CBN’s new withdrawal limit confuses SMEs

Small business owners are in a state of confusion over the latest directive of the Central Bank of Nigeria (CBN) limiting individual’s daily cash withdrawals to N20,000, findings by BusinessDay have revealed.

Those who expressed their reservations to BusinessDay said the new policy would affect their businesses in no small measure.

Recently, the Small and Medium Enterprises Development Agency of Nigeria, alongside the National Bureau of Statistics, put the number of micro, small and medium enterprises (MSMEs) in the country at 39.65 million, which employ about 87.9 percent of the nation’s labour force. The body added that MSMEs contribute 43.3 percent to the nation’s GDP.

The CBN had in a letter on Tuesday told deposit money banks, payment service banks, primary mortgage institutions and microfinance banks that cash withdrawal over the counter by individuals and businesses should not be more than N100,000 and N500,000 per week respectively, effective from January 9, 2023.

“The maximum cash withdrawal over the counter by individuals and corporate organisations per week shall henceforth be N100,000 and N500,000 respectively. Withdrawals above these limits shall attract processing fees of 5 percent and 10 percent, respectively,” CBN said.

However, the CBN decision, according to some small business owners, may be inimical to their growth as infrastructural bottlenecks prevent total reliance on other alternative channels of payments being promoted by the apex bank.

“People withdraw more than N20,000 at once in my shop. You should know that PoS business is driven by commission, and once this policy comes into force, it will surely reduce our commission. But we are looking at how to navigate the challenges,” Janet Robinson, who operates a Point of Sale (PoS) terminal in Ogun State, said.

Read also: CBN cash limits put pressure on e-payment channels

Chioma Uche, a small business owner, said that collecting cash from customers gives “the business owner confidence that one has not been duped in this era of fake alerts.” She also cited delay in checking her bank’s balances as another reason the alternative channels as presently offered might not provide complete solutions that the CBN envisages.

“I am not against using other means of payments such as transfers. If a customer makes a transfer, sometimes, SMS alerts will be delayed. At the same time, poor network connectivity could prevent you from checking your bank’s balances immediately. This is why it will be difficult for other alternative channels to replace cash,” Uche said.

Daud Shittu, another entrepreneur, wanted to know how a Nigerian in need of urgent medical attention would be attended to, having met the daily withdrawal limit before the emergency situation happens. He observed that some hospitals are fond of demanding cash, which in most cases is more than the new daily maximum withdrawal limit imposed by the CBN.

“Assuming I have met my daily maximum withdrawal and there is a medical emergency where the hospital requires me to drop cash before attending to the victim, how will this be possible? The CBN wants to increase death rate through health emergency,” Shittu said.

The CBN also listed as one of the directives that “only denominations of N200 and below shall be loaded into the ATMs.” Nigeria’s currency notes are N1000, N500, N200, N100, N50, N20, N10 and N5.

According to the data on the structure of Nigeria’s currency notes in circulation, since 2015, denominations of N200 and below accounted for less than 20 percent of the total currency indent. In 2015, out of the N1.86 trillion worth of currency notes printed by the CBN, denominations of N200 and below amounted N183.95 billion, representing 9.9 percent of the worth of all currency indent printed in that year.

In 201bddrec9, denominations of N200 and below accounted for 16.4 percent of the total currency notes for that year. The same set of denominations accounted 11.6 percent in 2020, indicating that the CBN, before now, had set in motion processes to reduce higher denominations in circulation.