Nigeria Caps ATM Withdrawals at $45/Day to Push CBDC

Central Bank of Nigeria is pushing to replace cash with its CBDC – eNaira.

Nigeria Caps ATM Withdrawals to $45/Day to Push CBDC
  • Nigeria’s central bank capped daily ATM withdrawals at $45
  • Weekly withdrawals are capped at $225 for individuals and $1,125 for corporations
  • Individuals and businesses that go above the limit will pay a 5% and 10% fee, respectively

Nigeria is taking drastic steps to push digital forms of payment, including its own central bank digital currency. This includes dramatically slashing the withdrawal limit on ATMs.

On Tuesday, the Central Bank of Nigeria (CBN) issued a directive reducing the amount of money Nigerians can withdraw daily from ATMs.

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Nigerians can now withdraw just ₦20,000, or about $45, from their accounts per day. Weekly withdrawals are capped at ₦100,000 ($225) for individuals and ₦500,000 ($1,125) for corporations.

Individuals that want to withdraw cash beyond the capped limit will be hit by a 5% fee. For businesses, the fee will be even higher, at 10%.

The CBN noted that this measure is part of an effort to promote the use of digital payments in the country. These include Nigeria’s Central Bank Digital Currency (CBDC) – eNaira.

“Customers should be encouraged to use alternative channels (Internet banking, mobile banking apps, USSD, cards/POS, eNaira, etc.) to conduct their banking transactions," CNB's director of banking supervision Haruna Mustafa said.

Nigerian Government Prefers eNaira Over Cash

Nigeria has been pushing the public to use its CBDC eNaira, with mixed results. Only one in 200 Nigerians currently use eNaira. Earlier, CBN issued other forms of incentives to users. This includes a 5% discount for drivers and passengers of the country’s motorized rickshaws.

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Still, the CBN continues to push eNaira as it is an important element of its strategy to promote digital payments. Authorities say that embracing digital payments would reduce corruption, boost financial inclusion, and facilitate remittances.

Nigeria is the most populous country in Africa. However, a large segment of its population has no access to a bank account. Moreover, Nigeria has a large informal economy, meaning a significant proportion of financial transactions goes unreported. If eNaira becomes mainstream, it could expand the country’s tax base.

In October 2021, oil-rich Nigeria became the first country in Africa to launch its own CBDC. It is still one of the few countries that launched its CBDC on a national scale. The only other nations to do so are The Bahamas, Jamaica, and eight island countries in the Lesser Antilles.

On the Flipside

  • Critics of CBDCs believe that governments can abuse the technology and use it to surveil citizens and track their every move. Moreover, a CBDC could enable authoritarian regimes to target dissidents.

Why You Should Care

With an estimated 211 million inhabitants, Nigeria is the most populous country in Africa and the continent’s largest economy. The nation’s embrace of digital payments could be a catalyst for other countries to follow suit and launch their own CBDCs.

This article is for information purposes only and should not be considered trading or investment advice. Nothing herein shall be construed as financial, legal, or tax advice. Trading forex, cryptocurrencies, and CFDs pose a considerable risk of loss.

Author
David Marsanic

David Marsanic is a journalist for DailyCoin who covers the intersection of crypto, traditional finance, and government. He focuses on institutionalized crypto entities like major cryptocurrency exchanges and Solana, breaking down complex topics into easy-to-understand writing. David's prior experience as a business journalist at various crypto and traditional news sites has enabled him to maintain a critical approach to news while adhering to high journalistic integrity standards.