Naijahood
Recent developments in the financial sector indicate that despite the Central Bank of Nigeria’s (CBN) efforts to alleviate the cash crunch by suspending charges for cash withdrawals above regulatory limits, the scarcity of currency notes in banks nationwide persists, even post the Yuletide season.
According to findings by Financial Vanguard, banks across the country continue to limit cash withdrawals in their branches and through Automated Teller Machines (ATMs). Concurrently, Point of Sale (PoS) operators have seized the opportunity to increase transaction fees by at least 100%.
Despite the CBN’s suspension of charges for withdrawals exceeding regulatory limits (N500,000 for individuals and N3 million for corporate account holders until April 30), banks are still imposing withdrawal limits below the statutory thresholds. The apex bank has warned of sanctions against banks and PoS operators contributing to the Naira notes scarcity crisis, urging the public to report any infractions.
Ongoing scarcity was evident during checks in Abuja and Lagos. In Abuja, most commercial banks set across-the-counter withdrawal limits between N10,000 and N40,000. Some ATMs were devoid of cash, forcing customers to adhere to restricted withdrawals. Similar situations unfolded in various areas of Lagos, with long queues forming inside and outside banks due to the absence of cash in ATMs. Frustrated customers, after waiting for hours, were often limited to withdrawals of only N10,000.
The shortage is attributed to insufficient cash supply, leading to rationing by banks and dissatisfaction among customers seeking weekend withdrawals. The challenge persists despite the CBN’s measures to ease the situation, emphasizing the need for continued vigilance and reporting of hoarding or malpractices by financial institutions.
Similarly, patrons were observed lining up at various banks in Ejigbo and surrounding areas seeking cash, as the ATMs were devoid of currency.
Several branches of banks in the Amuwo Odofin region lacked physical cash available over the counter, while those that did imposed withdrawal limits ranging from N5,000 to N10,000 per customer, regardless of their account type.
Exploring the Trade Fair axis in Lagos State revealed a shared frustration among customers, with banks in the area implementing diverse strategies to address the issue.
Financial Vanguard also uncovered that some previously non-functional ATMs at new-generation banks around Abule Ado are now operational, albeit with varying withdrawal limits for both customers and non-customers.
A visit to a second-generation bank at Trade Fair Lagos disclosed that non-customers could withdraw up to N40,000 from the bank’s ATM in batches of N10,000, while customers were allowed withdrawals of N40,000 in batches of N20,000.
However, at another second-generation bank in the same vicinity, non-customers were limited to maximum N5,000 withdrawals in batches of N1,000, with applicable charges. In contrast, at the counter, customers could withdraw up to N40,000, with an anonymous bank official mentioning the possibility of higher withdrawals depending on the account type.
Customer Reactions:
Expressing frustration, an anonymous customer in Lagos stated, “There is no cash anywhere. I have been queuing for several hours and can only get N10,000. It is not sufficient for my family’s needs at this time.”
Another customer in Ikeja, Lagos, identified as Bola, complained about the difficulty of obtaining cash, saying, “I first went to one of them, but I could only withdraw N4,000. I just noticed that another one is paying N20,000, and I decided to go there, but I could not withdraw because they said that I have exceeded my limit for the day.”
Addressing the issue of Naira scarcity and withdrawal limits, Mohammed Sule at the Federal Housing, Lugbe, in FCT said, “You can see here for yourself, at the three ATMs long queues are a common sight while some others were empty due to unavailability of cash.”
Banks’ Responses:
A Corporate Affairs Manager of a bank acknowledged the scarcity of Naira, attributing it to various factors such as people hoarding cash at home instead of depositing it in the bank, hindering the free flow of currency.
The Head of Corporate Affairs of a first-generation bank emphasized the importance of customers adopting diverse ways of meeting their financial needs, promoting digital payment methods to maintain efficiency and prevent potential cash shortages.
A spokesperson from a new-generation bank in Lagos acknowledged the frustration of customers due to the current situation, expressing their commitment to making cash available, though the ultimate solution lies with the Central Bank of Nigeria (CBN).
Bankers in Abuja expressed differing views on the cause of the scarcity, with one attributing it to CBN’s cashless policy, while another urged the apex bank to increase the supply of Naira notes to alleviate the situation.
However, a counterargument was presented by Beatrice Ugo, a CBN staff, who refuted the bankers’ stance. She insisted that the ongoing scarcity of the Naira should not be solely attributed to the CBN but rather to commercial banks and PoS operators who hoard Naira notes.
Ugo advocated for a thorough investigation to uncover the underlying reasons behind the cash shortage in the Federal Capital Territory (FCT) and neighboring states.
A senior official from a second-generation bank shared insights, attributing the Naira hoarding to people’s reluctance to deposit money due to past experiences. The official explained that the decline in deposits has led to a situation where individuals prefer to hoard cash, fearing scarcity when needed. Additionally, the CBN has identified a substantial amount of money circulating outside the banking system, prompting efforts to control cash supply. Consequently, the bank is unable to fulfill the requested amounts, forcing institutions to ration and manage the available cash until the situation stabilizes.
In contrast, a perspective from PoS operators, represented by Angela Promise at Lugbe market, justified the imposition of high charges as a necessity for their business survival. She pointed out the difficulty in obtaining money from banks, with the maximum daily withdrawal limited to N20,000. This constraint has significantly impacted their profits, leading to increased charges for withdrawals: N200 for every N5,000, N400 for every N10,000, N500 for every N15,000, and N600 for every N20,000 withdrawal in the area. Promise emphasized that these high charges are essential for PoS operators to sustain their operations in the challenging financial environment.
She mentioned that acquiring money from banks has become challenging, with the daily withdrawal limit set at N20,000. Previously, she could make a daily profit of up to N10,000, but now she struggles to take home even N4,000. As a PoS operator in the area, she explained the exorbitant charges imposed, such as N200 for every N5,000 withdrawal, N400 for N10,000, N500 for N15,000, and N600 for N20,000.
Another individual expressed that the current cash scarcity appears to be a deliberate act of economic sabotage. Despite a substantial amount of currency in circulation (over N2.5 trillion), scarcity persists, raising suspicions of intentional interference. He urged the Central Bank of Nigeria (CBN) to investigate and identify those responsible for the scarcity.
The person highlighted the exploitation within the cash distribution chain, with some individuals, including bank staff, taking advantage of the scarcity to sell naira notes at a premium of 10% to 20%. This individual emphasized the need for the CBN and security agencies to curb this racket, emphasizing the importance of tracing cash movement within the banking system.
Concerns were raised about the disruption of business transactions, particularly in distributive trade, the informal sector, and intra-city transport due to the scarcity. The suggestion was made that if the situation persists, the CBN might need to consider printing more currency notes.
Clifford Egbomeade, Head of Corporate Communications at Private Sector Health Alliance of Nigeria, called for strict regulatory measures to curb the exploitative practices of PoS operators. He recommended immediate measures to boost naira liquidity in circulation, clear guidelines on acceptable charges, and stringent oversight to protect consumers from excessive financial burdens.
David Adonri, Executive Vice Chairman of Highcap Securities, dismissed the notion that banks are behind the cash scarcity. He emphasized the negative impact on the informal sector and urged the CBN to intervene urgently by adequately supplying smaller denominations.
Tajudeen Olayinka, Analyst and CEO of Wyoming Capital and Partners, suggested that the CBN investigate the cause of the problem. He speculated that the scarcity might result from insufficient cash in circulation due to the withdrawal of old notes and burning, possibly linked to hoarding ahead of a previous December 31st deadline. He expressed optimism that the issue would be resolved in due course.
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