Unpleasant and harrowing experiences Nigerians went through in 2022 with liquid cash taking flight in banks’ vault and the streets are here again.
The cash shortage this time is coming at an excruciating moment when Nigerians are being dealt with by tough economic policies that ignite an unprecedented rise in prices of food items and essential commodities.
In the build-up to the last quarter of 2022, the Central Bank of Nigeria rolled out two policies: a new currency redesign and cashless policy.
The currency redesign policy was targeted to improve the naira’s credibility, improve monetary policy, and promote cashless transactions.
The redesigned new notes went into circulation on December 15, 2022. The apex bank’s cashless policy is not a new policy, though.
Its implementation had dragged, moving grudgingly at a snail’s speed. Towards the end of 2022 and early in the year of 2023, CBN throttled the cashless policy implementation.
The cashless policy aims to reduce the amount of physical cash in circulation and encourage more electronic transactions.
The policy applies to all accounts except for government revenue generation accounts, microfinance banks, primary mortgage institutions, and embassies.
Strikingly, there was convergence in the implementation of the two policies: redesigned naira policy and cashless.
Both happened at the same time, coinciding with the yuletide celebration season of 2022 and preparations for the May 2023 general elections.
The implementation of the two policies left Nigerians scrambling for the little cash available in the build-up to the yuletide season celebration of December 2022 and the May 2023 period for general elections.
Cash shortage resurfacing
This is 2024. The repeat of the cash drought of 2022 began subtle manifestation in early October 2024. The Automated Teller Machines (ATMs) domiciled within bank premises and designated points were left empty by banks.
The development endured unaddressed. Its contagious effect caught up with over-the-counter cash withdrawals. The rumor was that CBN was clandestinely working to phase-out old currency from circulation.
This was bandied as the reason for the cash shortage in the system. The bank refuted the claim in a statement by Acting Director of Corporate Communications, Mrs. Sidi Ali.
It dismissed speculation about the discontinuation of the old series of N200, N500, and N1,000 banknotes on December 31, 2024.
The bank referenced the Supreme Court’s order of November 29, 2023, which extended indefinitely the use of old naira banknotes. It said that the ruling remains unchanged.
In addition, CBN reiterated its directive to all branches to continue issuing and accepting all denominations of Nigerian banknotes, both old and redesigned, from deposit money banks (DMBs).
“The public is advised to disregard any suggestions that the old series of banknotes will cease to be legal tender. All Naira banknotes, regardless of their design, will continue to be accepted for daily transactions.
The CBN encouraged Nigerians to handle all banknotes with care to preserve their lifecycle.
Additionally, the public is urged to embrace alternative modes of payment, such as e-channels, to reduce reliance on physical cash,” the statement said.
By clarifying the status of the old naira banknotes and emphasising their continued legal tender status, the CBN aims to address any confusion and ensure a smooth transition within the payment system.
Similarly, the apex bank rose to action, noticing troubling signs from many parts of the country that the cash crunch, which had grounded the economy at the start of this year, was making a comeback as customers were finding it hard to get cash from banks.
Surveillance on DMBs
Not satisfied with cash scarcity in the system, the CBN announced measures to halt the cash drought. At the last Monetary Policy Committee (MPC) meeting, the CBN Governor, Olayemi Cardoso, frontally addressed the issue.
He said: “With respect to cash, we’re ensuring that all the Deposit Money Banks (DMBs) are getting all the cash they require. We’re ensuring that is happening.
We’re having regular dialogue between the central bank branches and the cash money central banks all over the place to ensure this is happening and that there are no gaps.
“We are also doing spot checks, and a lot is coming out of those spot checks. And we’re not relenting in applying sanctions where we have to do so. “I think some of that has actually been announced in the recent past. And of course, the cash buffers are going into the yuletide season. I be
Despite the threat of sanctions by CBN, no improvement in cash supply
ieve that you should expect that there may be some ad hoc measures that will come during this Christmas season. “I would just say you should watch that space. It will happen.
