The Nigerian government has introduced restrictions to limit the amount of cash people can withdraw, Bloomberg reports. The aim would be to discourage cash and increase the use of the digital eNaira as adoption has been disappointing so far. However, Nigerians seem more interested in Bitcoin.
On Tuesday, the Nigerian central bank announced the restrictions. Nigerian citizens are now allowed to withdraw a maximum of 20,000 naira (+/- €45) in cash per day. Previously, the maximum per day was five times as high.
There is also a weekly limit of 100,000 naira (+/- €245) for individuals and 500,000 naira (+/- €1225) for businesses. Above this amount, additional costs of 5% and 10% respectively will be charged.
The aim would be to discourage the use of cash and encourage digital payment methods such as eNaira. It is also the digital currencynamed by the Nigerian government. This does not apply to the restrictions.
“Customers should be encouraged to use alternative channels (Internet Banking, Mobile Banking Apps, USSD, Debit Card/POS, eNaira etc.) to conduct their banking transactions”said Director of Banking Supervision Haruna Mustafa.
So far, eNaira adoption has been disappointing with less than 0.5% of Nigerians using it.
This is perhaps not very surprising. After all, the digital eNaira is as vulnerable to inflation as the cash naira. And while cash offers privacy and security, the digital eNaira provides the opposite: the government has total control and can freeze accounts, confiscate funds and lock individuals out. It is not an improvement in many ways and apparently not desirable to many Nigerians.
Bitcoin is much more popular among the population. For years, Nigeria has led the rankings in Bitcoin adoption on the African continent.
This is noteworthy because in Nigeria it is prohibited by law for companies to have anything to do with Bitcoin or other cryptocurrencies. Companies may not facilitate transactions or trade in cryptocurrencies. In addition, banks are required to suspend services and close bank accounts if it appears that companies or individuals are involved in transactions with Bitcoin or other cryptocurrencies.
Despite this, the adoption of Bitcoin is booming. Blockchain analytics firm Chainalysis ranks the country 11th in Bitcoin adoption, and according to Google Trends, only El Salvador is more likely to search for “bitcoin” than Nigeria.
Finder research estimates that 26% of the Nigerian population owns a cryptocurrency, and according to Statista, that percentage is as high as 32%. Bitcoin is by far the most popular choice. That’s tens of thousands of millions of people out of a total population of 211 million.
on peer to peer trading platform Paful, Nigeria is now even the largest market in the world. This platform allows buyers and sellers to connect and transact directly with each other. Peer-to-peer trading in Nigeria has always been significant, but since the ban, the market has grown by another 27%.
Nigerian politicians also know that a ban does not work in practice. “It’s good to ban because of the challenges it brings, but in reality a ban won’t make it go away”Senator Tokunbo Abiru said last year.
Two years ago, Bitcoin also played a role in Nigeria during the #EndSARS protests. The special police unit Special Anti-Robbery Squad (SARS) was guilty of extortion, torture and even extrajudicial executions.
Protesters took to the streets under the #EndSARS banner. They demanded justice; among other things, that the SARS unit was disbanded.
To quell the protests, the bank accounts of The Feminist Coalition, one of the organizers of the protests, were frozen. Thanks to Bitcoin, the organization was able to continue fundraising.
Bitcoin is relatively popular in Africa – check out our other articles!