Nigeria will soon begin limiting ATM withdrawals to just $45 a day as part of a push to move the country towards a cashless economy.
The policy – which will also apply to banks and cashback from purchases – follows the rollout of the West African nation’s newly designed banknotes to control the money supply.
The Central Bank of Nigeria has capped weekly over-the-counter cash withdrawals at 100,000 naira ($225) for individuals and 500,000 naira ($1,124) for companies, with a processing fee required to access more.
When the policy goes into effect in January, ATMs will no longer dispense Nigeria’s high denominations of 1,000 naira ($2.25) and 500 naira ($1.10) while withdrawals from ATMs and point terminals will also sale will be limited to 20,000 naira ($45) per day.
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Haruna Mustafa, director of banking supervision at the bank, said cash withdrawals could be allowed under “convincing circumstances, no more than once a month”.
Policy makers say withdrawal limits and the central bank’s recent monetary initiatives would bring more people into the banking system and curb currency hoarding, illicit flows and inflation.
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But other analysts fear the move could harm the day-to-day transactions made by people and businesses, given the unreliability of digital payments in Nigeria.
Nigeria’s economy depends heavily on the “informal sector” – activities outside the legal framework and government regulation such as agriculture, street and market trading, and public transport. In this industry, where most Nigerians work, cash is usually preferred for transactions because many do not have bank accounts.
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Only 45% of adults in Nigeria have accounts with regulated financial institutions, according to the World Bank. In the absence of bank accounts, POS terminals have emerged as one of the fastest growing areas of financial inclusion in the country.
The Associated Press contributed to this report.