Naira scarcity bites hard on Nigerians as Banks limit cash withdrawal

Like the cash crunch of December last year and the first quarter of 2023 due to the implementation of the failed Naira redesign policy, the resurgence of the naira scarcity has begun to bite hard on Nigerians.

The development is coming despite the assurance of the Central Bank of Nigeria, CBN, on the availability of the currency notes.

As of Monday, Automated Teller Machines of Deposit Money Banks in many parts of the country are either not dispensing cash or are witnessing long queues.

While Banks have pegged maximum withdrawal limits from N20,000 to N50,000, transaction fees through Point-of-Sale operators, PoS, have also doubled due to the Naira scarcity.

PoS charges increased by 100 per cent as it moved to N200 per N5,000 in the nation’s capital; the same situation is reported nationwide.

However, the country’s apex bank blamed the Naira scarcity on panic withdrawals of large volumes of cash from various CBN branches by Deposit Money Banks (DMBs).

READ ALSO: Naira drift towards parallel market level as naira scarcity worsens

CBN insisted that there is no scarcity of Naira, noting that the economy has an adequate supply of the currency. But the reality on ground contradicts CBN’s point of view regarding the scarcity of Naira.

Dr. Uju Ogunbunka, the President of the Bank Customers’ Association of Nigeria, said the CBN’s explanation on Naira scarcity is meaningless, insisting there is a real Naira scarcity plaguing the country.

“The justification from CBN on the reason for currency scarcity doesn’t hold water and is meaningless. What I think they should do is print more currency for Nigerians to transact their businesses.

Also, the secretary-elect of the Mobile Money and Agent banking industry in Nigeria, Elegede Segun, said PoS operators were worst hit by the naira scarcity.

He confirmed that PoS vendors have hiked their charges so as not to run at a loss.

Advertisement

“It has been difficult; our members have resorted to local arrangements to get cash.

“Due to the scarcity, our members have increased their fees. It is a demand-and-supply situation. Most banks have a limit on cash withdrawals on ATMs and over-the-counter. The maximum withdrawal has been pegged at N50,000, which cannot serve one customer’s demand.

Giving perspective to the development, a renowned economist and former President and Chairman of the Council of Chartered Institute of Bankers, Prof Segun Ajibola, faulted the reason given by the CBN for the Naira scarcity.

READ ALSO: Naira crashes to all-time low of N1, 099.05/$1 at official market

“If the scarcity is artificial through currency holding/hoarding, it should be easy to pin this down. But I wonder if anybody would hoard Naira because it is not a convertible currency that can be speculated upon.

“And on the claim of much withdrawal for the festivities, 2023 is not the first year Nigerians would celebrate Christmas. I guess something is still wrong somewhere outside this literal guesswork.

Also, the CEO of SD & D Capital Management, Mr Idakolo Gbolade, blamed the current Naira scarcity on communication problems between the CBN, DMBs and the public.

“The CBN sought the Supreme Court judgment to extend usage of the old and the new Naira notes indefinitely, which was granted.

“To prevent the recurrence of what happened between December 2022 and January 2024, some individuals have resorted to hoarding cash instead of returning it to the banks for effective distribution, which is the major cause of the scarcity. Some still believe the old one will be withdrawn from circulation this month.

“The CBN needs to intensify their communication network and assure Nigerians that there is no reason to hoard Naira notes”, he stated.