The Central Bank of Nigeria (CBN) has unveiled yet another cashless policy, ostensibly designed to rein in currency circulation and promote electronic transactions. This time, the target is agent banking, with restrictions capping Point of Sale (PoS) transactions at N1.2 million daily, coupled with cash withdrawal limits of N500,000 weekly and N100,000 daily. It is a measure reminiscent of the CBN’s 2022 cashless policy, whose fallout severely disrupted economic activity and compounded hardship across the nation.

“Punitive caps and stricter oversight may curb cash hoarding in the short term, but they risk undermining financial inclusion and alienating those most dependent on cash transactions.”

The intent may seem laudable: reduce dependency on cash, curb hoarding, and enhance financial inclusion through digital channels. Yet, the execution raises fundamental questions about the CBN’s grasp of Nigeria’s socio-economic realities. For a country where 36 percent of adults remain unbanked and rural areas are heavily reliant on cash, imposing blanket restrictions without addressing underlying infrastructure and systemic inefficiencies risks repeating past failures.

When the CBN implemented similar restrictions in late 2022, the results were catastrophic. Daily withdrawal caps of N20,000 left millions of Nigerians scrambling for cash, crippling informal businesses, and leaving rural communities in despair. Currency in circulation plummeted from N3.23 trillion in September 2022 to N982.1 billion in February 2023, a decrease achieved at the expense of economic functionality. While cashless transactions surged by 44.84 percent in the first quarter of 2023, the country paid a heavy price: long queues at ATMs, extortionate PoS fees, and a population pushed to the brink of economic paralysis.

One might expect that the lessons of 2022 would inform the CBN’s strategy. Instead, the apex bank appears determined to double down, this time tightening the noose on PoS agents—essential intermediaries for millions of Nigerians without easy access to formal banking. The argument that these agents are making cash shortages worse by conspiring with market traders or hoarding cash appears to be a simple way to sidestep the true problem, which is that a cashless system cannot succeed in the absence of the fundamental infrastructure needed to sustain it.

The new restrictions come at a time when currency in circulation has soared to an all-time high of N4.5 trillion, reflecting a stark disconnect between policy ambition and economic reality. The CBN has cited the need to align agent banking with its cashless vision, but this rationale overlooks the critical role PoS agents play in bridging the gap between Nigeria’s formal and informal economies. Punitive caps and stricter oversight may curb cash hoarding in the short term, but they risk undermining financial inclusion and alienating those most dependent on cash transactions.

Indeed, Nigeria’s reliance on cash is not a matter of choice but necessity. Unreliable internet access, patchy mobile network coverage, and frequent transaction failures make digital payments an unreliable alternative for millions. Forcing a transition to electronic payments without addressing these structural issues risks compounding economic inequality. The wealthy may seamlessly adapt, but small businesses, market traders, and rural dwellers will bear the brunt of the upheaval.

The policy also underscores a troubling trend: a fixation on controlling cash circulation as a panacea for deeper economic challenges. Nigeria’s liquidity crisis is not merely a function of excess cash; it is a reflection of broader fiscal mismanagement, inflationary pressures, and public mistrust in formal banking systems. Addressing these root causes requires more than imposing transaction limits—it demands a coherent economic strategy that fosters stability, trust, and inclusivity.

The CBN’s vision of a cashless Nigeria by 2025, driven by a “mobile-first generation,” may be aspirational, but it is not grounded in the current realities of the Nigerian economy. Rather than enforcing draconian restrictions, the central bank should prioritise building the digital infrastructure needed to support a cashless economy. This includes expanding internet connectivity, enhancing the reliability of digital payment systems, and addressing the exorbitant transaction fees that deter adoption.

Furthermore, financial literacy campaigns and targeted incentives could encourage a gradual transition to electronic payments without alienating cash-dependent communities. Collaboration with stakeholders, including PoS operators, fintech companies, and rural cooperatives, will be essential in crafting a policy framework that balances ambition with pragmatism.

The CBN must also confront the perception that its policies disproportionately burden the economically vulnerable while sparing the privileged. This perception arises from the fact that many of these policies, while aimed at modernising the economy, have unintended consequences for those who rely heavily on cash, such as small businesses, market traders, and rural communities.

Transparent communication and evidence-based policymaking are critical to rebuilding public trust and ensuring that the central bank’s interventions are seen as solutions rather than disruptions. The CBN should proactively engage with stakeholders, including representatives from these vulnerable groups, to gather feedback and address their concerns.

If the CBN truly seeks to lead Nigeria into a cashless future, it must abandon its punitive approach and adopt one of partnership and inclusivity. This shift requires a fundamental change in mindset, recognising that a truly inclusive cashless society can only be achieved through collaboration and understanding. Only then can the central bank foster a financial ecosystem that serves the needs of all Nigerians, from urban professionals to rural traders. This includes providing financial literacy programmes, expanding access to affordable and reliable internet connectivity, and supporting the development of innovative fintech solutions that cater to the specific needs of underserved communities.

Anything less risks entrenching economic hardship and widening the very inequalities it seeks to address. The CBN has a crucial role to play in ensuring that the benefits of a cashless economy are shared by all and that no one is left behind in this digital transition.