Business

Cashless Policy: CBN Lists Next Moves

Published

3 years ago

December 29, 2022

Amidst early gains from the recently launched twin policy on cashless economy, the Central Bank of Nigeria, CBN, has kick-started some key steps towards consolidating the policy measures.

The twin policy is anchored on the Naira redesign and establishment of new limits on cash withdrawal from banks, all geared towards effective monetary policy and security environment while taming corruption.

Meanwhile the apex bank has also indicated that the policy has recorded some achievements setting the base for the new reinforcements.

The key steps includes the commencement of a nationwide stakeholder engagement and sensitization to promote understanding of the cashless policy, particularly in rural areas, markets and underserved communities across the six geopolitical zones of the country.

The apex bank, in conjunction with Bankers Committee and Share Agents Network Expansion Facility, SANEF, is also strengthening the Agent Network Capacity by intensifying agent rollouts across the country (especially underserved locations) and enhance Agents’ ability to carry out a wider variety of financial services in addition to 12 Classified as Confidential cash-in and cash-out (electronic card distribution, wallet/account opening, BVN onboarding, bills payment, etc).

A geospatial map of available financial access points is also being completed and the apex bank said it shall be made public to inform all stakeholders of the locations of physical and electronic financial access points where they can process transactions electronically.

The CBN promised to continue to be flexible in its implementation of cashless policy and monitor its impact especially on vulnerable segments of the society but ensure the multiple advantages are achieved.

In response to the Naira redesign policy banks’ vaults have recorded about N190 billion inflow as Currency Outside Banks, COB, fell by 6.7 per cent month-on-month in November to N2.64 trillion from N2.83 trillion in November 2022.

The N2.64 trillion COB in November represents the lowest in 12 months since October 2021.

Further reflecting the impact of the CBN cashless policy, currency-in-circulation (CIC) similarly fell month-on-month (MoM) by 4.0 percent, to N3.16 trillion in November from N3.29 trillion.

Recall that the CBN Governor, Mr. Godwin Emefiele, on October 26, announced the redesigning of the naira notes in denomination of N200, N500 and N1,000 in October, citing persisting concerns with the management of the current series of banknotes among other things.

Consequently, the CBN directed that bank customers must deposit the old notes by January 31st when they will cease to be legal tender, while the new notes were released into circulation on December 15th.

According to Emefiele, one of the challenges primarily include: significant hoarding of banknotes by members of the public, with statistics showing that over 80 percent of currency in circulation are outside the vaults of commercial banks.

He said as at the end of September 2022, available data at the CBN indicate that N2.73 trillion out of the N3.23 trillion currency in circulation was outside the vaults of commercial banks across the country.

Achievements of cashless policy

Meanwhile the CBN Deputy Governor, Financial System Stability, Mrs Aisha Ahmed, has reeled out the achievements of the cashless policy since its first phase in 2012 to date.

Addressing the national Assembly on the twin policies last week Ahmed stated: ‘‘The implementation of the cashless policy was a critical element that catalyzed the transformation being witnessed in the Nigerian financial and payments system.’’

She listed some of the key achievements to include: Expansion in financial access points (ATM, PoS, Agents and mCash); Proliferation of e-payment Platforms; Growth in electronic channels adoption; Enhancement financial inclusion; International Recognition of Nigeria’s Payment System & growth in vibrant fintech ecosystem; Positive impact on GDP; and Financial resilience of citizens during COVID.

On the revised cash withdrawal limit, she noted that the CBN is not unmindful of the concerns raised in response to the new limits and would remain flexible to make the necessary adjustments to ensure wider public acceptance of the policy.

This, according to her necessitated the upward reviewe of the cash withdrawal limits to N500,000 weekly for individuals (from N100,000) and N5,000,000 weekly for corporates (from N500,000).

Furthermore, the applicable charges above the limit have been reduced to 3% and 5% respectively. Mobile money agents who provide cash-in cash-out services in rural areas have also been recognized and provided for in the revised guidelines.

