Concerns over cash squeeze in states despite increased CBN supply

There is rising complaints by bank customers and Point of Sale (POS) operators in some states across the country over alleged cash squeeze just as citizens try to meet their increasing demands for notes especially as yuletide shopping begins. The states where these concerns are being raised include Bauchi, Borno, Kaduna, Kano, Kebbi, Taraba, as […]

There is rising complaints by bank customers and Point of Sale (POS) operators in some states across the country over alleged cash squeeze just as citizens try to meet their increasing demands for notes especially as yuletide shopping begins.

The states where these concerns are being raised include Bauchi, Borno, Kaduna, Kano, Kebbi, Taraba, as well as some satellite towns of the Federal Capital Territory (FCT).

The scarcity, which has lasted over a week in the reported states, is coming amidst data from the Central Bank of Nigeria (CBN), revealing that the total currency in circulation has reached N4.14 trillion, with N3.87 trillion of this amount currently outside the banking system.

The recent CBN data indicates that 93.34 per cent of the nation’s currency is in the hands of individuals and businesses, while only 6.66 per cent remains within the banking sector.

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The gap between currency outside banks and the total currency in circulation suggests that Nigerians, especially those living in the northern part of the country, still heavily rely on cash for daily transactions, despite the rise of digital banking services.

Also, the CBN data revealed that currency in circulation in Nigeria has added N1.48 trillion or 55.8 per cent Year-on-Year (YoY) to N4.14 trillion as of August 2024, from N2.66 trillion in August 2023. 

Cash squeeze pronounced in the North

Daily Trust findings revealed that the northern states are mostly affected by the current scarcity largely due to the onset of harvest and the fewer numbers of financial institutions in the rural areas of the North.

Findings by our reporters in Borno State indicate that some businessmen buying up grains on a large scale were said to be mopping up cash.

A POS operator, Hamza Abdullahi, said operators no longer get the required cash in banks, therefore, depend on traders and petrol stations.

Hamza attributed the scarcity to the harvest and yuletide period that is fast approaching.

He said: “Traders are busy buying the new harvests and to do this, they need cash because farmers in our rural areas do not use electronic payment channels. Some do not even have bank accounts”.

He said many people are also buying goats and other animals that are transported to the South ahead of Christmas, adding that these are largely cash transactions contributing to the scarcity.

He said for N50,000, POS operators now charge N1, 000 as against N500 previously.

Kano

Abubakar Sadiq Danzaria, said POS operators are milking customers, raising charges because of the scarcity.

Another POS operator in Rijiyar Zaki Motor park, Adamu Salisu, who said he visited Guaranty Trust Bank (GTB) in Murtala Mohammed road said, “Banks give only N50,000 a day and that is not enough to cater to the needs of our customers. Therefore, we source the cash from traders or filling stations.”

On his part, the chairman of Singer Market Development Association (SIMDA), Alhaji Junaidu Muhammad Zakaria, agreed with the POS operators that cash scarcity exists.

Speaking, a businessman, Muntari Aliyu said: “if you go to the rural markets, you can withdraw N3 million from the POS operator. They have the cash.

“People there don’t do business with our modern means of transactions; they don’t trust it that’s why they are not taking the money to the bank. It’s not in circulation the way it should”, he said.

Abdullahi Haruna, a grain merchant said it was tough for him to get N10 million that he needed to visit the grains market in Sumaila, on Wednesday.

“I had to use traders at the ‘Yankura and other markets in the Kano metropolis. This took me more than one week,” he said.

Zainab Almu, an entrepreneur, said the cash scarcity is as a result of the harvest season, and not necessarily a policy matter.

“Farmers who are bringing the grains from the villages are still sceptical about bank transfer. They want to collect their money in cash and go back home.

“There is the need for more sensitisation in this part of the country. Again, some of them have been duped in the past, especially during the cash crunch ahead of the 2023 elections.

“Many of them lost their fortunes because they received fake credit alerts from some dubious Nigerians. A lot of sensitisation must be done to convince such people to trust the system again,” he said.

She said she has accounts in Access, Zenith and GT banks. “All the banks are facing some challenges of notes. When you go to withdraw, there is limit to what they will give you,” she said.

Kaduna

The situation is also similar in Kaduna metropolis as business owners and POS operators are complaining about the shortage or scarcity of cash in banks and ATMs.

Most of them said they could only withdraw N20,000 from the ATM machines of Access Bank, Unity Bank on Ahmadu Bello road.

