Fresh developments in the financial sector have shown that despite the Central Bank of Nigeria, CBN’s move to ameliorate the cash crunch situation by suspending charges for cash withdrawals above regulatory limits, scarcity of currency notes in the banks nationwide has continued to hit harder, even after the Yuletide season.

Findings by Financial Vanguard revealed that banks across the country have continued to ration cash withdrawals in the banking halls and through their Automated Teller Machines (ATMs) while Point of Sale Operators, PoS, operators, have taken advantage by hiking transaction fees by not less than 100%.

Recall that the CBN had recently suspended charges for cash withdrawals above the regulatory limits of N500,000 for individuals and N3 million for corporate account holders, nonetheless, banks still peg customers’ withdrawals far below the statutory limits.

The apex bank had said that the suspension of the charges will last till April 30 this year and threatened to sanction banks and PoS operators found to be complicit in the current Naira notes scarcity crisis.

The apex bank, in a statement, 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 complaints and inquiries on the subject.

Scarcity persists

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

Two first-generation banks in Area 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.

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 told Financial Vanguard that the rationing was because “we have not received enough cash”.

The situation is not any different across Lagos metropolis.

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.

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

Many were not happy as they were only able to get N10,000 each, after queuing for several hours.

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 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.

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.

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.”

While 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 have 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 digital payment adoption 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 who spoke to Financial Vanguard on this development, attributed the scarcity to CBN’s cashless policy but expressed surprise at the level of the scarcity which he said is making life miserable for people.

Yet another banker in Abuja blamed CBN for the Naira scarcity and pleaded with the management of the apex bank to flood the banks with Naira notes.

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 normalize,” 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.

According to her, “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.

Another PoS operator in Surulere, Lagos, Ayo Gbenga, in response to the situation, said: “Bank customers are patronising us now because cash is not available in the banks . We buy cash elsewhere so we have to make gain to remain in business .I charged moderately depending as I buy. So I charge N200 for N5,000, N400 for N10,000. I don’t give a single person more than N10,000 so that it can go round.

Economy Experts react

It’s a deliberate act of economic sabotage – Muda Yusuf

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 behavior 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.

“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.

Informal sector already feeling the bite – David Adonri

David Adonri, Executive Vice Chairman, Highcap Securities, who opined that the banks may not be behind the resurgence of cash scarcity, said that the informal sector, which supports the economy is already feeling the bite.

He said: “I don’t think the banks are behind the resurgence of cash scarcity. They may be acting on instructions beyond their control.

“Scarcity of cash in a cash economy, like Nigeria’s economy, is not something to condone. Its negative consequences are too numerous to mention. The informal sector which dominates the economy is feeling the heat seriously. Petty transactions that sustain petty traders and common people are getting eroded.

“As a matter of urgency, CBN should intervene by adequately supplying, especially, N50, N100 and N200 denominations,” Adonri said.

Also commenting on the Naira scarcity, Tajudeen Olayinka, Analyst and CEO, of Wyoming Capital and Partners, said: “Since it is not a programmed cash scarcity, the solution lies in CBN looking into the cause of the problem and dealing with it accordingly. I suspect the scarcity might be due to insufficient cash in circulation, arising from previous withdrawal of old notes and burning. It’s possible that some people decided to hoard cash ahead of the previous December 31st Deadline. I believe we will get out of it in due course.”

Udeme Akpan, Yinka Kolawole, Godwin Oritse Nkiruka Nnorom, Obas Esiedesa, Emmanuel Elebeke & Mariam Eko also contributed to this report. (Vanguard)

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