Nigeria stops cash withdrawals from government accounts – Economics

From early March, Nigerian officials will be banned from withdrawing cash from government bank accounts, the head of Nigeria's Financial Intelligence Unit reportedly said. Officials who wish to be exempted from this new regulation must obtain an exemption from the Nigerian Presidency.

Government employees vulnerable to money laundering

Nigerian government employees will be banned from withdrawing cash from government accounts from March 1, said Modibbo R. Hamman Tukur, the head of Nigeria's Financial Intelligence Unit (NFIU). The new rule, which reportedly applies to federal, local and state officials, is aimed at combating high levels of corruption and money laundering in government.

Also a Reuters Report said the new rule comes in line with the Nigerian government's aim to achieve a cashless economy. The report also quotes Tukur explaining the reasons behind this decision. He said:

Officials are becoming increasingly vulnerable to money laundering and its predicate crimes as they are exposed to cash withdrawals from public accounts.

To support Tukur's claims, the report said an analysis by the NFIU - an autonomous unit within the Central Bank of Nigeria (CBN) - showed that officials withdrew cash equivalent to $2.45 billion from government accounts between 2015 and 2022. Most withdrawals were above set limits, the report added.

The draft for CBN's new payment system

Meanwhile, Tukur said officials must seek an exemption from the presidency in cases where cash is needed. However, this can only be granted “in individual cases”.

In his recent revealed The Nigeria Payments System Vision 2025 document aims to “have a cashless and efficient electronic payment system” that supports financial services across all sectors by 2025, according to the CBN. To achieve this, the CBN has instituted a series of reforms, including designing new issue naira banknotes and phasing out old ones.

The CBN also has imposed Cash withdrawal limits for both businesses and individuals. Recently also the bank allegedly Banks ordered to stop over-the-counter cash withdrawals of the new banknotes.

In addition to limiting the use of cash, the CBN is also trying to encourage the use of its struggling central bank digital currency. Despite the various steps taken to make the CBDC attractive to users, Bitcoin.com News reported in October 2022 that many Nigerians had not accepted this.

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Terence Zimwara

Terence Zimwara is an award-winning journalist, author and writer from Zimbabwe. He has written extensively about the economic struggles of some African countries, as well as how digital currencies can provide an escape route for Africans.

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