Nigeria is taking drastic steps to push digital forms of payment, including its own central bank digital currency. This includes dramatically slashing the withdrawal limit on ATMs.

On Tuesday, the Central Bank of Nigeria (CBN) issued a directive reducing the amount of money Nigerians can withdraw daily from ATMs.

Nigerians can now withdraw just ₦20,000, or about $45, from their accounts per day. Weekly withdrawals are capped at ₦100,000 ($225) for individuals and ₦500,000 ($1,125) for corporations.

Individuals that want to withdraw cash beyond the capped limit will be hit by a 5% fee. For businesses, the fee will be even higher, at 10%.

The CBN noted that this measure is part of an effort to promote the use of digital payments in the country. These include Nigeria’s Central Bank Digital Currency (CBDC) – eNaira.

“Customers should be encouraged to use alternative channels (Internet banking, mobile banking apps, USSD, cards/POS, eNaira, etc.) to conduct their banking transactions," CNB's director of banking supervision Haruna Mustafa said.

Nigeria has been pushing the public to use its CBDC eNaira, with mixed results. Only one in 200 Nigerians currently use eNaira. Earlier, CBN issued other forms of incentives to users. This includes a 5% discount for drivers and passengers of the country’s motorized rickshaws.

Still, the CBN continues to push eNaira as it is an important element of its strategy to promote digital payments. Authorities say that embracing digital payments would reduce corruption, boost financial inclusion, and facilitate remittances.

Nigeria is the most populous country in Africa. However, a large segment of its population has no access to a bank account. Moreover, Nigeria has a large informal economy, meaning a significant proportion of financial transactions goes unreported. If eNaira becomes mainstream, it could expand the country’s tax base.

In October 2021, oil-rich Nigeria became the first country in Africa to launch its own CBDC. It is still one of the few countries that launched its CBDC on a national scale. The only other nations to do so are The Bahamas, Jamaica, and eight island countries in the Lesser Antilles.

With an estimated 211 million inhabitants, Nigeria is the most populous country in Africa and the continent’s largest economy. The nation’s embrace of digital payments could be a catalyst for other countries to follow suit and launch their own CBDCs.