Justifications for the cash limits

The CBN has explained that it carried out in-depth analysis of over-the-counter intra-bank cash transactions over 12 months (November 2021- October 2022) to assess the impact of the policy on the generality of citizens.

The outcome showed that a significant value of cash transactions was below the maximum thresholds indicated under the extant cashless policy and were thus not subject to the cash processing charges. It also showed that 94.04% and 62.63% respectively of volume and value of cash transactions by individuals were below the threshold while 82.36% and 39.38% of the volume and value of cash transactions by corporates was below the threshold.

Other outcomes are as follows: Transactions at agent locations are also below the thresholds. For instance, 99% of cash withdrawals at agent locations are below N300,000, average cash out transaction size per individual is N18,000, whilst average cash withdrawals by agents is between N1,000,000 and N2,150,000.

The proliferation of financial access touch points and e-payment channels across urban and rural areas which presents citizens with ample alternative for financial transactions further justifies the nationwide implementation of the policy. 6,500 branches of banks and other financial institutions, 1.4million agent locations, 900,000 POS and 14,000 ATMs.

Meanwhile, Ahmed had also noted that the twin policies were in compliance with best practice. She stated: ‘‘The Policy is in line with the CBN’s quest to adopt international best practices and international conventions, especially in view of recent reputational damage with some Nigerians perpetuating advance fee fraud’’.

She added that the policies fall within the statutory responsibilities of the Central Bank, saying, ‘‘The CBN’s mandates and responsibilities under the CBN Act 2007 as amended empowers it to promote a sound and stable financial system and credible efficient payment system- Section 2d, Section 47 of the CBN Act and the policies were issued pursuant to these legal provisions. The actions are well within this mandate.’’

Misconceptions on the policies

Addressing the many misconceptions of the Naira Redesign and Cash-less Policy, Ahmed stated: ‘‘Currency denominations of N5, N10, N20, N50, and N100 remain legal tender, are unaffected by the Naira redesign policy and are available for use across the country including at markets in rural areas and informal sector of the economy.

‘‘There are currently no processing fees applied to cash deposits. Unlimited amounts can be deposited without charge, to enable seamless and unrestricted deposit of any notes affected by the currency redesign.

‘‘The processing fees on cash withdrawals are not new as these have been in place in Lagos, since 2012, and in five other Cash-less states and FCT, since July 2013.

‘‘The charge applies on the excess over the prescribed limit only not on the entire transaction amount. For instance, withdrawal of ₦550,000 by individual- fee is excess over N500,000 limit (i.e. ₦50,000x 3%= ₦1,500); Withdrawal of ₦6,000,000 by a corporate- fee is excess over N5,000,000 limit (i.e. ₦1,000,000 x 5%= ₦50,000).

‘‘The Policy does not prohibit cash transactions above the prescribed limits. Such transaction shall attract the processing fees to serve as incentive for account owners to embrace more efficient electronic payment channels.

‘‘The policy applies nationwide in recognition of the plethora of financial touch-points that are available in all the States of the Federation’’.

Benefits of cashless

CBN had listed the benefits of the implementation of full cashless policy to include:

· Building on the successes already recorded which have been highlighted in 3.0 above. Benefits include:

• Reduction of cost of cash management (processing, movement, security, destruction of old notes) which is often passed on indirectly to Nigerians including eliminating the physical risk of cash – robbery, kidnapping, terrorism!

• Promote Nigeria’s positive reputation for fighting money laundering and terrorist financing. Cash limits are recognized in Anti Money Laundering Laws due to its role in advancing these illegal activities.

• Reduction in incidences of crime – armed robbery, kidnapping, terrorism financing, advance fee fraud, graft, ransom payment and extortions. etc.

