The financial situation in Nigeria is often dire and sometimes unworkable. A new limit imposed by the central bank curbs cash withdrawals to an equivalent of $45 per day. This is done to promote cash alternatives, including the eNaira CBDC.
Nigeria Wants To End Cash In Favor of eNaira
There has been an ongoing global push to reduce reliance on cash. Physical money, either in paper or coin form, is clumsy. It is a hassle for consumers and retailers, as it is difficult to store and transport. Moreover, it poses a security risk, as thieves will attempt to steal money eventually. In this modern day and age, there are many alternatives to cash, yet it seems their adoption in Nigeria isn’t going fast enough.
More specifically, the Central Bank of Nigeria enforces new limits on cash withdrawals from ATMs. Users can get a maximum of $45 per day. However, they only receive small denominations while doing so. Big bills are taken out of circulation unless consumers specifically request them. Doing so is subject to a processing fee of up to 10%. Everyone should know they have zero control over money stored in their bank account. That becomes even more apparent in this African country.
These draconic limits aren’t surprising, though. Nigeria’s government and central bank have pushed hard for a cashless society. Moreover, they want to promote the use of the eNaira, the CBDC circulating in Nigeria. Other alternative options include internet and mobile banking, USSD cards, POS, and “other solutions” to conduct banking activities. In the West, using payment cards or mobile solutions is relatively normal.
The eNaira hasn’t been too successful since its launch. Consumers and retailers are wary of a CBDC they have no real control over. If anything, the government can freeze balances indefinitely for whichever reason they deem fit. Since launching over a year ago, less than 1% of Nigerians have actively used it. Instead, they often favor cryptocurrencies like Bitcoin and Ethereum. Those currencies note momentum despite Nigerian officials banning cryptocurrencies a while ago.
Pushing The Digital Age
Lower reliance on cash is a matter of time in most countries. Nigeria is one of the frontrunners due to its growing momentum as a fintech hub. Moreover, the region has made significant digital strides to revamp its payment industry. However, that doesn’t mean the eNaira will be successful, as Nigerians don’t like being controlled by their central bank. Even so, using cash will become virtually impossible, except for minute transactions.
It will be interesting to see how the finance landscape evolves in Nigeria. It is a very prominent country for fintech and mobile payments. However, the decision by the central bank to push a CBDC that no one likes may hinder growth in those industry verticals. A central bank digital currency isn’t a good solution in most countries, except China.