In a challenging turn of events, Point of Sale (PoS) operators find themselves reverting to the practice of purchasing cash from traders and petrol station attendants, signaling a growing scarcity of naira cash in banks.
The shortage has led to an increase in transaction charges by some operators, with fees spiking by 100 percent from N100 to N200 for cash transactions amounting to N5,000.
The scarcity of cash in banks has become a pressing issue, affecting various regions, including Surulere, Mushin, Kirikiri, Mazamaza, and Ejigbo in Lagos.
Some banks are visibly rationing naira cash to customers, exacerbating the challenge for those seeking to withdraw their money.
The scarcity, attributed to hoarding and a lack of cash releases by the Central Bank of Nigeria (CBN), has left customers frustrated and struggling to access their funds.
One customer, who preferred to remain anonymous, highlighted the difficulty of withdrawing substantial amounts, citing experiences at multiple banks in the Onipanu area.
The situation has become particularly concerning as the Christmas season approaches, with heightened demand for cash.
Despite reassurances from the CBN about the sufficiency of currency notes for economic activities, the ongoing cash scarcity continues to impact various sectors.
Some customers have reported being unable to withdraw amounts as low as N200,000 from multiple banks, illustrating the severity of the situation.
The scarcity has prompted PoS operators to adapt to the circumstances by returning to cash purchases from traders.
The ripple effects of this shortage have also manifested in the form of increased transaction charges, placing an additional financial burden on end-users.
Kelechi Godwin, a customer of Access Bank, reported a contrasting experience, stating the ease of withdrawing any desired amount from the bank at the Trade Fair.
However, this seems to be an exception, as reports of cash shortages persist, with Automated Teller Machines (ATMs) at certain locations unable to dispense cash.
The CBN, acknowledging the concerns of Nigerians, attributes the cash scarcity to high-volume withdrawals from CBN branches by Deposit Money Banks (DMBs) and panic withdrawals by customers from ATMs.
The CBN emphasizes the availability of sufficient currency notes for economic activities, urging the public to guard against panic withdrawals.
Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, raises questions about the root cause of the problem, suggesting a disruption in the supply chain.
Despite the Supreme Court’s order allowing old and new naira notes to coexist indefinitely, the reasons behind the cash hoarding remain unclear.
Damilare Akinlotan, an investment and equities analyst, acknowledges the potential short-term effects of the scarcity.
While the majority of point-of-sale transactions were settled in cash as of May 2023, Akinlotan anticipates an increase in the adoption of digital payment channels and potential economic contractions if the scarcity persists.
In response to the situation, the CBN has directed all deposit money banks to issue and accept old and redesigned naira banknotes.
This move, following the Supreme Court’s order, aims to extend the use of old naira banknotes indefinitely.
While this directive seeks to address the legal aspects of currency use, the cash scarcity issue continues to pose challenges to various economic stakeholders, requiring sustained efforts to ensure financial stability and accessibility.
