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Naira Scarcity: Consumers lament as cash crunch worsens, banks ration payments in economy

Photo Collage of Consumers in the Banking Hall and New Naira Notes

*The current cash crunch situation in Nigeria is a case of economic sabotage, say experts

Isola Moses | ConsumerConnect

Despite the Central Bank of Nigeria’s (CBN) recent assurances to ameliorate the cash crunch situation by suspending charges for cash withdrawals above regulatory limits, scarcity of the national currency notes in the banks has continued to hit harder, even after the Yuletide season.

Investigations revealed that Deposit Money Banks (DMBs) across the country have continued to ration cash withdrawals in the banking halls and through their Automated Teller Machines (ATMs).

Dr. Olayemi Cardoso, Governor of CBN

The Point of Sale Operators (PoS) operators also have taken advantage of the relative cash scarcity by increasing their transaction fees by not less than 100 percent, according to reports.

It is recalled that the CBN, in a move to ease the unease being generated in the economy over the cash crunch recently suspended charges for cash withdrawals above the regulatory limits of N500,000 for individuals and N3 million for corporate account holders.

However, checks indicated that several banks still peg customers’ withdrawals far below the banking regulatory limits.

The Bankers’ Bank also said that the suspension of the charges would last till April 30 this year.

The CBN equally noted it would sanction any banks and PoS operators found to be complicit in the current Naira scarcity saga.

The CBN, in a recent statement, further urged members of the public to report infractions, especially hoarding of Naira notes by banks and PoS operators, in their areas to the nearest branch of the apex bank or via the link: https://forms.office.com/r/frZJ0f2hFQ to address condumers’ complaints and inquiries on the subject.

As Naira scarcity persists in economy

Checks last Friday, in Abuja, FCT, showed that limits for across-the-counter withdrawals in most commercial banks ranged from N10,000 to N20,000 and the highest, N40,000.

Financial Vanguard report also said the two first-generation banks in Areas 7 and 8, Garki, while the ATMs were without cash, across-the-counter withdrawals were limited to N20,000.

In the same area, a check on second-generation banks branches also in the same area showed that the ATMs were empty while across-the-counter withdrawals were limited to below N10,000 and below N20,000 respectively, report stated.

Still in another two new-generation banks branches in the same area, while the ATMs were dispensing cash, customers with other banks’ ATM cards were limited to a maximum of N5, 000 per transaction and limited to only two transactions per card.

An official in the new generation bank was quoted to have said that the reported cash rationing in some banks is occasioned by the fact that “we have not received enough cash.”

Consumer experience in Lagos

Reports indicate the cash situation is not different the the Lagos metropolis.

For instance, in Ketu, Mile 12, Amuwo Odofin, Surulere, Trade Fair axis and other environs, all banks, including first generation, second generation and new generation banks did not load cash into their ATMs for customers to withdraw, report said

There were also long queues, stretching from inside the banking halls to outside as customers rushed to withdraw monies for the weekend.

In regard to the cash crunch, several consumers of financial products and services were not happy as they were only able to get N10,000 each, after queuing for several hours, according to report.

Similarly, customers were also seen queuing at many banks in Ejigbo and environs for cash as the ATMs were empty of cash.

Some of the bank branches the newspaper visited in Amuwo Odofin area had no cash available across the counter while those that had limited withdrawals to between N5,000 and N10,000 per customer, irrespective of whether the account was individual or corporate.

Likewise, checks around Trade Fair axis, in Lagos State, revealed the same frustration by customers as banks in that area adopted different strategies to tackle the situation.

It was also discovered that some of the new generation banks around Abule Ado, which hitherto, were not loading their Automated Teller Machines in the twilight of 2023 due to the scarcity, now load their machines though they set different withdrawal limits for customers and non-customers as it is the case in most places across Nigeria in recent times.

A visit to a second-generation bank at Trade Fair Lagos as well showed that non-customers of the bank could withdraw up to N40,000 from the bank’s ATM but in batches of N10,000, while customers of the bank are allowed withdrawals of total N40,000 in batches of N20,000 each.

At another second-generation bank located in the same area, the story was different as non-customers of the bank were allowed a maximum of N5,000 withdrawals in batches of N1,000, while the applicable charges still apply.

However, at the counter, the customers could withdraw as much as N40,000.

An official of the bank who pleaded anonymity told Financial Vanguard that customers can withdraw more than N40,000 across the counter depending on the type of account, report said.

No sufficient cash everywhere, say consumers

A customer in Lagos, who pleaded anonymity, related her experience: “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.”

Lamenting the difficulty to get cash at a second-generation bank located in Ikeja, Lagos, a customer, who identified herself as Bola, said: “My visit to a bank to make withdrawal did not yield result.

“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 had exceeded my limit for the day.”

