By VERICASH Articles February 19, 2023

CBN’s War on Cash!

In October 2022, Nigerians were met with shocking news when a nationwide denomination change was announced by the Central Bank of Nigeria (CBN). Three of Nigeria’s higher denomination notes were to be replaced- 100 naira notes from brown to blue, 500 naira notes from purple to green, and 200 naira notes from brown and blue to pink.

The decision was driven by an alarmingly low percentage of the local currency in circulation. According to CBN’s latest reports, as low as 20% of the currency resides in the banks, with the rest hoarded at homes.

CBN Governor Godwin Emefiele attested that a whopping 2.7 trillion naira of the total 3.2 trillion in circulation is currently outside the vaults of Nigerian commercial banks. The age-old saying in Nigeria that most people’s savings are under their mattresses has come back to haunt the country.

Nigerians’ reaction to the cash swap crisis has been multiplied by another recent but, equally surprising announcement. The CBN has imposed stringent restrictions on the weekly cash withdrawal limits. The decision was introduced to limit the use of cash and, in turn, quell counterfeit and ransom payments and, push the adoption of digital currency.

The new policy by the CBN allows individuals to withdraw 100,000 naira weekly, a drastic cutback from the former limit of 2.5 million naira. This has invited widespread outrage among Nigerians overnight.

The After-Effects of CBN’s Cash on War

The cash crunch worsened as the extended deadline (February 10) to swap old cash with new ones inched closer. Large crowds swarmed outside ATMs and banking halls, impatiently counting down the hours till their turn. The situation worsened as most banks ran out of cash, compelling people to loiter endlessly at the ATMs across Ogun and Lagos metropolis. Many returned empty-handed, hoping against all odds that the deadline to swap cash is further extended. A circular later confirmed that there wasn’t to be any further extension.

Reports attest to a banker being assaulted on the way to work and banking halls and ATMs being destroyed. A former military personnel and security expert, Dr. Chinye Bone, who is also the managing director/chief executive of Strict Guards Security, stated that the widespread attacks on banks:

Is beginning to look like a national uprising, and Nigerian security agencies and the government should be concerned with what is going to end up becoming. It would have been better if they were open protests than these pockets of violence from branch to branch.



As the success of cash swap attempts go down, Nigerians increasingly believe that commercial banks have money but are intentionally hoarding it. People want back the money they had trustfully deposited in commercial banks over the years. Many have dragged CBN to court for the haphazard manner of the cash swap and the short notice.

Meanwhile, more than 10 registered Nigerian political parties taking part in the 2023 general elections have threatened to pull out of the race if the federal government and the CBN suspend or cancel the naira redesign policies, including the cash withdrawal limit.

A Move Towards Financial Digitalisation

The nation has veered towards limiting cash withdrawals due to the atrocious rates of the CBN digital currency adoption. How has digital currency fared in the face of these recent tribulations? Before this year, only 0.5% of Nigerians switched to the Central Bank Digital Currency (CBDC). With the recent decision to go cashless, FinTech apps are facing continual crashes.

Rise, the digital investment platform, stated:

Fifteen million Nigerian adults regularly engage in informal financial transactions, and in that sector, cash is king. This makes sense because, from entering danfo (minibusses) to buying suya (spicy meat kebabs) at night, many transactions don’t have an effective digital payment alternative.



The CBN has previously tried to push its digital currency in two ways, mirroring the strategies of the private bank sector. In August 2022, a change was introduced to CBDC eligibility rules to attract 55% of unbanked adults – Nigerians were no longer required to have a bank account to use CBDC. And , in October 2022, a 5% discount was offered for taxi payments to “discount the price” of CBDC.

The recent cash swap program and decrease in withdrawal limits are some of the few examples of legal barriers the government can leverage to “increase adoption”. People are gradually taking to online transfers, having faced a lack of options, just like the CBN intended. But the shaky CBDC infrastructure means transactions have been taking hours, with some not going through at all.

A Knight-Bagehot Fellow OF Business and Economics Journalism asks

Going cashless is good, but only when the digital payment and acceptance services are ubiquitous and reliable. Imagine this: your bank app fails, and you can’t withdraw more than ₦20,000 without going to the bank. How does this make sense?



Not only does the country pay more for data in general, but the Internet is also not stable enough for frequent financial transactions. FinTech apps like OPay, PalmPay, and PiggyVest are trying to push their digitized payment options. But the unimpressive scenario of internet usage and reliability has been stopping their efforts on the tracks. Critics believe the e-Naira will face a relatively slow adoption rate. This is because of the mass distrust in government institutions fuelled by the recent policy changes.

A survey by Google and AppsFlyer found a 33% increase in the use of FinTech apps in Nigeria. As for the CBDC, it has been and will remain a bone of contention for years to come. With a shaky digital infrastructure, an overnight shift to a cashless economy is a recipe for disaster.

How Can Nigeria Cope with the War on Cash?

One of the institutions that survived the ravages of the war on cash is the United Bank for Africa (UBA), whose services are built on the VeriCash digital banking platform. This evidences that the only way for the nation to maneuver its way out of the war on cash is to fortify its digital infrastructure. While Nigerians see no hope of the recent policy changes being withdrawn, the real roadblock is the lack of a well-regulated digital ecosystem.

The way forward seems to be a nationwide technological upscaling. Data needs to be affordable, the Internet reliable, and cashless payments swift. Nigeria has a long way to go in the digital domain. But the recent demonetization efforts will only dwindle the Nigerians’ faith in the government. There must be fool-proof digitalization drives established before the policy changes are implemented.

While the crisis is compelling many to adopt digital payments, the constrained circumstance in which the policy changes have been introduced is not welcome. This is fertile ground for FinTech apps and digital banking platforms to take over and make a difference, and as it stands right now, the change has already begun.

About CIT Vericash

CIT VERICASH is a division of CIT GLOBAL, an international leading provider of innovative eCommerce and mCommerce software solutions and services with solid expertise spanning 25 years, since its establishment in Toronto, Canada in 1993. By applying CIT Global’s dedicated centers of excellence and its specialized leading products, in cooperation with its strategic partners, the company has delivered innovative and award-winning solutions to its clients in more than 48 countries, serving leading brands from North America, Europe, Asia Pacific, the Middle East, and Africa.

CBN’s War on Cash!

The After-Effects of CBN’s Cash on War

A Move Towards Financial Digitalisation

How Can Nigeria Cope with the War on Cash?

About CIT Vericash

Resources