In recent times, the Nigerian government has enforced several keen economic regulations and monetary policies in pursuit of a total cashless policy, money circulation control as well as to control the rising inflation rate in the country. The recently launched Revised National Financial Inclusion Strategy (NFIS 3.0) and several other essential policy frameworks is an action of appeal by the Central Bank of Nigeria (CBN) towards achieving its 95 per cent financial inclusion target by 2024.
To address the daunting challenges plaguing currency management in the country, notably the significant hoarding of banknotes by the people, in November of this year, President Muhammadu Buhari unveiled newly redesigned N200, N500, and N1,000 notes as earlier promulgated by CBN months ago. As shown in data released by the CBN, over 80 per cent of currency in circulation is outside commercial banks’ vaults. The apex bank made it known that effective 15 December 2022, the newly redesigned notes will be released for the consumption of the general public, and by 30 January 2023, the old notes will cease to be legal tender.
The apex bank enforced cash withdrawal limits.
Furthermore, the government again strengthened its total cashless policy pursuit with the cash withdrawal limits initiative set to be effective by 9 January 2023 across the country. The order, issued by the apex bank, noted that cash withdrawals by individuals and corporate entities over the counter could not exceed N100, 000 and N500,000, respectively, per week. While through Automatic Teller Machine (ATM) and Point of Sale (PoS), the maximum cash withdrawal per week will be N100,000, subject to a maximum of N20,000 cash withdrawal per day.
It also directed that only N200 and lower denominations should be loaded into banks’ ATMs. Several stakeholders, individuals and the public have voiced their opposition against the government policy enforcing a threshold on withdrawal, noting that it will affect the country economically. Likewise, the senate has also called on the Central Bank of Nigeria to considerably adjust the withdrawal limits in response to public outcry on the policy. While some supported the bank’s policy, others vehemently opposed it.
CBN rolled out National Domestic Card to unify payments.
Consequently, the CBN also rolled out yet another initiative as it adopts a nationwide card scheme scheduled to be effective by January 2023. This initiative is geared towards unifying payments and enhancing the country’s card system with the introduction of the National Domestic Card, which is believed will make transactions easy in the country. The National Domestic Card would bring all payments under one system in collaboration with the Nigeria Interbank Settlement System (NIBSS). The implication, according to analysts, is that the central bank in 2o23 might phase out ATMs and other card-payment systems.
On the part of the rising inflation, the CBN continues to activate every probable measure to mitigate the rising cost of living in the country caused by inflation. In response to the inflation, The Central Bank of Nigeria raised its monetary policy Rate (MPR) to 16.5 per cent in a sustained push to control inflation and ease pressure on the Naira. It retained the Cash Reserve Ratio (CRR) at 32.5 percent, the asymmetric corridor at +100 and -700 basis points around the MPR and the liquidity ratio at 30 per cent.
Experts cautioned for economic development hampering.
The CBN continues to tackle the difficult challenge of lowering the amount of cash in circulation while controlling inflation. The central bank believes that by increasing interest rates, the money supply in the economy would be reduced, which in turn should lower inflation. However, experts have cautioned that this might hinder economic development. Higher interest rates are perceived to increase the cost of lending to finance companies and may result in a rise in the cost of products and services.
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