Bola also noted: “I am even tired; I don’t know what to do with N4,000 and I cannot use the PoS because of their charges.

“If I knew that the second bank was paying N20,000 I shouldn’t have gone to the first one because here people who are not their customers can withdraw up to N20,000.”

Another customer simply identified as Mohammed Sule, at the Federal Housing, Lugbe, in FCT, spoke on the same issue of Naira scarcity and withdrawal limit.

Duke said: “You can see here for yourself at the three ATMs. Long queues are common sight while some others were empty due to unavailability of cash.

“Those who managed to make withdrawals were placed on the limit of N5,000 minimum and N20,000 maximum withdrawal.”

Why Nigerian banks say on cash scarcity crisis

Reacting to the situation, a Corporate Affairs Manager of a bank that spoke on condition of anonymity, disclosed “yes, we agree that Naira is not enough to give out to customers.”

He stated: “We can’t blame CBN too because it has been trying to see how to navigate this situation.

“Many reasons are causing the scarcity; the experiences and fear that people already had in the past made them keep the Naira at home instead of depositing it in the bank; so this ordinarily prevents the free flow of currency in circulation as the apex bank cannot continuously print new money.”

Commenting on the situation in their financial institution, one of the first-generation bank’s Head of Corporate Affairs also said: “Each bank and their branches have their way of dealing with the cash crunch, depending on the available cash to dispense.

“But, banks encourage customers to have diverse ways of meeting their needs and that is why they promote digital payment adoption to maintain efficiency and prevent potential cash shortages.”

Another new generation bank’s spokesperson, in Lagos, equally remarked: “Some customers show a lot of frustration as the current situation hinders daily financial operations and impacts the overall economy.

“But we will continue to do our best to make cash available to our customers, though it may not be enough until CBN can tackle the crisis.

“This is beyond our bank to address as we don’t have control over money supply.”

Nonetheless, a banker, in Abuja, while speaking on the cash crunch in the economy, attributed the scarcity to CBN’s cashless policy.

The banker yet expressed surprise at the level of the scarcity, which he said is making life miserable for people.

Still another bank official, in Abuja, reportedly blamed the banking sector regulator for the Naira scarcity.

He, therefore, urged the Management of the CBN to flood the banks with Naira notes.

CBN not to blame for Naira scarcity: Stakeholders

Beatrice Ugo, an official of the CBN, however countered the bankers’ position, saying, “the persistent Naira scarcity could not be put on the shoulder of CBN but commercial banks and PoS operators that hoard the Naira notes.”

She called for a probe of the situation to unravel the mystery behind the cash crunch in the FCT and other surrounding states.

A senior official of a second-generation bank as well commented, that people are simply hoarding the Naira due to the experience.

“What I can say is that we do not get as many deposits as we used to. People are hoarding money; they don’t want to bring the money to the bank and be faced with scarcity when they need it. That is what is happening.

“When we call some of our big customers that used to deposit huge sums of money, they tell us that they don’t want to risk running out of cash,” said the staff.

The banker, “CBN on its side has discovered that there is much money outside the banking system so they try to limit the cash supply.

“So, we are faced with a situation where deposits are not coming in and the CBN is not supplying as much as we request. In this situation, we try to ration and manage the little cash we have until things normalise.”

It is simply deliberate economic sabotage –Muda Yusuf

Commenting on the biting Naira scarcity, Dr. Muda Yusuf, Chief Executive Officer (CEO) of  the Centre for the Promotion of Private Enterprise (CPPE) and Director-General of the Lagos Chamber of Commerce and Industry (LCCI), said the situation  is simply a case of economic sabotage.

Dr. Yusuf contended that there is no basis for scarcity with currency in circulation at N2.5 trillion.

The expert also urged the CBN and the security agencies to put a stop to what he described as racketeering in the banking system.

“The current cash scarcity is a case of economic sabotage. Currency-in-Circulation (CIC), going by CBN data, is over N2.5 trillion, which is about what it was before the Naira redesign crisis.

“There is, therefore, no basis for scarcity, except if there is a deliberate act of sabotage,” he declared.

He also noted: “The CBN has a responsibility to investigate and identify those behind this.

“There is no compelling or rational argument to support the hoarding theory.

“We are not in an election season and there are no imminent nationwide elections at the moment. So, of what value will hoarding be for anyone?”

He disclosed “already, some elements in the cash distribution chain, including bank staff, are taking advantage of the scarcity to sell Naira notes at between 10% and 20% premium.

“The CBN and the security agencies must put an end to this racket.

“It should not be difficult to trace the movement of cash within the banking system.”

Yusuf lamented that business transactions are already being disrupted, especially in the distributive trade sector, the informal sector and the intra-city transport sector of the Nigerian economy due to the scarcity.

“If the situation persists, it would not be out of place for the CBN to print more currency notes,” he added.

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