The Central Bank of Nigeria has begun taxing cash withdrawals and deposits that exceed NGN 150,000 (USD 931) per day for individuals and NGN 1,000,000 (USD 6,205) per day for corporations [1]. The scheme is aimed at reducing the amount of physical cash circulating in the economy, encouraging more electronic-based transactions as well as minimizing issues related to security, cash management and money laundering. [1,2] The program is also expected to drive financial inclusion via mobile phones, which many under-banked and unbanked Nigerians own [1,3].
The fee system, which is in place on a pilot basis in Lagos state, is expected to cost CBN approximately NGN 2.5 billion (USD 15.5 million) [1, 4]. However, CBN Governor Sanusi Lamido Sanusi reportedly said that the policy is designed to reduce the cost of handling cash, which is expected to reach approximately NGN 192 billion (USD 1.19 billion) in 2012. He was quoted as having said, “The target is getting the cost reduced by 30 per cent in three years through enforcement of four-pronged initiatives – namely reduction in cash management cost, enhanced electronic payment system, Information Technology (IT) and centralised back-office systems.” [2]
By Kristha Abores, Research Associate
About Central Bank of Nigeria (CBN):
The Central Bank of Nigeria (CBN) was established in 1958 as Nigeria’s central banking authority. As defined by the Act of Parliament that created CBN, its statutory mandates are as follows: “to issue legal tender currency; to maintain external reserves; to safeguard the international value of the legal tender currency; to promote monetary stability and a sound financial system in Nigeria; and to act as banker and financial adviser to the Federal Government.” As of July 2011, CBN reports total assets of NGN 8.37 trillion (the equivalent of USD 54 billion).
Sources and Additional Resources:
[1] “Further Clarifications On Cash-Less Lagos Project,” http://www.cbn.gov.ng/cashless/
[2] “Banks Fortify E-Payment Solutions for Cashless Policy,” http://www.thenationonlineng.net/2011/index.php/business/money/32782-ban…
[3] “Entrenching Cashless Economy Through Secure, Affordable Mobile Money Solutions,”http://www.businessdayonline.com/NG/index.php/markets/companies-and-mark…
[4] “Cashless Lagosto Cost CBN, Banks over N2.5billion,” http://www.thisdaylive.com/articles/cashless-lagos-to-cost-cbn-banks-ove…
MicroCapital.org article, January 9, 2012, “MICROCAPITAL BRIEF: Nigeria’s National Association of Microfinance Banks (NAMB) Asks Government Not to Set Up Microlenders,” https://www.microcapital.org/microcapital-brief-nigerias-national-associa…
MicroCapital.org article, December 20, 2011, “MICROCAPITAL BRIEF: Fortis Mobile Money to Enable Mobile Phone Banking for 180 Members of Nigeria’s National Association of Microfinance Banks, Lagos State Chapter (NAMBLAG),” https://www.microcapital.org/microcapital-brief-fortis-mobile-money-to-en…
MicroCapital.org article, October 4, 2011, “MICROCAPITAL BRIEF: Central Bank of Nigeria Approves New Capital Base Requirements for Microfinance Banks (MFBs), MFBs Await Capital Verification Results,” https://www.microcapital.org/microcapital-brief-central-bank-of-nigeria-a…
MicroCapital.org article, September 7, 2011, “MICROCAPITAL BRIEF: Central Bank of Nigeria Issues Mobile Money Operating Licenses to Affiliate of Fortis Microfinance Bank, 10 Other Companies,” https://www.microcapital.org/microcapital-brief-central-bank-of-nigeria-i…
MicroCapital.org article, June 28, 2011, “MICROCAPITAL BRIEF: Central Bank of Nigeria (CBN) Looking to Set New Capital Base Requirements for Microfinance Banks (MFBs),” https://www.microcapital.org/microcapital-brief-central-bank-of-nigeria-c…
MicroCapital’s Universe Profile: Central Bank of Nigeria (CBN), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Cen…
Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/
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