New Cash withdrawal limits in Nigeria and PoS agency banking

Background – cash withdrawal limits

Following the outcry that accompanied the December 6th Central Bank of Nigeria (CBN) circular on cash withdrawal limits at automated teller machines (ATMs) and point-of-sale (POS) terminals to N20,000 per day, the bank has bowed to pressure and upped the weekly limits for individuals and corporate organisations to N500,000 and N5m respectively.

The CBN said it is reviewing the policy as a response to the feedback it received from stakeholders. It also provided room for withdrawal above the new limits. However, financial institutions will be required to submit some paperwork on the customer to the CBN to get necessary approval.

Cash withdrawal limits impact on PoS agents

While the discussions of withdrawal limits are important, one important constituent impacted by the policy, a massive community of self-employed young people, appeared to have been ignored. These are registered mobile money agent outlets and they are visible at roadsides, shopping malls, open markets et cetera.

There are over 1.4 million mobile money agents, mostly young people, employed in the sector and eke out an existence. There are 681 PoS agents per thousand square meters in Nigeria (2021), a very impressive figure. The bridge the unbanked gap by bringing more ordinary Nigerians (people previously excluded) into the financial net. They assist the Nigerian masses with cash withdrawals, cash deposits, money transfer, airtime purchase, electricity bills payment (and other bills), and account opening. The President of the Association of Mobile Money and Bank Agents in Nigeria (AMMAN), Victor Olojo, has applauded the policy reversal. He decried apex Bank’s earlier insensitivity to Nigerians plight.

So, what now happens to these people? Will they be pushed out into the cold? Back to unemployment queues? CBN says no, but the agents and Nigerians are not so sure. What is fact and what is fiction?

A Nigerian youth at his roadside PoS agency location

PoS transaction figures

The old December 6 circular practically limits PoS agents to a weekly N100,000 transaction! At a rate of N100 commission per N10,000 transaction, that is N1000 weekly. That is definitely not a living wage! The new circular has improved the limits to N500,000 weekly but is this enough? In 2021, the money agents did cumulative PoS transactions valued at 6.4 trillion Naira. The have exceeded this amount in the first 9 months of 2022. It is likely that the new policy will slow this down and negatively impact the progress made in financial inclusion.

The larger picture?

CBN wants us all to see the larger picture. It says its policies will curb inflation, strengthen the Naira, reduce cost of currency management and more importantly stem terrorism, banditry and kidnappings. The CBN insists that hardworking Nigerians will not be financially disenfranchised. It also denies that there are any political undertones to its policies. The CBN governor speaking through deputy governor Aisha Ahmad, said Nigeria is a leader in digital payments on the African continent with over 3.7 billion transactions in 2021. The bank intends to sustain this achievement and move its cashless policy forward.

On the impact on money agents, the CBN said the revised limit plus a reduction in applicable charges to 3% for over-the-limit transactions would keep PoS businesses afloat. It provided an analysis of PoS agency transactions in the previous one year to support it claims. About 99% of withdrawals at agent locations are below N300,000.

Conclusion and more questions

In conclusion, we as Nigerians must ask these pertinent questions:

1. In whose interest is an efficient payment system and workable cashless policy? 2. Does a cashless policy help to reduce crime, terrorism financing and kidnapping? 3. Is the policy of cash limits new and is it a recognized world-wide as an anti-money laundering strategy? 4. Does the policy give adequate room for unavoidable cash transactions above fixed limits and the prescribed processing fees fair? Is the new policy back by sound statistical analyses of Nigerian cash and online transaction trends? The answers to these questions would help the Nigerian in objectively responding to CBN’s and the Federal Government’s cashless policy push.