New CBN's Cash Regime Takes Toll on Customers in the East

Several bank customers remain stranded in banking halls in the Eastern Nigeria coal mining capital, Enugu Monday as a new Central Bank of Nigeria (CBN) monetary policy on cash withdrawals takes effect.

The new monetary regime, which was first test run in Lagos in January 2012 by the apex bank requires a cash-withdrawal-limit of N150, 000 (approximately $943.3) on third party bank cheque.

Early Monday customers milled disturbed in banking halls not used to cash withdrawal limits complained bitterly. They lamented their frustration at not being able to withdraw enough cash for their daily business transactions.

Nigerian entrepreneurs rely largely on huge cash transactions for daily business deals due to age-long lack of trust in the banking system. Several retailers also don’t trust third party cheques due to fraudulent practices.

Mallam Sanusi Lamido Sanusi, who was named, last week by the UK’s The Banker magazine as African Central Governor of the Year -2013 for the third consecutive year insisted the cashless policy is aimed at instilling financial discipline in the chaotic Nigerian business climate.

Boniface Chinwuba, a bank customer in Enugu said he needed N500, 000 to purchase some building materials, but could not do so because of the policy. Apparently ignorant of the policy, Chinwuba blame lack of adequate publicity.

“Look at the trouble I am passing through. In fact, I will pull my account from this bank,” said Chinwuba.

Mrs. Maria Okolo, a private school proprietress in the city also stated that she came to withdraw N300, 000 to pay her workers, but could not do so. She appealed for extension of time to enable customers adjusts to the new policy.

A survey at several microfinance banks reveal they were also cash strapped to service their customers who are mainly petty traders, artisans and other SMEs in the informal sector of the economy.

A microfinance bank operator who spoke in anonymity said they couldn’t get enough cash supply from the commercial banks. “Most times, we withdraw money from commercial banks to service our customers but with this development, it is now impossible,’’ said the official.

The policy stipulates a ‘cash handling charge’ on daily cash withdrawals or cash deposits that exceed N500, 000 for individuals and N3 million for corporate entities. 

According to the CBN, “the new policy on cash-based transactions (withdrawals & deposits) in banks, aims at reducing the amount of physical cash circulating in the economy, and encouraging more electronic-based transactions - payments for goods, services and transfers.

It notes that the policy aims to “drive development and modernization of our payment system in line with Nigeria’s vision 2020 goal of being amongst the top 20 economies by the year 2020.

An efficient and modern payment system is positively correlated with economic development, and is a key enabler for economic growth.”

Amongst others, it also seeks to reduce the cost of banking services (including cost of credit) and drive financial inclusion by providing more efficient transaction options and greater reach.

The policy seeks also to improve the effectiveness of monetary policy in managing inflation and driving economic growth.
From July 1, the CBN hopes to extend the policy further to five more states across the country – Abia, Anambra, Ogun, Rivers and Abuja.

Subsequently, it directed banks to engage effective media campaigns to enlighten customers on the new cashless policy.