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How the new CBN’s cash withdrawal policy will affect traders, currency sellers, POS, retail distribution services

The Central Bank of Nigeria (CBN) earlier in the week directed commercial banks and other financial institutions in the country to reduce the cash withdrawal limit to N100,000 and N500,000 for individuals and corporate organizations respectively.

 Samuel Oyekanmi

The Central Bank of Nigeria (CBN) earlier in the week directed commercial banks and other financial institutions in the country to reduce the cash withdrawal limit to N100,000 and N500,000 for individuals and corporate organizations respectively.

In addition, banks were directed to only load N200 denomination notes or less in their ATMs, in a bid to limit the volume of N500 and N1,000 notes in circulation in a bid to tame the rising rate of inflation in the country.

The directive of the apex bank follows the announcement by the governor, Godwin Emefiele, during the November 2022 MPC meeting, when he revealed that higher denomination notes will be reduced in circulation ‘in the long run, in order to discourage naira hoarding.

The highlight of the letter includes Individuals who will only be able to make a maximum cash withdrawal of N100,000 per week over the counter. Withdrawals over the limit of N100,000 will attract a processing fee of 5% charge.

  • Corporate organizations also have a maximum cash withdrawal limit of N500,000 per week over the counter, with a 10% processing fee charge if the limit is exceeded.

  • Third-party cheques above N50,000 will not be eligible for cash payment over the counter, however, the cheque limit of N10 million through clearing for 3rd party account settlement still subsists.

  • Only denominations of N200 and below shall be loaded into ATMs and customers will only be able to make a maximum ATM cash withdrawal of N20,000 per day or a cumulative N100,000 per week.

  • Individuals will only be able to make a maximum cash withdrawal of N20,000 per day via POS terminals.

This latest move by the central bank will have a widespread effect on trade, especially on businesses relying on cash-based transactions, POS transactions, and other forms of electronic payments. Here is a summary of some of the impacts we expect to see.

POS businesses: Point of Sale services have served as a major employer of labour in Nigeria in recent times, especially for the youths who operate in small kiosks and stores mostly in rural areas.

  • POS agents can handle as much as N1 million in cash in their small stores N1,000 notes with ease, however, with the new restrictions of handling around N200 notes, it becomes extremely difficult to handle heavy cash. 

  • For example, N1 million in N200 denominations will require about 5,000 notes, which could be overly conspicuous and consequently attract robbery or attacks.

  • The extra 5% interest processing charges that would come from withdrawing more than N100,000 from the banks by the POS agents would reflect on their charges going forward.

  • Also, the POS business as a point of performing withdrawals and deposits could be adversely affected if more Nigerians adopt mobile banking and can transact from the comfort of their homes using their devices.

Electronic Payments: Data from the NBISS reveal Nigeria processed N345 trillion in the last 11 months compared to N271.9 trillion recorded for the whole of 2021. Despite this, challenges remain with electronic transactions as frequent reports of failed transactions dampen the effectiveness of digital payments.

  • By decreasing cash transactions and increasing electronic transactions, we expect an increase in network failures as the digital infrastructure available for most banks and integrators struggles to cope with demand.

  • Banks and other channel integrators need to invest in cyber security software applications to guard against an expected rise in fraud on cyber-attacks.

  • Important to add that as competition increases, the cost of making these transfers will crash in the medium to long-term squeezing out profits from payment platforms.

  • We expect a consolidation such as mergers and acquisitions as rival platforms outcompete each other for market share.

Traders: Petty traders like meat, pepper, tomatoes, and yam sellers as well as services like salon, plumbing, and other repair services, who are already used to cash transactions will face the hassle of receiving payments going forward as individuals will be forced to move with fewer cash and rely on online means of transactions to make payments.


  • These small businesses will have to accept bank transfers as a means of payment from their customers or apply for POS machines. 

  • There is however a major distrust for banking transactions due to records of transaction failures, and non-reversed transfers that have impacted the penetration of online banking in the country.

  • There again is the issue of illiteracy amongst people living in rural areas in the country, who would prefer to save in cash through local thrift collections or in hidden boxes in their houses.

  • Sophisticated trading platforms that have for years invested in using technology to bridge the gap between the informal market, major distributors, and consumer goods companies, will now have to revamp their entire business models.

  • This might involve investing in their own proprietary payment channel platforms and wallets while also implementing interoperability with competing companies.

Currency traders at parties/owambe: A typical business in Nigerian parties typically called ‘owambe’ is naira trading to those who want to spray. Those involved in the hawking of the naira at parties often charge interest for giving clients mint currencies for their Nigerians who are known for their lavish parties.

  • Firstly, the business will be affected by the new notes for at least 4 months, considering that the new currencies will remain mint for at least the first few months, discouraging the need for patronizing currency hawkers.

  • Meanwhile, the cash withdrawal limit will also affect the amount they can withdraw for their business. Although, an alternative will be for them to increase their interest charges when selling at a party to give room for the 5% extra bank charges collected by the banks.

Tax remittance: The new cash withdrawal limit will have tax implications, especially for individuals and Micro Small, and Medium Enterprises (MSMEs).

  • Considering that the policy will force many people to carry out transactions using electronic payments, small businesses that currently operate mostly on cash will become visible to the tax authorities.

  • Additionally, the more transactions that are made by individuals electronically, the more the tax authorities will get the intelligence to track their income and net worth making it easier to fish out those that are evading taxes.

  • Fiscal policy partner and African tax leader at PricewaterhouseCoopers (PwC), Taiwo Oyedele, however, advised that businesses should register with the relevant tax authorities and open a separate bank account for their business and avoid mixing business with personal transactions.

Why this matter: The new policy by the CBN is set to change the financial ecosystem of the largest African economy, which could be a major turning point for the macro, monetary, and fiscal economy.

  • However, not without its pain as Nigerians will have to adapt to the imminent changes brought about by the new CBN policy.

Why this policy: The new policy by the CBN is riding on the back of the redesign of the new naira notes for N200, N500, and N1,000, which is aimed at reducing the broad money supply and currency in circulation. Nigeria’s broad money supply rose to a record high of N50.5 trillion in the month of October 2022.


  • Between January and October this year, the money supply has grown by a whopping N6.1 trillion, while currency in circulation rose to N3.29 trillion, which has been largely attributed to currency hoarding.

  • The apex bank has also adjusted monetary policy tools by increasing interest rates multiple times, which has been ineffective in bringing down the inflation numbers or narrowing the exchange rate disparity between the official and the black market.

  • Meanwhile, the new policy by the CBN to reduce the maximum cash withdrawal limit has been seen as a major turning point in taming the rising inflation, curbing corruption, as well as improving the adoption of cashless banking in the country.

  • However, it is imperative to highlight how this new directive will affect average Nigerians and their businesses.

  • We also opine this policy is also driven by the central bank’s financial inclusion strategy which is hinged on stabilizing forex.

  • Source: Nairametrics

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