We are concerned. We do not want people to suffer unduly because of a number of distortions. I can’t talk about all of them here now, but a number of distortions, which we are working very hard to ensure we get on top of.
As you’ve rightly pointed out, we’re going into a typically highdemand season. “We will do what we can to ensure that certain initiatives are taken to bridge that tide until after the yuletide season.”
The apex bank went a step further when it was apparent the cash squeeze situation isn’t abating. It provided designated contacts for bank customers to report difficulties experienced with withdrawing cash over the counter or at automated teller machines (ATMs).
A circular to this effect was jointly signed by Solaja Olayemi, its act – ing director of currency operations, and Isa-Olatinwo Aisha, its Acting Director of Branch Operations. In the circular, CBN provided designated lines to help address customers’ challenges.
“Please refer to the various engagements and interventions from the Central Bank of Nigeria (CBN) on the above subject aimed at addressing efficient and optimal currency circulation in the economy.
“As part of these ongoing efforts, we would like to draw your attention to the following directives and guidelines: Deposit Money Banks (DMBs): DMBs are directed to ensure efficient cash disbursement to customers over the counter (OTC) and through ATMs as the CBN will intensify its oversight roles to enforce this directive and ensure compliance.
This will assist CBN in addressing issues hindering the availability of cash and further improve currency circulation,” the circular added.
The bank, in a detailed explanation, informed bank customers on how to report a bank branch or ATM not dispensing cash by providing them with the relevant details.
These include the account name/name of the DMB, amount, time, and date of incident(s), amongst others.
POS to the rescue
Amid a deepening cash crunch crippling the economy, Nigerians are at the mercy of point-of-sale (POS) operators. POS operators upped transaction charges by 100 per cent.
The situation elicited widespread groaning from mass Nigerians. Vice President, Senator Kashim Shettima, last week, called on the Central Bank of Nigeria and commercial banks to urgently address the growing concerns surrounding high and arbitrary charges imposed by point-of-sale operators, which he described as an impediment to financial inclusion in Nigeria.
Represented by the Special Adviser to the President on Economic Matters, Dr. Tope Fasua, he said this at the 2024 Annual Bankers’ Committee Retreat held on Friday in Abuja.
Shettima decried what he called the “moral hazard” and “adverse selection” issues associated with POS merchants who have been accused of exploiting customers with excessive transaction fees.
Many Nigerians have been complaining about the high POS charges, which have become a source of significant financial strain, especially during emergencies, VP said.
He, therefore, called for immediate regulatory action to curb such exploit – ative practices, urging the CBN and banks to step up efforts to ensure that POS charges are fair, transparent, and reasonable.
According to him, “we would want to take this opportunity to appeal strongly to the committee to urgently clear up thorny issues in the sector, some of which are impeding the efforts at financial and economic inclusion.
“Nigerians complain bitterly that they are unable to access even minimal cash when most needed. There seems to have been some moral hazard and adverse selection problems with the involvement of street-side PoS merchants.
Nigerians complain about high and arbitrary charges and exploitation by rogue agents, which we are sure you will be able to tackle with concerted efforts.”
Shettima pointed out that many of the major economic transactions in the country had been facilitated by banks, and their growth is directly linked to the wider economic progress.
No end in sight
Despite the threat of sanctions by CBN, no improvement in cash supply. A POS operator in Suleja, while sharing his experiences with this medium, lamented the situation. “I rely on filling stations to get cash.
They changed between N700 to N1000 for every N50,000 they give you. The situation is getting out of hand. If we manage to get it, you will also increase your charges. Is worse with the banks. The highest amount you get is N20K.
How do you cope?” he inquired. Another POS operator put the blame on the CBN, saying: “I went to my bank to get money. My account officer told me to forget the lies CBN told.
He said the truth is that commercial banks can’t give money CBN didn’t give them. He said while banks are channels for money supply, the source for money to circulation is CBN”.
Last line
Unless the CBN wields the big stick on erring commercial banks and takes drastic measures, Christmas celebration and the New Year season would be both rough and tough for the majority of Nigerians.
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