Nigeria Pushes the Use of CBDC With New Central Bank Policy

  • Nigeria is one of 11 countries that have launched a digital currency.
  • The CBN recently introduced new banknotes in a bid to usher in a transition to digital payments.
  • Nigeria launched the e-naira in 2021, but less than 0.5% of the country’s population has adopted it.

Nigeria was one of the early African nations to launch its own central bank digital currency, CBDC. However, a year after the launch, adoption of the e-naira has been low. The country’s central bank recently announced a new policy aimed at turning the nation into a cashless society and ultimately leading to more adoption of the e-naira.

The new directive from the CBN will lead to a drastic reduction in the amount of physical cash citizens and businesses are entitled to. As per the new policy, Nigerians can only withdraw $45 (N20,000) daily and $225 (N100,000) weekly from ATMs.

Additionally, there will be a weekly withdrawal cap for both citizens and companies of $225 (N100,000) and $1,125 (N500,000), respectively. Funds withdrawn in excess of those restrictions would incur a 5% fee for individuals and a 10% fee for corporations. The central bank also placed the daily cap for cash withdrawals from point-of-sale terminals at $45 (N20,000).

However, the CBN noted that larger financial withdrawals should only be made “in compelling circumstances” and cannot exceed N5 million ($6,765) and N10 million ($13,513) for individuals and organizations, respectively. The financial regulator added that such exceptions are only permitted once a month. 

The director of banking supervision, Haruna Mustafa, noted that the changes would encourage Nigerians to explore other banking options and lessen their reliance on cash. He said,

Customers should be encouraged to use alternative channels (Internet banking, mobile banking apps, USSD, cards/POS, eNaira, etc.) to conduct their banking transactions.

The cashless policy has been operational in Nigeria since 2012. The country’s financial regulators claimed the policy would increase the efficiency of its payment system and make banking services more accessible and cheaper for citizens.

Nigeria’s CBN governor, Godwin Emefiele, has long sought ways to trigger the massive adoption of the e-naira. Emefiele recently introduced new banknotes to aid the change to digital payments. Nigeria is one of 11 countries to have fully developed a digital currency. The new directive is set to kick off in January. However, it remains to be seen if Nigerians will finally embrace the e-naira or increase their use of cryptocurrencies.

Lawrence Woriji Verified

Lawrence has covered some exciting stories in his career as a journalist, he finds blockchain-related stories very intriguing. He believes Web3 will change the world and wants everyone to be a part of it.

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