Important things for Nigerians to know about CBN’s revised cashless policy

The Central Bank of Nigeria (CBN) recently announced the redesign, production, release, and circulation of new series of three banknotes N200, N500, and N1000 denominations, respectively. These banknotes will become effective on December 15, 2022, after being unveiled by President Muhammadu Buhari. The Naira redesign coincides with another policy of the apex bank known as the cashless policy.

Monetary policy has been a great tool for economic development and sustainability. Nigeria, like other countries in the world, is trying to catch up with a more advanced method of finance. The days of handling physical cash are quickly fading in the wake of technological advancement in the financial sector.

However, a lot of controversies trailed the CBN’s revamped cashless policy, which was announced on December 6, 2022. This article will try its best to explain what the policy is all about.

What is the CBN cashless policy?

The CBN cashless policy is a policy introduced to regulate cash-based transactions to reduce (not eliminate) the amount of physical cash (coins and notes) circulating in the economy, and encourage more electronic-based transactions (payments for goods, services, transfers, etc.).

The CBN introduced the cashless policy in January 2012 to align the Nigerian economy with the economies of industrialized countries, whose movement of physical cash for transactions has been heavily limited in favour of digital transactions. After a pilot run and gradual implementation that took nearly two years, the CBN fully implemented the policy on 1 July 2014.

However, the apex bank revised its cashless policy and announced new measures aimed at ensuring that financial customers in Nigeria carry less cash and use more digital means. In addition, these new measures have been introduced to enable the Naira redesign policy works in ways such as reducing counterfeiting and preventing hoarding of the notes, regulating money supply to reduce inflation and limiting criminals’ access to cash.

The existing policy, according to the CBN official website, stipulates a cash handling charge on daily cash withdrawals that exceed N500,000 for Individuals and N3,000,000 for Corporate bodies.

However, following the launching of the naira redesigned notes, the CBN introduced a stricter policy which restricted the maximum cash withdrawal over-the-counter (OTC) by individuals and corporate organisations per week to N100,000 and N500,000, respectively. The withdrawal of additional cash asides from the stipulated amounts attracts a five per cent charge for the entities and the bank will have to verify the customer’s details such as the Bank Verification Number (BVN), means of identification before approving the disbursement of the funds applied for.

Asides from the aforementioned reasons, economic and political analysts also deduce that the apex bank made ahead of the 2023 general elections to control the amount of cash in circulation during the period. Noting that the nation’s payment infrastructure had already been deepened with 1.4 million online banking platforms scattered across the country, Godwin Emefiele, the CBN Governor, insists that Nigeria, Africa’s biggest economy, needs to fully key into the cashless economy.

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Advantages of CBN cashless policy

To drive economic development and modernisation of the banking system

According to the CBN Governor, more countries have embraced digitisation and have gone cashless in terms of financial transactions. Nigeria is following the trend to encourage the development of the economy. With the digitisation of the banking system, the cashless policy, the CBN said, will be a key enabler of economic growth.

To reduce the cost of banking services

With the cashless policy, there will be no need for customers to troop to the banks for their services. All banking services can be done online. There are other options too like POS operators and fintech sectors that will reduce the workload of traditional banks. In addition, the cashless policy encourages greater reach to other people, especially, rural dwellers through fintech. Thus, banks no longer have to spend so much money to serve their customers unlike before.

To effectively reduce inflation

Inflation is one of the major factors of the economic woes in Nigeria because there is too much cash in circulation. According to Emiefele, over 85 per cent of the cash that is in circulation is outside the bank. This is one of the major contributors to inflation, which is bad for the economy. With the cashless policy, incessant cash circulation will reduce, thus reducing inflation in the country.

To fight corruption

We have heard so many reports of bundles of money buried in mansions, offices, tombs and a lot of other weird places. Nigeria also operates money-based politics through vote buying and the financial inducement of voters. Ahead of the 2023 elections, the CBN cashless policy will contribute to free and fair elections due to limited cash withdrawals by individuals and corporate organisations.

To fight crimes

High cash usage enables leakages, money laundering, and other cash-related fraudulent activities. With the introduction of the cashless policy, it will be easier to trace every financial transaction to fight against crimes that include ransom for kidnapping, money laundering, terrorism, robbery, bribery etc.

To gather more data

The Nigerian government can use the data coming from cashless transactions to improve and analyse their economic policies. With the data, officials can predict or identify the patterns of activity and use such information to improve other sectors like power, housing, transportation etc.

To encourage more spending

Going cashless means easy spending. You do not have to get cash to buy what you want. From the comfort of your home or any location, you can shop online with your debit and credit card. Spending will encourage economic growth and development.

ALSO READ: How counterfeit money impacts Nigeria’s economy

Disadvantages of CBN cashless policy

Cyber attacks

Cyber attack is the major disadvantage of the cashless policy. With virtually every financial transaction going online, the CBN, banks and other financial institutions and their channels of transactions are vulnerable to cyber attacks, which can cause terrible havoc to the government, corporations and individuals.

Poor access to the internet

Since almost all financial transactions will be online, it is going to pose a problem to Nigerians many of whom still cannot access affordable internet services. Again, the internet is poor in some areas, particularly in rural areas. This means a lot of Nigerians, especially those who are not internet literate, may not be able to easily have access to financial services when they need them.

Lack of digital privacy

Digital transactions also mean a lack of privacy for cash transactions. Your data is in the hands of certain organisations. You may trust them to handle it with care, but you also run the risk of it winding up in malicious hands.

Technical problems can affect access to funds

Apart from lack of access to the internet, network and technical problems can cause a glitch in financial transactions. You may be denied access to some funds to do your shopping. Many merchants or traders will likely not agree to let you go with their goods without confirming payment. A simple problem like a dead phone battery or that of a POS machine can leave you penniless.

Providers may charge higher fees

Payment providers may take advantage of the cashless policy to charge more for their services, especially in places where there are limited numbers of providers. It can eat into the customer’s savings, thereby eliminating the benefits that come with less cash handling.


Since you do not have to get cash to spend, you may be tempted to overspend because it is easy to swipe your card, tap or click your mobile banking app without noticing how much you spend. If you are not careful, you will spend on things you do not need and go broke.

What are experts saying about the CBN cashless policy?

Since the announcement of the new CBN cashless policy, there have been mixed reactions from the general populace. Even the Nigerian Senate and House of Representatives have protested against the policy and made moves to stop it from taking effect.

Experts are also divided on the cashless policy with one school of thought saying the new policy will limit business activities, reduce spending and create unemployment. The other school of thought, however, believes that the CBN cashless policy is a welcome idea, but insists that the government should put the right measures in place to make it more effective.

These measures include sensitising the general public, especially small business owners, about the policy, as well as utilising Tax Identification Number (TIN) as a criterion for excess cash withdrawal.

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