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Nigeria's central bank announced that it would lower the weekly cash withdrawals limit for individuals starting next month in an attempt to promote the "cashless Nigeria policy" and encourage the use of eNaira, Nigeria's Central Bank Digital Currency (CBDC).

The new withdrawal limits will come into effect on Jan. 9, as per a letter issued by the director of supervision Haruna Mustapha, Central Bank of Nigeria.

The CBN's new withdrawal limit allows individuals and companies to only withdraw $45 (N20,000) per day and $225 (N100,000) per week from ATMs, according to the letter issued on Tuesday.

Withdrawals above limits will incur a 5% fee for individuals and a 10% fee for businesses. The maximum cash withdrawal via point-of-sale terminals is also capped at $45 (N20,000) per day. For example, if someone withdrew $45 from an ATM and then tried to withdraw cash from a bank on the same day, they would be charged a 5% service fee.

Corporates will only be allowed to withdraw up to 500,000 nairas per week, a sharp decrease from the previous limit of 3 million nairas daily, as per the new limits.

However, in highly persuasive cases, individuals and businesses can respectively withdraw up to 5 million and 10 million nairas per month, according to CBN director of supervision Haruna Mustapha.

The new policy is coming barely weeks after The Central Bank of Nigeria (CBN) announced that it will be issuing newly designed N200, N500, and N1000 banknotes.

More than a year after its launch, the uptake of the eNaira - Africa's first Central Bank Digital Currency (CBDC) - remains low. According to Bloomberg, less than 0.5% of Nigeria's 211 million population is using the eNaira digital wallet.

To encourage widespread adoption of the eNaira, the CBN recently offered a 5% discount to Keke NAPEP (tricycle taxi) customers for using the CBDC as payment.

Nigeria's cashless policy was designed to address some of the issues associated with physical cash, including the high cost and corruption specifically.

Furthermore, Nigerian authorities since long been trying to eliminate the use of cash in informal markets, as most Nigerians do not have a bank account. Officials are also seeking to end the practice of paying ransoms to armed gangs who kidnap people and demand millions of naira in cash.