CBN’s Destructive Regulation: An Attempt to Cash-starve Hardworking Nigerians, by Habibu Bawa

Despite my poor understanding of formal and banking sector, I still believe, as a Nigerian who spent considerable years in hand-to-hand, me-to-you or rather the Nigerian Informal Sector, the Central Bank’s new cash regulation policy is obviously a frantic effort to cash-starve 80.4% of the 210 million Nigerians whom depend on cash exchange for goods and services that constitute 57.7% of the total size of the Nations economy their chances to make ends meet daily.

The Central Bank of Nigeria has on the 6th of December released a circular which it titled; ” Letter to All Deposit Money Banks (DMBs) and other Financial Institutions” limiting ATM, POS and OTC daily withdrawals for individuals and corporate entities to #20,000 and #100,000 respectively without considering families and businesses that requires above that for daily needs or to settle casual employees which aside proving total disregard for the semi-formal markets where stockbrokers and sales agents buy agriproducts from rural markets, convey to processing companies, receive payments through banks and withdraw from POS operators easily to continue their businesses but literally means, you cannot as an individual buy from Malls, Pharmacies and Supermarkets goods over #20,000 daily and #100,000 weekly, yet it’s meant to improve cashless policy.

Like the introduction of the E-Naira, USSD charges, Inter-bank transfer charges, ATM withdrawal charges from different banks, electronic transfer tax, VAT on SMS alert, card maintainance and new ATM cards charges, many a Nigerian consider CBN’s new policies as draconian and cryptic which only keep the Local Nigerian away from commercial banks as #20000 deposited in early December, apart from depreciation in it’s purchase power, long and sluggish queues at ATMs, depositor loses about 1% to charges by month ending.

The CBN in it’s crude and cruel policies has failed to put into consideration the inefficiency of our banking system, the ratio of unbanked to bank communities, the distribution of Nigeria’s commercial bank branches and our financial literacy percentage.

With an estimated population of about 210 million people, there are just 134 million active bank accounts which includes individual, joint and corporate bodies with multiple accounts.

According to IMF, in 2020 alone, Nigerian banks closed upto 234 branches, 649 ATMS and lost about 16,646 mobile money agents which amounts to 11% decline in one year and reduction in the number of commercial banks per 1000km² and ATMs per 100,000 adults. This aside the facts that many banks have no branches outside state capitals.

Many with only theoretical knowledge of Nigeria’s economy considers the informal and semi-formal sectors irrelevant or at best at the bottom rung of the economic system when in truth, they are the real drivers of the economic system because they are many in number, large in segments and more common and important to the life of an average Nigerian.

Though it is unclear if the country has reliable data on any of their segments. There are about 5.5 million hardworking Nigerians in the informal sector in Lagos state alone that exchange Naira for spare parts, phone accessories and plastics amounting to millions in Ladipo, Idiroko and Alaba to mention but a few. There are other millions dealing in cattles, grains and palm oil in Illela, Mubi, Dabai, Mokwa and Otukpo whose businesses rely on buying with cash from unbanked communities out of network coverage, transport to cities or processing companies whose businesses will be affected by daily withdrawal limits.

These are visible informal business segments within the country with multi-million daily profit turnover and With our fragile banking system that makes many dislike bank transfers,
unless the Central Bank is planning to cash-starve hardworking Nigerians, it will require five years or more of orientation and part implementation of it cashless policy. Even in the UK where 100% of its adult population is banked, it’s £300 per day which is roughly #300, 000.