Despite the Central Bank of Nigeria’s efforts to alleviate a cash crunch by temporarily waiving charges for cash withdrawals beyond regulatory limits, a continuous scarcity of currency notes has persisted across banks nationwide.
This shortage remained prevalent even after the conclusion of the Yuletide season.
Financial Vanguard’s investigation uncovered that banks nationwide persist in rationing cash withdrawals in their branches and through Automated Teller Machines (ATMs). Concurrently, Point of Sale (PoS) operators have exploited the situation, increasing transaction fees by no less than 100%.
Recall that the CBN recently suspended charges for cash withdrawals exceeding the regulatory limits of N500,000 for individuals and N3 million for corporate account holders. However, despite this directive, banks continue to restrict customers’ withdrawals to amounts well below the established statutory limits.
The apex bank previously announced that the suspension of charges would extend until April 30 this year, accompanied by a warning of sanctions against banks and Point of Sale (PoS) operators involved in the ongoing Naira notes scarcity crisis.
In an official statement, the central bank encouraged the public to report any infractions, particularly instances of Naira notes hoarding by banks and PoS operators in their respective areas.
Reports can be submitted to the nearest branch of the apex bank or through the provided link: https://forms.office.com/r/frZJ0f2hFQ, which facilitates the addressing of complaints and inquiries on this matter.
Scarcity persists
During a check conducted by Financial Vanguard in Abuja on Friday, it was observed that across-the-counter withdrawal limits in most commercial banks varied from N10,000 to N20,000, with the highest being N40,000.
In two first-generation banks in Area 7 and 8, Garki, where ATMs lacked cash, across-the-counter withdrawals were capped at N20,000.
Meanwhile, second-generation banks in the same area displayed empty ATMs, and across-the-counter withdrawals were restricted to below N10,000 and below N20,000 in respective branches.
Additionally, in two new-generation banks in the same vicinity, although ATMs were dispensing cash, customers using other banks’ ATM cards were limited to a maximum of N5,000 per transaction, with only two transactions allowed per card.
An official from one of the new-generation banks attributed the rationing to insufficient cash supply, stating, “We have not received enough cash.”
The cash shortage issue extends across the Lagos metropolis, affecting areas such as Ketu, Mile 12, Amuwo Odofin, Surulere, Trade Fair axis, and other environs. In these locations, ATMs in all banks, including first-generation, second-generation, and new-generation banks, were not loaded with cash for customer withdrawals.
This led to long queues inside and outside banking halls as customers sought to withdraw money for the weekend, with many expressing dissatisfaction as they could only obtain N10,000 each after waiting for several hours.
Similar scenes unfolded in Ejigbo and surrounding areas, where customers queued at numerous banks due to empty ATMs.
In some Amuwo Odofin branches, there was no cash available over the counter, and those that did had imposed withdrawal limits ranging between N5,000 and N10,000 per customer, irrespective of whether the account was individual or corporate.
Checks around the Trade Fair axis in Lagos State revealed the same frustration by customers as banks in that area adopted different strategies to tackle the situation.
Also, Financial Vanguard discovered that some of the new generation banks around Abule Ado that, hitherto, were not loading their Automated Teller Machines (ATM) at the twilight of 2023 due to the scarcity now load the machines though they set different withdrawal limits for customers and non-customers.
A visit to a second-generation bank at Trade Fair Lagos showed that non-customers of the bank can 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 N40,000 in batches of N20,000.
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.
Customers react
A customer in Lagos, who pleaded anonymity, said: “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.”
Expressing frustration over the challenge of obtaining cash at a second-generation bank in Ikeja, Lagos, a customer named Bola remarked, “My visit to a bank to make a withdrawal did not yield results.
“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.
“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, Mohammed Sule, at the Federal Housing, Lugbe, in FCT, speaking on the same issue of Naira scarcity and withdrawal limit, told Financial Vanguard: “You can see here for yourself, at the three ATMs long queues is 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.”
