Nigeria continues to grapple with a shortage of physical cash despite repeated assurances from the Central Bank of Nigeria (CBN) that there is enough money in circulation. This shortage has led to significant disruptions in businesses, particularly in areas where electronic payment options are not readily available.
In Abuja, the capital city of Nigeria, many sellers who rely on cash transactions have resorted to sharing point-of-sale (PoS) machines with fellow traders to keep their businesses afloat. This trend has become particularly prevalent in Wuse – the largest market in the central area of the city.
Kelvin Emmanuel, the Chief Executive Officer of Dairy Hills Limited, expressed skepticism regarding the claim that the scarcity of cash is linked to collusion between deposit money banks (DMBs) and PoS agent banks. He emphasized that the CBN’s efforts to reduce money supply through open money market operations, aimed at curbing inflationary pressure, may be exacerbating the shortage of cash. Emmanuel highlighted the need for the government to address supply chain issues and foreign exchange liquidity challenges, as these factors have contributed to an imbalance in the economy and increased inflationary pressures.
Amid these concerns, the CBN has sought to reassure the public about the safety of funds held in Nigerian banks. The apex bank has emphasized the stability of the country’s banking sector and urged the public to continue their regular banking activities without being swayed by unverified reports regarding the health status of Nigerian banks.
The CBN affirmed its readiness to fulfill its duty of maintaining a stable financial system in Nigeria. Acting Director of Corporate Communications, Sidi-Ali Hakama, emphasized that the CBN is well-equipped to oversee and regulate financial institutions in the country. The apex bank also dismissed reports suggesting potential government intervention in CBN-supervised financial institutions, asserting that such claims did not originate from official sources.
In a bid to allay fears of panic withdrawals, the CBN reassured bank customers that their funds are secure in their accounts and urged them not to engage in unwarranted withdrawals based on unverified reports. The statement further reiterated the CBN’s commitment to ensuring the stability and soundness of financial institutions in Nigeria.
As the cash scarcity persists and concerns about the stability of the banking sector linger, the Nigerian government and regulatory authorities face the task of addressing the root causes of the cash shortage and restoring confidence in the financial system. Additionally, a comprehensive approach that considers both monetary and fiscal measures may be necessary to tackle the complex economic challenges contributing to the cash scarcity and inflationary pressures in Nigeria.
