In spite of the order given to commercial banks by the Central Bank of Nigeria (CBN) to issue and accept old and redesigned naira banknotes, the scarcity of the naira has continued. This has brought back the ugly memories of late 2022 and early 2023 when the scarcity of naira notes disrupted economic activities across the country. In addition, the inflation rate has continued to soar.
Reports show that despite the suspension of CBN’s cash withdrawals above the regulatory limits of N500,000 for individuals and N3 million for corporate account holders till April 30, 2024, the commercial banks have pegged customers’ withdrawals far below the statutory limits. Since December 2023, the banks’ Automated Teller Machines (ATMs) have fixed withdrawal limits for customers from N5,000 to N40,000. This has necessitated long queues in the banks. In many banks, the ATMs are not functioning. The scarcity of naira notes has also led to the circulation of counterfeit naira notes.
Although the apex bank has blamed individuals for being responsible for scarcity of naira notes, it also advised members of the public to report commercial banks and Point of Sell (PoS) operators hoarding naira notes to its branches nationwide. As the naira scarcity continues, the PoS operators have raised their charges to 100 per cent and above across the country.
The hoarding of the naira notes has also been blamed on individuals afraid of experiencing the naira scarcity of last year by massively withdrawing cash from banks. The PoS operators have also been blamed for stockpiling cash at home, hoping that the lingering scarcity of the currency will positively affect their business, just as bank officials have been accused of hoarding the naira. In the same vein, some bank officials have accused the CBN of not releasing adequate cash supply to them, while blaming businessmen and private individuals for not depositing enough cash as usual.
There is speculation that the CBN has deliberately restricted cash supply after discovering that there is so much money outside the banking system. This is why commercial banks are starved of cash. Without adequate cash supply, the banks have resorted to rationing the ones in their possession.
The accusations and counter-accusations over the lingering scarcity of naira notes will not solve the problem. That is why the Federal Government and the apex bank should urgently address the naira scarcity. The ridiculous withdrawal limits set by banks across the counter and on ATMs are inadequate in a cash-based economy. The naira scarcity witnessed last year adversely affected the economy. The present naira scarcity is suffocating the informal sector and hampering the much-needed economic growth. Some business transactions are being disrupted in the distributive trade sector and the transport sector, amid unreliable telecom networks.
Since the commercial banks do not have total control over the quantity of money circulation, we enjoin the CBN to wake up and make more naira notes available. The growing scarcity of the national currency is not tidy. It is also unacceptable. Let the CBN muster the political will to boost the naira liquidity by increasing the currency supply to commercial banks. The CBN’s cashless policy, which has also been blamed for the prevailing naira scarcity, should be seen as a work in progress and not one that will further emasculate the economy.
Additionally, strict regulatory measures should be imposed on the PoS operators with regulated charges and stringent oversight functions to prevent arbitrary imposition of fees on transactions. As it stands now, members of the public do not enjoy any form of protection from greedy PoS operators, who at times impose some frivolous charges.
The Federal Government may also investigate the current naira scarcity with a view to addressing it once and for all. Without adequately addressing it, the spiraling inflation will continue to worsen the economy. The government cannot continue to watch while some unscrupulous Nigerians and their collaborators are ruining the economy. To ensure financial stability, the government should implement pragmatic short-term and long-term measures.