Who owns the Naira?

Maikudi: Prof ‘Fari Owonikoko, good morning sir. There is breaking news.”

Owonikoko: “Ehh! Breaking news on what?”

Maikudi: “The Central Bank of Nigeria (CBN) has issued a directive to commercial banks and financial institutions limiting daily ATM withdrawals to N20,000 while limiting over-the-counter withdrawals for individuals and corporate organizations to N100,000 and N500,000, respectively.”

“According to the statement released on Tuesday, December 6, the revised policy will become fully operational from January 9, 2023.”

“So, what’s your take on this policy because I find it rather ludicrous!”

“Prof, do you know what?”

Owonikoko: “What do you think I know?“

Maikudi: “This CBN’s cash withdrawal policy may be part of a broader strategy to control the demand for foreign exchange.”

Owonikoko: “It’s a good one then. At least we can expect to vote freely without vote-buying as “naira rain” will not be available in the next 2023 general elections.” “It will also help the authorities to track spending of most political parties during this campaign season.“

Maikudi: “If that is the case, may be the policy is politically motivated. It is basically to discourage cash disbursements in large quantities during elections by the politicians.”

Owonikoko: “For me, I hope it will boost the cashless policy, and greatly so, I should add. But Nigerians need to adjust very fast. Methinks it is more of an economic than political decision.”

Maikudi: “Why? Rice is about N50.000 per 50kg bag. Diesel is above N800 per litre. This policy will force the informal sector to keep cash at home. The unbanked are more in the informal sector. I guess this policy will be reversed after the general election when it has served its political purpose. The criminals will now go for dollars and not naira. This will put pressure on the exchange rate.”

Owonikoko: “The policy is okay.” “We should start using digital banking” “So funds can be traced and tracked.” “eNaira may be an alternative.” “A country like Kenya has used similar platform and you can actually be in Kenya for 6 months and not touch Shillings, the local currency, due to the success of Mpesa. Aside tracking funds, it boosts cashless policy and reduce huge budget on printing paper money.

“But let’s put sentiments aside.” “I thank you very much but we all need to support digital payments in this country.”

Maikudi: “How do we control the amount of cash in circulation when most people are hungry and there is inflation. A lot of people don’t have money. The money they are talking about is in the hands of a few people. Money is not equitably distributed. I think this government needs to get its economic policies right. The stress is too much. The other day, I could not collect my clothes from the laundry because Point of Sale (POS) machine wasn’t working and I had no cash on me. Then, suddenly someone is saying that I can’t withdraw more than N20,000 daily. Is the money not my money? Policies are meant to solve problems, not to inflict pain on the people.

“Money agents say the policy is to kick them out of business. In my opinion, this policy is not timely at all. The banks are currently experiencing serious network challenges, especially with their Internet Banking and App. This I learnt is largely due to the fact the banks’ IT/ICT Talents have been lost to “japa economy”. “Queues are fast rising in the banking halls even the Customer Service officers are frustrated with this.”

“Now people will start to pile up their cash withdrawal at home for fear of queues, and internet banking failures, etc. Because when you remember how long it took you to get cash, you won’t want to take it to the bank again.” Let’s not talk about the stress. Yet, we want financial inclusion.”

“We still have a large percentage of the population who are not yet familiar with e-banking specifically in the villages. I believe it would be reviewed and probably reversed after election.“

“The policy would have been okay, if these challenges are not currently existing.”

“Considering the maximum withdrawal limit perday of N20,000 from ATM and POS, imagine you have to fill up your tank at say N12,000 using POS at the filling station, does it mean that you only have max of N8,000 to make do with through out the day, using electronic medium?“ “I think the term “Compelling circumstances” needs to be defined – and the condition “once in a month” can be likened to the governement playing God. This is what it looks like to me.”

Owonikoko: “You are only focusing on withdrawals – money in your pocket. CBN is saying, everything should be cashless. You can still do all your transactions but electronically. Now, financial services provider will need to upgrade their technology and existing channels to accommodate the influx coming on the hill of the policy.”

“I don’t think POS payments and ATM withdrawals will be merged. Part of the essence is to further drive cashless policy as such. POS is not a cash transaction but ATM is.”

Maikudi: “I don’t know why CBN likes complicating issues for the common man.” What about those in the rural areas where there is network failure most times? Why is the CBN always trying to trample on our human right?”

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“What is the CBN really saying? Is the CBN saying that a near cashless society is what we need as a people to the freedom and privacy that go with a cash-based economy? After all I work very hard for my money. I should exercise the freedom to spend my money the way I like. This cashless policy is a bunkum to my mind.

Owonikoko: “Calm down my friend. Let me ask you a question. Who owns the naira?“

“Tell me now, who owns the naira?” “I am sure you don’t know!”

“The government of the Federal Republic of Nigeria owns the naira“

“Let me educate you briefly on the CBN cash withdrawal limit policy to the best of my knowledge….

“We are already practising it in our daily transactions. It will not affect either small or large businesses. This policy will enable us change our spending pattern. Will the cashless policy significantly reduce inflation? We have to wait for the reaction of the economy. Mind you, the cashless policy is a monetary policy. But what is the corresponding fiscal policy to match this cashless policy?”

“Anyway, this CBN cashless policy and the new naira notes will not disrupt our daily transactions. It will help track cash for ransom, drug money and other illicit transactions. It will stop kidnappers from demanding for cash ransom which cannot be traced and other illegal cash transactions.”

Maikudi: “Ah, Prof! You’re speaking as if you are now the CBN governor?” Anyway, the House of Rep members have invited the CBN governor in line with the CBN Act to brief the lower chamber about the activities of the apex bank in recent time. All said, let’s keep our fingers crossed and hope for the best. On this matter, I shall return. Thank you, Prof.