UpdatesDec 11, 2022

Nigeria significantly restricts access to physical cash

The African country prefers digital currency

Nigeria has significantly reduced the amount of cash individuals and businesses can withdraw. The government is trying to push through its 'Cashless Nigeria' policy and increase the use of eNair, the digital currency of the Central Bank of Nigeria (CBDC).

Nigeria bets on CBDC

The Central Bank of Nigeria on December 6 this year issued a directive for financial institutions under which both individuals and companies will now be limited to withdrawing USD 45 (20,000 yen) per day and USD 225 (100,000 yen) per week from ATMs, and 225 USD (100,000 yen) and $1,125 (500,000 yen) per week at bank branches. In addition, when the withdrawal limit is exceeded, a special fee of 5% for individuals and 10% for companies will be added.

This decision is to "encourage" customers to use alternative channels based on digital currency. This is due to the very low adoption of eNair, for over a year, i.e. since its launch, only 0.5% of the population reported owning and using the digital currency, and since May this year only 80 retailers have signed up for the national CBDC.

Nigeria established its "cashless" policy in 2012, suggesting that moving away from physical cash would increase the efficiency of its payment system, lower the cost of banking services and improve the effectiveness of monetary policy. Nigeria is one of 11 countries to fully implement the CBDC, 15 other countries have launched pilot programs and India is set to join the ranks later this month.

Countries around the world have begun testing these solutions as a way to convert national fiat currencies, but mostly with poor results. The only case where the CBDC performs above expectations at the moment is the digital yuan.