Banks’ reactions
Reacting to the situation, a Corporate Affairs Manager of a bank that spoke to Financial Vanguard on condition of anonymity, said: “Yes, we agree that Naira is not enough to give out to customers. 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.”
Also commenting, one of the first-generation bank’s Head of Corporate Affairs said: “Each bank and their branches have its 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 the adoption of digital payments to maintain efficiency and prevent potential cash shortages.”
Another new generation bank’s spokesperson in Lagos said: “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.”
A banker in Abuja, speaking to Financial Vanguard about the ongoing scarcity, linked the issue to the Central Bank of Nigeria’s cashless policy. However, the banker expressed surprise at the extent of the scarcity, noting that it is significantly impacting people’s lives.
Another banker in Abuja placed the blame for the Naira scarcity on the CBN and appealed to the apex bank’s management to increase the circulation of Naira notes in banks.
But a CBN staff, Beatrice Ugo, countered the bankers’ position, saying: “That 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 who spoke with our correspondent said 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.
“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,” she said.
PoS operators’ perspective
However, one of the POS operators who spoke to Financial Vanguard, Angela Promise, at Lugbe market, justified the high charges, saying that they had to do so to remain in business.
She said, “To get money now from banks is not easy; the highest one can withdraw from a bank today is N20,000 per day. Before, I used to make as much as 10,000 profit per day, but today, I hardly go home with N4,000.”“For instance, we PoS operators charge as high as N200 for every N5,000 withdrawal, N400 for every N10,000, N500 for every N15,000 and N600 for every N20,000 withdrawal in this area,” she added.
In response, another PoS operator in Surulere, Lagos, Ayo Gbenga, said: “Bank customers are patronising us now because cash is not available in the banks. We buy cash elsewhere, so we have to make gains to remain in business. I charged moderately depending as I buy. So I charge N200 for N5,000 and N400 for N10,000. I don’t give a single person more than N10,000 so that it can go round.”
Economy Experts react
Commenting on the biting Naira scarcity, Former Director General of the Lagos Chamber of Commerce and Industry (LCCI) and CEO, Centre for the Promotion of Private Enterprise (CPPE), Muda Yusuf, said it is a case of economic sabotage, arguing that there is no basis for scarcity with currency in circulation at N2.5 trillion.
He, therefore, called on the CBN and the security agencies to put a stop to what he described as racketeering in the banking system.
His words: “The current cash scarcity is a case of economic sabotage. Currency-in-circulation, 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.
“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?
“Already some elements in the cash distribution chain, including bank staff, are taking advantage of the scarcity to sell naira notes at between 10% to 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.”
He lamented that business transactions are already being disrupted, especially in the distributive trade sector, the informal sector and the intra-city transport sector due to the scarcity.
He stated that if the situation persists, it would not be out of place for the CBN to print more currency notes.
Strict regulatory measures needed to curb exploitation by POS operators – Clifford Egbomeade
Clifford Egbomeade, Head, Corporate Communications at Private Sector Health Alliance of Nigeria (PSHAN), stated that the exploitative behaviours of POS operators, who cash in on the situation to impose high charges on transactions, underscore the urgency for regulatory intervention to curb the exploitative practices and alleviate the financial burden on Nigerians.
“To address this pressing issue, the CBN should consider immediate measures to boost Naira liquidity in circulation. Enhancing liquidity by increasing the currency supply to financial institutions could alleviate scarcity and mitigate the challenges faced by consumers in accessing cash.
“Simultaneously, strict regulatory measures need to be imposed to curb the exploitative behaviour of POS operators. Clear guidelines on acceptable charges and stringent oversight can prevent the unreasonable imposition of fees on transactions, protecting consumers from excessive financial burdens.
“In the long term, the CBN should foster a concerted effort to promote digital payments and reduce reliance on physical cash. Encouraging the adoption of electronic transactions and mobile banking can help create a more efficient and resilient financial ecosystem, reducing the strain caused by Naira scarcity.
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“Collaborating with stakeholders and implementing both short-term interventions and sustainable long-term strategies is pivotal to alleviate the scarcity of Naira and ensure financial stability for the Nigerian population,” he said.