The scarcity of Naira currency is intensifying across Nigeria, leading banks to impose restrictions on cash withdrawals. Residents in major cities such as Lagos, Abuja, Kano, Katsina, Jigawa, Adamawa, and other parts of the country are expressing growing concerns over their inability to access significant sums of cash from their banks.
This situation has raised fears of a currency scarcity reminiscent of the challenges experienced during the naira swap period.
The shortage of cash has not only affected individuals but has also had a significant impact on local business transactions, particularly in Northern Nigeria, where cash remains the preferred method of payment over bank transfers.
This problem initially came to light on November 1, with cash scarcity resurfacing in Borno and Kano states. The urgency was compounded by the looming December 31 deadline for the use of the old N200, N500, and N1,000 banknotes.
Naira scarcity caused by panic withdraw
In response to the situation, the Central Bank of Nigeria (CBN) explained that the apparent cash scarcity in certain areas was primarily due to high-volume withdrawals by Deposit Money Banks (DMBs) from CBN branches and panic withdrawals by customers at Automated Teller Machines (ATMs).
Isa Abdulmumin, the Director of Corporate Communications at the CBN, assured the public that there was an adequate stock of currency notes to support economic activities in the country. CBN branches across the nation were actively working to ensure the seamless circulation of cash.
The CBN had previously announced that in compliance with a Supreme Court order, old banknotes would remain legal tender alongside the redesigned notes until December 31. Last week, the apex bank reiterated that both old and new notes retained their legal tender status, urging Nigerians to continue using them for transactions.
Abdulmumin emphasized that every banknote issued by the CBN remained legal tender, as stipulated in Section 20(5) of the CBN Act, 2007. CBN branches were instructed to continue issuing various denominations of old and redesigned banknotes in sufficient quantities to deposit money banks for onward circulation to customers.
Northerner traders experience cash shortages
However, despite these assurances, a scarcity of naira persists in various parts of the country. Traders, farmers, and other individuals are reluctant to release their goods, even when potential buyers are willing to make bank transfers.
Prominent village markets in states like Kano, Katsina, Jigawa, Adamawa, Kaduna, and Taraba are experiencing cash shortages, impacting business activities. Farmers who have brought their produce to these markets are finding it difficult to sell, as middlemen scramble to secure cash for transactions. Point of Sale (POS) operators in these markets have also confirmed a shortage of cash.
In the town of Mai’adua in Katsina State, traders faced challenges completing transactions due to the unavailability of cash. Some individuals even resorted to sending cash from other locations to facilitate purchases. This cash scarcity is causing disruptions in the agricultural sector just as farmers are looking to sell their produce.
In the border town of Kongolam, which neighbors Niger Republic, a POS operator mentioned running out of cash despite having customers waiting to withdraw. Some customers, credited with substantial sums, have had to receive their funds in small installments.
Reports from Yobe State’s Nguru indicate that grain merchants are willing to offer rewards of up to N50,000 to anyone who can bring them N1,000,000 in cash. This additional incentive is on top of the charges they typically pay, highlighting the severity of the naira scarcity issue.
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