Lagos – Nigeria’s central bank has imposed restrictions on weekly cash withdrawals to limit the use of cash in a bid to curb counterfeiting and discourage ransom payments to kidnappers.
Under a new policy announced late on Tuesday, the Central Bank of Nigeria (CBN) said that weekly cash withdrawals had been slashed to 100 000 naira ($225) from 2.5 million naira daily for individuals.
For businesses, the weekly limit has been cut to 500 000 naira from the current daily limit of three million naira.
“Withdrawals above these limits shall attract processing fees of five percent and 10 percent, respectively,” the CBN said.
The central bank said that withdrawals from cash machines were also included in the new measure, which takes effect on January 9.
“The maximum cash withdrawal per week via automated teller machine shall be 100 000 naira subject to a maximum of 20,000 naira cash withdrawal per day,” it said.
Only denominations of 200 naira and less will be loaded into ATMs, it said.
“The maximum cash withdrawal via the point of sale terminal shall be 20 000 naira daily,” it added.
The central bank warned commercial lenders against violating the new cash limits, which it said were in line with its policy to promote cashless transactions.
The bank has expressed concerns in the past over currency counterfeiting, the volume of money outside the banking system and huge ransom payments to kidnappers and bandits.
Analysts also see the new cash policy as a move by the CBN to discourage vote-buying and financial inducements by politicians ahead of a presidential election in February.
Nigeria is facing myriad security challenges, including a jihadist insurgency and kidnappings ahead of the ballot to choose a successor to President Muhammadu Buhari, who steps down after two terms in office.
The announcement of the cash restrictions comes just days after Nigeria launched new banknotes of 200, 500 and 1 000 naira.
The new notes come into use on December 15, but Nigerians have until January 31 to turn in old notes when they will cease to be legal tender.