Nigeria forces citizens to use national cryptocurrency instead of cash

Nigeria has drastically reduced the amount of cash that individuals and businesses can withdraw as the country’s authorities try to promote the «Cashless Nigeria» political campaign and increase the use of eNaira, the Central Bank’s digital currency (CBDC).

On December 6, the Central Bank of Nigeria issued a directive to financial companies stating that individuals and legal entities can now withdraw only $ 45 per day and $ 225 per week from ATMs. At the same time, individuals will pay a 5% commission on the withdrawal amount, and legal entities — 10%. The limits are cumulative for each withdrawal, so a person who withdraws $ 45 from an ATM and then tries to withdraw cash from a bank again on the same day will receive a 5% or 10% service fee.

Haruna Mustapha, the Director of Banking Supervision in Nigeria, commented on the innovation: «Customers should be encouraged to use alternative channels (internet banking, mobile banking apps, USSD, cards/POS, eNaira, etc.) to conduct their banking transactions.»

Interestingly, the previous limits on daily cash withdrawals in Nigeria were $ 338 for individuals and $ 1128 for companies.

The adoption rate of the state cryptocurrency eNaira has been low since its launch on October 25, 2021. The country’s central bank tried to persuade Nigerians not to neglect CBDC, as less than 0.5% of the population used the national digital asset. Back in 2012, Nigeria introduced a «cashless payment» policy, assuming that the abandonment of physical cash would make the state payment system more efficient. Officials also hoped for low banking costs and high efficiency of monetary policy.

At the end of October 26, the Governor of the Central Bank of Nigeria, Godwin Emefiele, said that 85% of all Naira banknotes (the local currency — ed.) in circulation are stored outside banks. Therefore, the government could not think of anything better than to reissue new banknotes and encourage citizens to use digital payments more actively.

According to the CBDC tracker of the American think tank Atlantic Council, Nigeria is one of 11 countries in the world that have introduced CBDC into their economies. It is worth reminding that the European Parliament is currently working hard to launch the digital euro. At the same time, China is actively testing the digital yuan.