The presidential candidate of the African Democratic Congress (ADC), Dumebi Kachikwu, has faulted the Central Bank of Nigeria (CBN) on its recent policy on cash withdrawal limits, accusing it of using cosmetic measures to address economic failure.
This was made known by Kachikwu while appearing on a Channels Television programme, Politics Today, on Monday night.
More on the accusation: Kachikwu alleged that the CBN introduced this new cash withdrawal limit in its cashless policy to prevent possible bank-runs which could lead to panic in the financial system and subsequently a total collapse of the economy. Kachukwu said:
- “Unfortunately, what is happening is that we are using cosmetic measures to address the failings in our economy, instead of tackling it head-on and coming up with solutions that will ginger (and) bring back our economy to life.’’
The presidential candidate drew a connection between the policy and an instance of widely circulated “fake news” alleging that the United States government was withdrawing dollars in circulation in Africa because of corruption and politicians.
As a result, according to him, the bureaux de change in the country stopped collecting dollars.
- “That’s why the naira seemed to appreciate for a period of time. It’s not gotten back to the N800 and above since then. What was happening prior to this? There was a run on the banks; we had a lot of the middle class taking out their money from deposit money banks and they were leaving Nigeria.
No more trust: Speaking further, Kachukwu claimed that Nigerians no longer trust the economy. He said:
- “People didn’t have any trust in the economy anymore and people were taking out their money, buying foreign exchange, and leaving Nigeria in droves. So, what the CBN has done is what you call ‘wag the dog’ – essentially do something to distract the attention of the people from what the real issues are.
- “They don’t want a run on the banks because a run on the banks will lead to panic in the financial system, and it will lead to a total collapse of the economy, which is why they have come up with this policy. And what does it do? It restricts you from taking your money out of the banking system, which is reversing what was going on.’’
Going further, Kachikwu in his analysis said that the CBN policy is similar to the ones in Greece, Lebanon, Zimbabwe, and Venezuela, among others. According to him, when economies are failing, central banks restrict access to money.
- “The annoying thing for me is when you attribute it to politics, people storing money in their vaults, vote-buying, and what have you,” he said. “I’m not saying that does not exist – that exists. But do you know what it means to store N5 billion or N10 billion or to even move N100 million in cash? The volume of that money? The bullion vans required to move that?”
For catch-up: Recall that on December 6, 2022, the CBN in a new circular placed limits on over-the-counter cash withdrawals, Automated Teller Machine (ATM) withdrawals, and point of sale (PoS) withdrawals.
- The apex bank in a memo directed all banks and other financial institutions to ensure that over-the-counter cash withdrawals by individuals and corporate entities do not exceed N100,000 and N500, 000, respectively, per week.
- It also directed that only N200 and lower denominations should be loaded into banks’ ATMs.
- After the policy takes effect on January 9, 2023, across the country, all cash withdrawals above the stated limits will attract processing fees of 5% and 10%, respectively.
- The policy has, however, received both praises and knocks from Nigerians and different interest groups with critics suggesting that the full implementation of this initiative will stifle micro and small businesses.
