Earlier last week, the Central Bank of Nigeria issued a directive to banks and other financial institutions regarding its new policy on cash transactions.
This new directive which will reduce withdrawals at ATMs and POS terminals to N20,000 daily sparked nationwide debate amongst citizens in the country, and sis, I’m sure you’ve also heard about it.
Even though many have expressed their displeasure with this new reality, citing the difficulties it brings with it, it also has some advantages (especially to you as a business owner).
Today, I’ll be helping you understand some of the pros and cons of this new directive on the financial ecosystem and also your business as well.
Advantages of the new CBN directives
The first major advantage of this new directive is the potential it creates for small businesses to go digital. According to the world play global payment report, cash is used for 91% of in-store purchases in Nigeria.
Having said that, the limitation placed on cash transactions will force small businesses to embrace digital payments which in turn makes it easy to track daily sales and manage inventory easily.
In addition to saving time on data input and processing invoice paper, digital payments for small firms may help speed up those processes. Furthermore, it offers the business readily accessible financial documents for inclusion in loan applications.
Secondly, this directive ensures that the risk of money laundering is reduced. It’s no news that cash transactions are way harder to track than digital transactions, hence why criminals prefer it.
But now that the cash flow is limited and with the anti-money laundering activities put in place by financial regulators, financial institutions are able to highlight significant or unusual deposits, and legitimate bank accounts won’t be used to withdraw huge quantities of money for shady offline activities.
Thirdly, there will be an Increase in financial inclusion for underprivileged communities with this withdrawal limit, and many more Nigerians, especially the unbanked, will resort to transacting digitally.
This will make it easier for you as a business owner to sell to whoever, wherever, without worrying about cash.
Amazing right? Now let’s look at some of the cons that comes with this new directives
Disadvantages of the new CBN directives
It’s of no surprises that enforcing this policy would indeed bring some form of inconvenience, so here are 3 of the most significant cons of the cash withdrawal limit
- Potential inconvenience for individuals, businesses and organizations with high cash transaction needs
- Not enough infrastructure to support digital payments
- Potential of creation of a Naira black market
Conclusion
It is very important that as a business owner, you are aware of the monetary policies being introduced in the country, and also you’re kept abreast of how it affects you.
So sis, I hope you’re very well informed now.
Also, kindly note that this policy is slated to take off on January 9th 2023, so if I were you, I’ll start planning to ensure that you’re not caught unawares.
Does this policy affect your business in any way? If so, kindly share us.