• Deepening the Nigerian payment system through more innovation and cheaper costs

• Financial inclusion – the route to scaling financial inclusion is through electronic channels. Mobile phone penetration in Nigeria is 152m (according to NCC). EFINA survey shows that 81% of Nigerians excluded have mobile phones

• USSD helps to overcome the need for internet connectivity to smart phones

• Economic opportunities for small businesses & rural communities to facilitate trade and improve livelihoods, thereby boosting economic growth

• More effective transmission of monetary policies

• Overall growth, development and stability of the financial system

VANGUARD

Business

Naira Records Highest Depreciation Against US Dollar

Published

1 day ago

January 10, 2026

Editor

The Naira recorded the highest depreciation against the United States dollar at the official foreign exchange on Friday to end the week on a negative note.

Central Bank of Nigeria data showed that the Naira extended its dip on Friday to N1,423.17 against the dollar, down from N1,419.72 traded on Thursday.

This represents a N3.45 depreciation against the dollar on a day-to-day basis, the highest in the week under review and in 2026 so far.

Meanwhile, at the black market, the naira remained at N1,490 per dollar on Friday, the same rate recorded on Thursday.

In the other week, the Naira recorded three gains and two losses against the US dollar and other currencies.

The development comes amid the continued rise in the country’s external reserves, which hit $45.67 billion as of January 8, 2026.

Business

KPMG Flags Five Major ‘Errors’ In Nigerian Tax Laws

Published

2 days ago

January 9, 2026

Editor

Fresh apprehension has surfaced over Nigeria’s newly implemented tax framework after KPMG Nigeria highlighted what it described as “errors, inconsistencies, gaps, and omissions” in the new tax laws that took effect on January 1, 2026. The professional services firm in a recent statement cautioned that failure to address these issues could weaken the overall objectives of the tax reforms.

Nigeria’s tax overhaul is built around four major legislations: the Nigeinpieces of legislation:ria Tax Act (NTA), the Nigeria Tax Administration Act (NTAA), the Nigeria Revenue Service (NRS) Establishment Act, and the Joint Revenue Board (JRB) Establishment Act. The laws were signed by President Bola Ahmed Tinubu in June 2025 and formally commenced in 2026. However, the reforms have continued to attract controversy since they were first introduced in October 2024.

Despite the concerns, government officials have consistently described the reforms as essential to improving Nigeria’s low tax-to-GDP ratio and modernisingpieces of legislation:modernizing the country’s tax system in line with evolving economic conditions.

In a detailed review, KPMG outlined several areas of concern.

Capital gains, inflation modernizing inflation and market response

KPMG flagged Sections 39 and 40 of the Nigeria Tax Act, which require capital gains to be calculated as the difference between sale proceeds and the tax-written-down value of assets, without adjusting for inflation. According to the firm, this approach is problematic given Nigeria’s prolonged high-inflation environment.

Data from the National Bureau of Statistics shows that headline inflation has remained in double digits for eight consecutive years, averaging over 18 percent between 2022 and 2025. Over the same period, asset prices have been significantly influenced by currency depreciation and general price increases.

Market data also reflects investor sensitivity to tax policy changes. Although the NGX All-Share Index gained more than 50 percent over the year and market capitalisation inflation,capitalization approached N99.4 trillion, equities experienced sharp sell-offs in late 2025. In November alone, market value reportedly declined by about N6.5 trillion amid uncertainty surrounding the new capital gains tax regime.

KPMG warned that taxing nominal gains in such an environment could result in investors paying tax on inflation-driven increases rather than real economic gains. The firm recommended introducing a cost indexation mechanism to adjust asset values for inflation, noting that this would reduce distortions while still enabling the government to earn revenue from genuine capital appreciation.

Indirect transfers and foreign investment concerns

Attention was also drawn to Section 47 of the Nigeria Tax Act, which subjects gains from indirect transfers by non-residents to Nigerian tax where the transactions affect ownership of Nigerian companies or assets.

