The recent policy by the Central Bank of Nigeria (CBN) on cash management, which is expected to have come into effect on January 1, 2026, has multifaceted implications for the payment system and the conduct of monetary policy by the apex bank. This policy, which is a revision of the 2022 cash policy under the Godwin Emefiele-led CBN, has removed all limits and fees on cash deposits, and thus probably aimed at averting the imbroglio that prevailed in the period preceding the 2023 Presidential elections when Nigerians went through what could be described as some sort of “hell” in carrying out their daily transactions.

It is hoped that the current CBN under the leadership of Yemi Cardoso did thorough homework before coming up with this position, which invariably appears to have more questions than answers in its implementations and effects.

Under the rules of this revised cash policy, individuals can now withdraw up to N500,000 weekly, while corporate bodies can withdraw up to N5 million. The new policy also indicates that withdrawals above these thresholds will attract a 3 per cent fee for individuals and 5 per cent for corporate institutions, shared between the CBN (40 per cent) and the financial institution (60 per cent).

In the same vein, the CBN had further indicated that these limits also apply to Automated Teller Machine (ATM) withdrawals, which are capped at N100,000 daily and N500,000 weekly and with the proviso that all naira denominations may now be loaded into ATMs and that the N100,000 cap on cashing third-party cheques across the counter remains which will now count toward a customer’s weekly withdrawal total. According to the CBN, in its circular on the issue, “the decision to overhaul its cash-related policies is driven by the need to reduce the rising cost of managing physical currency, bolster security around cash movements, and curb money laundering by encouraging greater use of electronic payment channels”.

While this may sound attractive, the facts on the ground do not suggest that revising the existing cash policy would be able to achieve all these, as stated in the CBN Circular. There are issues that need to be further evaluated. First, the CBN appears to be reneging on its responsibility of dispensing cash using the ATM system. The CBN needs to ask the basic question as to how many ATMs are functioning well across the country. The blame for the poor functioning of ATMs across the country must be shared between the CBN and the deposit money banks, with the bulk of the blame going to the CBN as the apex regulatory body in the country’s financial system.

This poor functioning of the ATMs has led to the booming of the Point-of-Sale (POS) business in the country, which has leveraged on the inefficiencies in the system to expand its operations nationwide. Many Nigerians currently rely on POS operators for their cash needs for daily transactions. That is clearly an indictment of the CBN and the deposit money banks. What the CBN should have preoccupied itself with would have been enhancing the optimal functioning of the ATMs across the country, to at least save the ordinary Nigerian from paying unnecessary charges to the POS system as they withdraw cash for their daily use.

Second, has the CBN considered the security implications of this policy in this era of increasing insecurity in the country? Government is currently considered by many, including stakeholders outside the country, to have performed below par in the provision of safety and security for the generality of Nigerians. In this regard, increasing the cash withdrawal limit may actually be an incentive for the “bad boys” to increase the tempo of their activities and thus worsen the state of insecurity for the ordinary Nigerian, especially those at the lower rungs of society. That should be an area of concern.

The removal of the limits on cash deposits and withdrawals will also require extra investments by the deposit money banks in cash management, which may partially divert their attention from the core banking services, which the ordinary customer may be more interested in. In fact, some banks are even following the cashless payment route within their system, such that their need to invest more in cash management services may not be appreciated.

In this regard, the new policy may actually be working against the cashless policy of the CBN, which had received a major boost over the years, starting from the CBN administration under Sanusi Lamido Sanusi. On the other hand, the benefits of this revised policy may actually be of less significance to medium-sized enterprises and large corporations, which have consistently, over the years, migrated to the cashless mode in their payments for transactions, given the huge amounts involved in their dealings with banks. Only the micro and small-sized enterprises may have some reprieve from the policy, a situation which could have been better addressed by the existence of a well-functioning ATM cash dispensing system.

Another question that may run through the minds of many Nigerians is whether this new cash policy has anything to do with the 2027 General elections. The risk of this new cash policy enhancing vote buying is there to be considered. A situation of providing for higher cash limits provides an easier avenue for political actors to withdraw large sums of money for vote buying and other forms of undocumented, off-the-books election expenditures.

Finally, the policy could be counterproductive in relation to the promotion of cashless policy and financial inclusion, where owning bank accounts at the rural level helps the CBN to better monitor the demand and supply of money across the country and help assess the strength of the non-bank public in the economy. Is this policy not going to work against financial inclusion in the country, as many micro businesses may opt to stay away from the banking system as much as they can to avoid bank charges that come with operating bank accounts, such as stamp duties, maintenance fees, among a plethora of bank charges that have become a thorn in the flesh of many bank customers.

The policy has its merits in relation to bringing the economy back to the pre-2022 era, but challenges exist and as articulated above, these appear to be many. The policy could be counterproductive in relation to the promotion of cashless policy and financial inclusion, where owning bank accounts at the rural level helps the CBN to better monitor the demand and supply of money across the country and help assess the strength of the non-banking public in the economy.