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Why naira scarcity persists despite S/Court judgement

There seems to be no end in sight to the scarcity of cash across the country as bank customers are unable to make huge withdrawals…

There seems to be no end in sight to the scarcity of cash across the country as bank customers are unable to make huge withdrawals from various commercial banks, Daily Trust can report.

This is despite the Supreme Court judgement penultimate week, which declared that old and new naira notes would co-exist as legal tender until further notice.

The judgement was a relief as some Nigerians were said to be returning their old naira notes to the bank uncertain of what would be the verdict of the court on both the new and old notes.

However, despite the verdict, respite appears to be elusive as reports from Lagos, Kano, Abuja, Kwara and other states indicate that there is acute shortage of cash.

Banks have limited the amounts of cash given to customers over the counter; as some could withdraw only N5,000 at some automated teller machines (ATMs).

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Checks at some banks in Lagos showed that many people were unable to make large withdrawals over the counter and at ATMs.

Many residents of Lagos State, who spoke to our correspondent, narrated their ordeals struggling to make withdrawals.

“I have been to many banks this morning, they said they don’t have cash and all the ATMs around are not even dispensing. After visiting many banks, I was able to withdraw just N5,000,” said a Lagos resident, Mrs. Ademola.

Customers decried that point-of-sale (PoS) operators had increased their charges in Lagos. A customer, who identified himself as Sulaiman, said he paid N1,200 to get N10,000 from a PoS agent at the weekend in Lagos.

A PoS operator also confirmed that many banks were not paying them as expected.

She said, “For instance, I would go to different banks like four banks before I am able to withdraw the amount I would need and even at that I don’t normally get the amount required for the day. So, I am left with no choice but to ration. The maximum I give people is N5,000.”

James Segbenu, an entrepreneur residing at Badagry, stated: “Not just the ATMs, even PoS centres are complaining of shortage of cash. They claim the banks are saying people are not depositing like before, they claim people are hoarding money for the fear of last years’ experience.”

He also said that the highest he could get from the PoS was N20,000.

In Ilorin, Kwara State, when our correspondent visited some banks along the Taiwo and Unity Roads, it was discovered that only N10, 000 was being paid to customers irrespective of the amount they sought to withdraw.

A customer at Zenith Bank, Unity Road, Ilọrin, who identified herself simply as Islamiya, decried that the situation was really frustrating.

“Many of us came to withdraw around N100,000 to N200,000 but we were miffed by the bank’s decision to only cap payment at N10,000. The money is our deposit and we thought all this nonsense will be a thing of the past after the irritating Emefiele saga. But see how we are being punished for our money again”.

On her part, another bank customer at Keystone Bank at the Challenge area of Ilorin, Olaitan, also confirmed that the bank had been paying customers, including herself, only N10,000.

“They told us there is no cash and that is why they are rationing the amount of withdrawal. Most of us were given N200 notes that have been seriously mutilated. But we have to accept it in the present. We don’t know what is happening again in our monetary policies. It’s like the more you look, the less you see”, she added.

In Kano, our correspondent noticed improved cash supply in some parts of the state after the Supreme Court verdict.

At GTCO Bank, Gyadi Gyadi Zaria Road branch, ATMs were seen dispensing cash to numerous customers.

Many other customers were also on queue waiting to be issued with ATM cards.

Similarly, all Jaiz Bank ATMs near Dangi Chemist, were dispensing  both old naira and new naira to the customers.

The story was the same at Unity Bank a few meters away, though customers on the queue were not many.

However, a sizable number of customers were seen waiting at First Bank, Na’ibawa, even though the ATMs were not dispensing cash. Customers were anticipating that the bank officials would stuff the machines with cash.

A PoS operator, who preferred not be named, said commercial banks in the state were still rationing cash.

“We still do not get what we want from the banks. So we often rely on traders to get cash for our customers”, he explained.

A top source in one of the commercial banks said the Central Bank of Nigeria (CBN) is in the right position to address the naira scarcity, noting that banks are limited by the available cash in their vaults.

“You know we operate in a rigidly regulated sector. So, there is no way any bank can be responsible for this scarcity without appropriate sanctions from the CBN. The situation you mentioned is not within our reach. We will continue to make cash available to customers once they are available,” he said.

The source, however, said Nigerians should embrace alternative means of payment instead of engaging in panic withdrawals.

Another source in the banking sector said the scarcity was artificial as it was caused by the unwillingness of Nigerians to make deposits while others engage in panic withdrawals.

“With the available data and the currency in circulation, there should be no scarcity of cash. This scarcity is artificial. It started with the rumour on the deadline for the old notes, which both the Supreme Court and the CBN have addressed. However, the banks are witnessing few deposits while there are more demands for withdrawals,” he hinted.

Checks by Daily Trust revealed that the currency in circulation (CIC) has peaked to the pre-Naira redesign era, as there was N2.99 trillion as of October 2023.

The data, which was the latest from CBN, was an increase of 8.33 per cent or N230 billion from N2.76 trillion documented in September.

The data was also an increase of 115.11 per cent or N1.6trn from N1.39trn recorded in January 2023 and about N3 billion less than the N3.29 trillion documented in October 2022 before ex-CBN governor, Godwin Emefiele, announced plans to redesign the N200, N500 and N1,000 banknotes.

The currency in circulation comprises the currency outside the banking system and the vault cash of banks.

An inside source at the CBN asked Nigerians not to panic, saying the banks had enough cash to meet the needs of their customers. The official, who spoke on condition of anonymity, also said Nigerian banks were sound and the CBN kept record of their liquidity status.

“So, we monitor them on a daily basis and I can tell you our banks are healthy and sound and their liquidity level is okay,” he said.

 

From Abdullateef Aliyu, Abiodun Alade, Yvonne Ugwuezuoha, Lagos; Mumini Abdulkareem, Ilorin & Ahmad Datti, Kano

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