• Nigeria is set to ban cash withdrawals from government accounts starting March 1.
• The move is part of the effort to tackle illicit activities from top to bottom, and to discourage the support of terrorist extremist group Boko Haram.
• As part of the regulation, individuals are limited to weekly over-the-counter cash withdrawals of 100,000 Nairas ($225) and ATM withdrawals to $45 per day, with certain denominations not available on cash vending machines.
The Nigerian government announced that the ban on cash withdrawals from government accounts will take effect on March 1, less than a week after the country conducts a presidential election next month. The country has been suffering from the terrorist extremist group Boko Haram, and the government is looking to cut off their financial support by digitizing the economy.
Modibbo Tukur, Chief Executive of the Nigerian Financial Intelligence Unit, said that the move is in line with the government’s need to tackle illicit activities from top to bottom. He noted that any cash withdrawals from government accounts, even if it is just one naira, will trigger off money laundering and corruption investigations.
In addition, the Central Bank of Nigeria has limited weekly over-the-counter cash withdrawals to 100,000 nairas ($225) for individuals and 500,000 nairas ($1,124) for corporations. ATM withdrawals have also been limited to $45 per day, with denominations of 1,000 nairas ($2.25) and 500 nairas ($1.10) not available on cash vending machines from January. The president and the central bank can authorize exceptions for exceptional cases.
Cryptocurrencies such as Bitcoin and Cardano have been offering hope to those locked out of the banking industry. With millions of Nigerians anguished in abject poverty, the successful deployment of the digital Naira could potentially help those in need.
The Nigerian government is keen to push its economy toward cryptographic payments and the cash withdrawal ban is a step in that direction. Whether the ban will have the desired effect remains to be seen, but it is clear that the government is willing to do what it takes to tackle money laundering and corruption.
