Nigeria’s Cash Policy Shift: A Pragmatic Response or a Sign of Uncertainty?

The Central Bank of Nigeria (CBN) has once again tweaked its cash policy, and the implications warrant a closer look. As of January 1, 2026, the CBN scrapped cash deposit limits for bank customers. It also maintained weekly withdrawal ceilings. In a nutshell, you can deposit as much cash as you want, but taking it out is another story. This comes via a circular signed by Dr. Rita Sike, Director of Financial Policy and Regulation.

This isn’t the first time the CBN has adjusted its cash management strategy. I remember back in 2019, the push for a cashless society included charging fees for large cash deposits and withdrawals. The stated goals were to reduce cash in circulation and boost government revenue. It started selectively, then was meant to expand nationwide.

Then, in late 2023, those charges on large cash deposits were suspended. Now, they’re gone altogether. Yet, the weekly withdrawal limits remain: N500,000 for individuals and N5 million for corporate bodies. Exceeding those limits triggers fees – 3% for individuals, 5% for corporations – shared between the CBN and the bank. The previous system for special monthly withdrawal approvals is also gone. You will also need to remember daily ATM limits are N100,000, and a weekly N500,000 limit.

What does this all mean?

On the surface, removing deposit limits seems customer-friendly. People can freely deposit their money without incurring extra costs. It acknowledges the reality that cash still plays a significant role in the Nigerian economy, especially in the informal sector. Still, the CBN’s intent is important. They justify the changes as a response to “present-day realities.” Perhaps, this reflects the CBN accepting that a completely cashless society isn’t achievable in the near term.

However, maintaining strict withdrawal limits suggests the CBN isn’t abandoning its cashless ambitions entirely. Consider this: controlling withdrawals allows the CBN to influence money supply and track financial flows. The fees on excessive withdrawals can still serve as a deterrent, nudging people towards electronic transactions.

There’s also the issue of compliance and infrastructure. Enforcing withdrawal limits requires banks to invest in monitoring systems. The CBN needs to oversee these systems to ensure compliance. If you ask me, a robust digital infrastructure and reliable connectivity are critical for a successful cashless transition. Without them, these policies become more of a burden than a benefit.

It’s worth noting some exemptions remain – such as government revenue accounts, microfinance banks, and primary mortgage banks. But significantly, the exemption for embassies, diplomatic missions, and aid agencies is now off the table. This signals a move toward greater financial oversight across all sectors, but its full impact remains to be seen.

Now, while the CBN presents this as a streamlined approach, I can’t help but wonder about the message it sends. Frequent policy changes can create uncertainty and erode public trust. Will people feel confident putting their money in the bank if the rules keep shifting? This challenge needs to be addressed.

The CBN also requires banks to report cash deposit and withdrawal transactions above the limits. This strengthens financial monitoring, but it will put a further burden on bank staff.

Given these facts, a balanced perspective is necessary. The policy change is not a complete reversal, but an adjustment. It acknowledges the persistent role of cash, while retaining controls aimed at promoting electronic transactions. The question is, will it work? Time will tell whether this latest iteration of the CBN’s cash policy achieves its intended goals or if it’s just another step in a long, winding road.

From my experience, policies like these often have unintended consequences. People find ways to circumvent the rules, which can lead to new challenges for regulators. The CBN has to remain vigilant and adapt its strategies as needed.

In any case, the removal of cash deposit limits offers some convenience. Yet, the continued restrictions on withdrawals suggest a cautious approach. The apex bank needs to foster a stable and predictable financial environment. This will encourage people to embrace digital transactions without feeling like they’re being forced into it. That’s the real key to a successful transition.