KEY POINTS
- The cash scarcity is, however, worsening as banks have limited withdrawal as low as N5, 000.
- Bank customers go to POS operators; they raise fees.
- CBN bashed over cash crunch, Reps asks CBN to address cash crunch and improve cash distribution.
Nigeria’s cash scarcity has resurfaced further worsening economic hardship for citizens particularly with long queues at ATMs, setting cash withdrawal limits, with more frustrations at banking halls across the country.
In Lagos, Rivers, Abuja and Ebonyi, customers face strict cash limits of up to N50,000 while non customers also receive limits of up to N5,000.
While the Central Bank of Nigeria (CBN) itself is at the centre of the crisis, customers and lawmakers have accused it of failing to ensure adequate distribution of cash.
However, the directive by the CBN to the banks to disburse cash Over-the-Counter (OTC) and at the ATMs efficiently, many banks have kicked, claiming that they can’t meet customers’ demands because of the cash supply itself.
With national shortage, banks limit withdrawal
Most bank branches nationwide have set cash withdrawal limits varying between N5,000 and N20,000, a Vanguard investigation has revealed. Those who spoke with reporters said accessing cash — essential in a predominantly cash based economy had become so difficult.
The cash shortage was the result of limited money supply by CBN and decreased cash deposits from customers, they said. The cycle of cash scarcity gets the worse as customers begin to deposit cash with Point of sale (Pos) operators rather than with banks.
Customers at bank branches in the commercial city of Lagos could only withdraw between N10,000 and N40,000 a day. Some banks at Ikotun and Festac put ATM limits at N10,000 per total while OTC withdrawals were pegged at N10,000 to N20,000.” But then, even as little as N5,000 could go to non customers.
Public outrage and economic distress
The cash short has elicited rage from customers and business owners alike and also from the Point of Sale (POS) operators who will now have to pay higher fee to access it. In other states, the problem is exacerbated as bank officials are accused of hoarding cash.
A Lagos based customer, Mrs Yetunde Usman, said, ‘I have not had a bank card because ATM terminals have swallowed three of my cards this year.” I don’t get my money from my bank anymore but now I can get less than what I need.”
Miss Bamgbose Adura, another customer, described the predatory fees she faces when using POS operators. So now you have to pay N200 to get N5,000. Before it was N100. The situation in the bank is even worse, she lamented pushing many people to visit the banks.
Banks blame cash shortage on supply issues
However, the CBN had earlier issued a directive to banks to give priority to customers’ cash needs and do all that needed to be done to ensure smooth cash disbursement. But many banks have failed to comply, saying they have not received sufficient cash from the apex bank.
According to a staff at a Festac bank, ‘The Central Bank of Nigeria, CBN, is not providing us with enough cash,’ he cried out. We have to give out the little we have so.
“The same report cannot also be said in Ogun state, Ondo state, and Edo state, as the banks, themselves, have also been reporting how customers are only allowed to withdraw sums, such as N5,000, N20,000 per transaction, according to the banks,” Nwankwo adds. But in the continuing absence of the notes, POS operators have been taking the advantage they have, charging up to N300 for every N10,000 withdrawn.
Cash crisis has hit small business owners, traders and POS operators the hardest. In Ebonyi, Akwa Ibom and Abia States, traders decried the situation, saying it has become impossible to access funds to restock their businesses. A lot of them have had to buy cash from third parties, filling stations, at a premium.
‘I came to withdraw over N500,000 for my business, but the bank told me they have no cash,’ a foodstuff dealer in Ebonyi State, Mrs. Rose Nworie, said. They offered N20,000,’ their best.'”
POS operators are meanwhile compelled to give cash to filling station attendants and other traders. ‘That’s why we now buy cash from filling station attendants and BEDC operators just to survive in business,’ a POS operator in Ondo said.
They demand immediate intervention from CBN
Following the outrage that greeted the cash scarcity, House of Representatives has asked the Central Bank of Nigeria (CBN) to immediately address the situation. As a result, the House ordered its Committee on Banking Regulations to inquire into the shortage and report back within a week.
Entrepreneurs and individuals have to spend long hours in queues, at times taking days at banks without success, according to Hon. Uguru Emmanuel who moved the motion of urgent public importance. “cash is particularly a problem for those in rural areas who don’t have access to digital payment systems and who rely on cash for transactions.”
And, instructing that while the CBN introduced a policy capping daily cash withdrawal at N500,000 for individuals and N5 million for corporate entities, many banks have adopted a different tact by limiting customers to the sum of N10,000.
The House, however, holds the CBN responsible for the cash shortage, if it was not responsible for the situation, ordered the bank to find meaningful ways of addressing the cash scarcity.
The crisis in regional snapshots
– Lagos: The N10,000 N20,000 withdrawal limits, as well as lines at ATMs that last several hours.
– Abuja: The limit on customers over the counter is N10,000 and many ATMs are either down or dispensing small sums.
– Ebonyi: Over the counter withdrawal limits are as low as N10,000. Bank customers turning up at POS operators for cash plying their wares are met with increased fees.
– Akwa Ibom: Many business owners cry foul over how they withdraw cash, others rely on informal cash purchases from POS operators.
– Ondo: Bank branches are paying customers as little as N10,000, while POS operators charge as high as N300 for N10,000 withdrawals.
– Edo: However, customers cannot draw anything more than N10,000 when they want to and ATMs only dispense a limited amount not exceeding N40,000.
– Ogun: At some banks, customers are allowed to withdraw daily no more than N50,000 cash while some banks allow just N20,000 a day.
– Bayelsa: The banks limit customers to extra cashing out as little as N10,000 or as high as N50,000 and POS operators charge exorbitant charges.
Widespread economic disruption tests CBN’s security influence
The cash shortage has underlined weakness in Nigeria’s financial system and led critics to conclude that the CBN is failing to ensure availability of cash. The CBN had come under intense criticism to increase the supply of cash to banks and step up oversight of banking operations.
But for now, the public has only been waiting for a response from the Central Bank as businesses and individuals continue to struggle with a cash strapped economy.