This provision comes at a time of subdued foreign investment. Figures from the United Nations Conference on Trade and Development indicate that foreign direct investment inflows into Nigeria remain below pre-2019 levels, reflecting ongoing investor caution.

While similar rules exist in other countries, KPMG noted that they are often supported by detailed guidance and clear thresholds. The firm advised Nigerian tax authorities to issue comprehensive administrative guidelines to clarify scope, thresholds,capitalizationthresholds, and reporting obligations inorder to reduce disputes and limit potential negative effects on foreign investment.

Foreign exchange deductions and business impact

Another issue identified relates to Section 24 of the Act, which restricts businesses from deducting foreign-currencyforeign currency expenses beyond their naira equivalent at the official Central Bank of Nigeria exchange rate.

In reality, limited access to official foreign exchange forces many companies to source FX at higher parallel market rates. Under the current rule, the additional cost becomes non-deductible, effectively increasing taxable profits and overall tax liabilities.

KPMG observed that although the provision aims to discourage FX speculation, it does not adequately reflect supply constraints. The firm recommended allowing deductions based on actual costs incurred, provided transactions are properly documented, to avoid penalisingforeign currencypenalizing businesses for factors outside their control.

VAT-related expense disallowances

Section 21(p) of the Nigeria Tax Act also came under scrutiny for disallowing deductions on expenses where VAT was not charged, even if the costs were entirely business-related.

Given Nigeria’s large informal sector and persistent VAT compliance gaps, analysts argue that the rule unfairly shifts part of the VAT enforcement burden onto compliant taxpayers. KPMG advised that the provision be removed or significantly amended, stressing that expense deductibility should be based on whether costs were wholly and necessarily incurred for business, while VAT compliance should be enforced directly on defaulting suppliers.

Non-resident taxation uncertainties

KPMG further highlighted ambiguities around the compliance obligations of non-resident companies. While the Nigeria Tax Act recognizespenalizingrecognizes withholding tax as the finalthe final tax for certain nonresident payments in the absence of a permanent establishment or significant economic presence, the Nigeria Tax Administration Act does not clearly exempt such entities from registration and filing requirements.

Nigeria’s network of double taxation treaties, including agreements with the UK, South Africa, Canada, and France, generally supports the principle that final withholding tax extinguishes further obligations. Experts warn that inconsistencies between the laws could create uncertainty and discourage foreign participation.

KPMG recommended harmonizing the relevant provisions of the NTA and NTAA, with explicit exemptions for non-resident companies whose tax obligations have been fully settled through withholding tax. The firm noted that such alignment would ease compliance and enhance Nigeria’s appeal for cross-border transactions.

As Nigeria undertakes its most extensive tax reform in decades, KPMG concluded that the success of the overhaul will depend on clarity, consistency, and alignment with international best practices. Without timely amendments, businesses may face higher costs, foreign investors could remain cautious, and capital markets may continue to experience volatility.

Recall that KPMG concerns come after a lawmaker, Abdulsamman Dasuki, raised alarm over alleged alterations to the gazetted tax laws.
(DAILY POST)

Business

Naira Records First Depreciation Against US Dollar In 2026

Published

2 days ago

January 9, 2026

Editor

The Naira recorded its first depreciation against the United States dollar in the official foreign exchange market on Thursday, the first time in 2026 so far.

The Central Bank of Nigeria’s data showed that it weakened on Thursday after days of gains to N 1,419.72 per dollar, down from N 1,418.26 on Wednesday.

This means that for the first time this year, the Naira dipped by N1.46 against the dollar on a day-to-day basis.

Similarly, the Naira also depreciated by N10 at the black market to N1,490 on Thursday, down from the N1,480 recorded the previous day.

This comes despite the continued rise in the country’s foreign reserves to $45.64 billion as of Wednesday, 7th January 2026.

DAILY POST reports that the Naira recorded a seven-day bullish run at the official foreign exchange before Thursday’s decline.