A provision store owner along Charanchi Road in Tudun Wada, Bello Idris Dallaje, also lamented the scarcity of cash, saying it was affecting their businesses.

“This has been affecting our businesses because, on a daily basis, customers who come to buy items would rather transfer money because there is no cash, while others will ask you to help them with cash, which we don’t have,” he said.

Kebbi

A POS operator in Kebbi, Salome Martin, said for the past three weeks, she has been facing difficulties in meeting the cash needs of the people and this is affecting her POS business. “It’s so bad that I couldn’t withdraw more than N10,000 to do my business. For days now I have not had cash to run my POS,” she said.

Similar situations abound in Bauchi and Taraba states.

Few states reported scarcity in the South

In the southern part of the country, the scarcity is not as pervasive as the North, as only a few states reported scarcity of cash.

In Lagos, the major cause of the scarcity in select areas of the state is the recent network glitches which prevented access to bank accounts by some of the Tier 1 banks, Daily Trust gathered. 

Findings by our reporter show that some First bank, Access and GTB in Surulere, Ejigbo, Ikotun, Mushin, Kirikiri, Mazamaza and Ejigbo, were seen rationing cash to customers.

“It’s just a bit scarce, people are hoarding money, so we have to work with the little we have,” a staff of a bank in Kirikiri told our correspondent.

In Ekiti State, findings also revealed cash scarcity as checks at First Bank showed that they only disbursed N10, 000 to their customers, Union Bank, N10, 000 and Wema Bank, N10,000.

Market women noted that many of their customers were lamenting over the development, saying the rationing started about two weeks ago.

Shortage in Ondo ahead of gov ’ship election

Residents of Ondo State have been lamenting over the shortage of cash in commercial banks across the state. 

Daily Trust gathered that many of the banks, which are located at the Alagbaka area of Akure, the state capital, are dispensing between N3,000 and N5,000 over the counter. 

The development is coming a few days to the November 16 off-cycle governorship election of the state. 

Sources who spoke to our reporter attributed the shortage in the bank to heavy withdrawals of funds. 

A customer with one of the second generation banks, Bamidele Ajibola, said the politicians were storming the banks to make withdrawals.

While noting that the situation was becoming depressing, Ms Ajayi said she was finding it difficult to pay some workers who are working for her at a construction site. 

“I am currently handling a project for my friend who is in Canada. And those working on the site collect cash. So, it is not easy paying them because I can’t withdraw from the banks as a result of cash shortage,” she said.  

A staff member with one of the banks in the state who pleaded anonymity, attributed the cash shortage to heavy withdrawals by the politicians.

Banks decline comments

Daily Trust’s efforts to speak with branch operations managers in most of the states did not yield results as the officers of the banks said they were not authorised to speak to the media.

An enquiry sent to Ismail Omamegbe, Head, Media & External Relations and Kunle Aderinokun of Access Bank were not replied to yesterday.

Some other spokespersons of commercial banks who were contacted declined comments and did not want their identities disclosed, noting that it was a matter for the apex bank to speak to or handle.

However, sources within the CBN disclosed that the apex bank has ensured adequate supply of cash to its branches across the states, for where the various branches of the commercial banks are being supplied the notes.

Meanwhile, efforts to get the official reaction of the CBN’s Ag. Director, Corporate Communications, Hakama Sidi, was not successful as she did not answer a call to her cell phone, and did not also respond to a message sent to her by WhatsApp.

Speaking about money supply at the recently concluded Monetary Policy Committee (MPC) meeting of the apex bank, the CBN Governor, Olayemi Cardoso said: “Over N4 trillion in July, I know from my internal sources that another N1.4 trillion is likely to be delivered in another three months to aid that whole process of cash within the system and cash velocity.

“From our perspective, I think we are doing everything possible to ensure that there’s sufficient cash in the system, that’s that side of them, and there’s no excuse for not having sufficient cash in the system. Now it goes to the deployment of that cash”, he said.

 

Contributions from: Ahmad Datti & Salim Umar Ibrahim (Kano) Hamisu Kabir Matazu (Maiduguri) Mohammed Ibrahim Yaba (Kaduna) Abdullateef Aliyu &Eugene Agha (Lagos) Hassan Ibrahim (Bauchi) Magaji Isa Hunkuyi  (Jalingo) Tosin Tope, (Akure) Raphael Ogbonnaiye (Ado-Ekiti)