As Nigeria prepares for the Christmas and New Year festivities, a fresh cash shortage is plaguing citizens across the country, leaving many decrying the situation.
Despite a recent revelation by the Central Bank of Nigeria (CBN) that a staggering N3.87 trillion remains outside the banking system, many Nigerians are still struggling to access cash, particularly in local markets where cash transactions dominate.
The latest figures show that a significant 93.34 per cent of Nigeria’s currency is controlled by individuals and businesses, while only 6.66 per cent circulates within the formal banking sector.
This underscores the deep reliance on cash, even as digital banking services continue to grow.
According to reports, markets are feeling the strain, particularly vendors who continue to prefer cash transactions despite the availability of electronic payment options.
Mr. Isah Zakari, the National Secretary of the Association of Point of Sale (POS) Users in Nigeria (APOSUN), recently addressed the issue, attributing the cash shortage to several factors, with commercial banks bearing much of the blame.
Zakari explained that in December 2023, banks reduced the amount of cash they allocated to POS agents, limiting their ability to meet the growing demand for physical currency.
He further revealed that some POS outlets, often owned by bankers, had been accused of redirecting cash meant for circulation into their operations.
“If I need N50,000, I go to the bank, which is my right because I deposited that money. But now, banks have reduced ATM withdrawals to as little as N10,000, and POS operators face similar restrictions,” Zakari said.
The cash constraints have led to a sharp increase in POS transaction fees, with some operators now charging N1,000 for transactions as high as N50,000, compared to the previous N500 fee.
In areas such as Ikeja, Egbeda and Agege area of Lagos, residents and businesses are reporting significant difficulties accessing cash, with many ATMs dispensing as little as N10,000 at a time.
Entrepreneurs like Mr. Dare are finding it increasingly difficult to meet customer demands due to the ATM limits, which have led many to rely on POS operators for cash withdrawals.
“You will be moving from one ATM to another looking for cash, but many ATMs are empty,” Dare said, adding that this situation has become even worse than last year’s festive period.
Food vendors like Shade Adeyemo, who relies on cash to run her business, have also been severely impacted.
“I can’t get enough cash from the ATMs. Imagine needing N100,000 and being told I can only withdraw N5,000 or N10,000. It’s a struggle,” she lamented.
Bank insiders have a different perspective, suggesting that POS operators themselves are partly to blame for the shortage.
Some bank officials claim that POS operators often engage in practices like opening multiple accounts and withdrawing large sums from ATMs to hoard cash, which further exacerbates the problem.
“POS operators move from one ATM point to another to withdraw as much cash as possible, often leaving little for others,” one bank official stated, noting that this behavior has forced banks to impose withdrawal limits.
Despite these challenges, bank officials insist that the problem is not solely the fault of the banking sector.