Nigerians Groan As Naira Scarcity Persists Nationwide

Just a few days before the Christmas and New Year celebrations, Nigerians are once again confronted with the shortage of Naira notes.

This situation persists despite the Central Bank of Nigeria's assurance of an adequate supply of currency notes.

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.

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.

DAILY POST reports that DMBs had 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).

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.

According to data from CBN in June, currency in circulation climbed to N2.60 trillion from N982 billion in March 2023.

Speaking to DAILY POST on Monday, Dr Uju Ogunbunka, the President of the Bank Customers’ Association of Nigeria, said the CBN’s explanation on Naira scarcity is meaningless.

According to him, there is a real naira scarcity in the country.

“There is a real scarcity of cash; when I went round recently, the Naira scarcity was real.

“I don’t think CBN needs the advice to make banknotes available; it is their mandate. They should be telling Nigerians why they are incapable or deliberately shortchanging Nigerians.

“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.

“The excuses we get from CBN are untenable at this period because they have all the machinery to address the issue.

“If the CBN is unable to address the issue, it means they are facing a challenge”, he said.

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.

“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.

“As it is, banks are not giving out enough cash to customers.

“People are seeking self-help amid the scarcity. They now prefer to hold their cash than to deposit it at the bank because they are not sure of withdrawing the funds”, he stated.

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.

“The banking industry has never had this kind of problem of currency shortages in the public space until late last year/early this year.

“The CBN has records of currency distribution to banks at the zonal levels. It should be easy to detect where the disconnect lies.

“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.

“It is up to the regulator to diagnose where lies the problem and move swiftly to douse it. Otherwise, counterfeiters could capitalise on the loophole to swindle Nigerians in desperate need of cash,” he told DAILY POST.

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.

He told DAILY POST: “The scarcity of Naira notes at this period is due to communication problems between the CBN, deposit money banks and the public.

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

“However, the new CBN management team has not printed new notes because of their policy of managing liquidity in the system and ensuring that money in circulation does not exceed their threshold.”

“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.

Recall that from December 2022 to February 2023, the Naira redesign policy by the CBN resulted in a cash crunch until the Supreme Court extended the deadline to 31st December, 2023, and later vacated the extension deadline following a request by the federal government.