The cash withdrawal regulation has reportedly caused a scramble of Nigerians to purchase U.S. dollars, as the Association of Bureaux De Change Operators of Nigeria (ABCON) said.
Maximum weekly OTC cash withdrawals for individuals and businesses were capped at N100,000 and N500,000, respectively, by the Central Bank of Nigeria on Tuesday.
This new regulation will go into force on January 9th, 2023.
President of ABCON Aminu Gwadabe told NewsXtra on Thursday that demand for the U.S. dollar has increased since the policy was revealed.
He said that the naira’s weakness to N750/$ on the Lagos black market was the result of dollar demand.
Gwadabe stated that the pressure on the local currency’s exchange rate is due to the cash withdrawal limit’s unanticipated implications. “One of the unintended consequences of the cash withdrawal limit is the return of public rush to substitute their naira to the greenback,” he said.
When asked how the new policy may affect the association’s members’ ability to make a living, Gwadabe expressed confidence that the BDC owners would continue to operate.
According to him, most BDCs have used mobile banking and other alternative payment methods long before the guideline was implemented.
Gwadabe explained, “ABCON, as a proactive organisation, has embraced digitalisation of our members’ business model and operations since 2016.”
“Several payment apps were designed in collaboration with the CBN, banks like RTGS, SAAZ MASTERS etc., to automate the official licenced BDCs exchange payment method.
“In view of our business vulnerabilities to cash transactions to arm robberies and other predicated crimes, we have always collaborated with the apex bank to mobilise our members in embracing cashless policy since its inception.
“Honestly, there is a lot of influx of online naira payments in exchange for cash dollars in all the major cities of Nigeria even before the new naira redesign policy of the CBN.
“Ironically and painfully, the licenced BDCs are losing to the new practice mostly controlled by ungoverned operators due to their incapacitation due to inhibitive policies.”
The President of ABCON also voiced concern that the policy would negatively affect people who do not have access to financial services because they do not have a bank account.
Nonetheless, “we can not underline the role of the traditional cash base structure of our economy as over 40 million Nigerians are unbanked,” Gwadabe said.
“The limit on cash withdrawal will discourage the use of cash but is insufficient to address the challenges inherent in the cash base sub-sector.
“The CBN needs to embark on a lot of sensitisation and stakeholders collaboration to achieve effective results.”