ACF cautions on Implementation of cash withdrawal limit, says it may result in collapse of informal sector


The Arewa Consultative Forum (ACF), has warned that the implementation of the cash withdrawal limit by the Central Bank of Nigeria (CBN), will result in the catastrophic collapse of the informal sector.
In a statement on Friday in Kaduna, the forum said the CBN may have the best of intentions while initiating the policy, but failed to consider its extreme consequences on the informal sector.
The statement signed by the Secretary General of the forum, Murtala Aliyu, noted that the CBN anticipated cashless payments, slated to commence in January, 2023, is well justified, stressing that cash based economies are notoriously costly, inefficient and prone to attacks by evil people.
According to the forum, “A huge amount of time and money is needed to print the currency and a lot more still to steer it through the system. “The currency notes themselves have a shelf life after which they have to be replaced. Cash is the lifeblood of the underworld: difficult to trace and quite convenient for terrorists, money launderers, smugglers, vote buyers, etc.
“So, yes, the less cash available for all these criminals as the CBN is trying to achieve, the better for law abiding citizens.
“That said, we do need to remember that the road to hell is paved with good intentions.
CBN officials may have the best of intentions while contemplating this policy but evidently failed to consider the unintended consequences of implementing it in the way they have planned; consequences that may be extremely grave”.
Aliyu said, “If the CBN insists on implementing this wholly unrealistic policy of restricting individual’s cash withdrawal from the banks to N20,000 per day and N100,000 for a week or N500,000 in the case of corporate bodies, it won’t be long before we suffer a catastrophic collapse of the informal sector of the economy.
“More than anyone, CBN knows that transactions in commodity markets especially in the rural areas are entirely cashbased.
“The villager that brings to the market his chickens, beans, onions, goat or cows does not typically have a bank account or internet skills”.
The forum maintained that “cash remains the overwhelming medium of exchange for much of the country particularly in the North.
“This should surprise no one as bank offices are largely unavailable even for people who are keen and have the skills to use them.
“Even by the CBN’s reports, over 38 million adults in Nigeria do not currently have access to banking services with ‘women, rural dwellers, Micro-Small and Medium-Sized Enterprises and Northern Nigeria’ being among the most disproportionately excluded.
“And despite its pious pretensions, it is on record that the CBN under the present management, apparently out of desire to safeguard the interests of the commercial banks, has done much to undermine and stifle the progress of financial inclusion in Nigeria.
“Thanks to the decisions taken by the CBN, Nigeria today, despite its size, has the dubious record of having the lowest financial penetration in all of Africa, perhaps in the world.”
The ACF said under the circumstances, “the CBN will do itself and the country a world of good if it invests more efforts at addressing these challenges.”
The forum urged the CBN to ensure the establishment of sufficient financial institutions in all parts of the country.
“It should allow a level playing field for a wide range of financial providers and encourage partnerships between them.
“Furthermore, the CBN must enforce strict regulations that protects people’s money. It must inform, encourage and prepare the public adequately for the transition.
“Until the CBN is able to address these challenges substantially, a preemptive move or a ‘frog-jump’ into a cashless payments system, however well intentioned, will only land us into a bottomless pit.”


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