Cash squeeze intensifies, stalls business transactions
• Emefiele: CBN will still collect old notes after Feb 10 deadline
• CBN uncovers mismanaged N4m new notes in Ogun, knocks commercial banks
• Online transfers take days to complete, disputes increase
• PoS merchants ration cash, increase charges to 10%
• Banks reduce ATM withdrawal limits to N5,000
• Falae carpets Emefiele, says policy likely to disrupt 2023 polls
Tension over scarcity of cash has worsened across the country, with millions of Nigerians denied access to their savings.
From the agony of failed electronic money transfer to the pains of staying endlessly on queue to use an Automated Teller Machine (ATM), thousands of households are groaning amid cash scarcity, even as many have run out of essential supplies.
Amid the untold hardship, the traditional cash points (bank tellers) have suspended operations, as they have no cash to dispense, both old and new notes. Top bankers, in separate chats, told The Guardian they are wary of possible sanction by the Central Bank of Nigeria (CBN), hence, they suspended the cash payment.
After several days of standoff with the House of Representatives in which the Speaker, Femi Gbajabiamila, had threatened to issue an arrest warrant on the apex bank chief, the CBN Governor, Godwin Emefiele, yesterday, allayed fears that the old naira notes would no longer be tenable after expiration of the February 10 deadline for the naira swap policy.
Speaking when he appeared before the Ado Doguwa-led House of Representatives ad-hoc committee, he pledged to adhere to Sections 20, sub-section 3, 4, 5 of the CBN Act.
The CBN boss said Nigerians could be rest assured that they would be allowed to deposit their old naira notes with the apex bank even after the deadline as stipulated by the CBN Act.
Emefiele, who was accompanied by top CBN officials, pledged to ensure equitable and transparent distribution of the new naira notes to all banking outlets across the country.
Expressing satisfaction with the enthusiasm so far exhibited by Nigerians over the naira redesign and swap policy, he frowned on officials of some commercial banks that indulge in the unwholesome act of hoarding the new notes.
Referring to a trending video on the social media where bundles of new notes were sprayed at a party, he assured the lawmakers that he met with heads of deposits banks on Sunday, aimed at addressing the anomaly and ensure availability of the new notes in ATMs across the country.
He assured the lawmakers that CBN is already collaborating with the Economic and Financial Crimes Commission (EFCC), Independent Corrupt Practices and other related Crimes Commission (ICPC), Nigerian Intelligence Finance Unit (NFIU) and other security agencies to ensure smooth implementation of the naira swap policy.
Responding, Doguwa described the naira swap policy as a well-thought out policy, adding that it is unfortunate that its intent was misunderstood due to gap in communication between CBN authorities and the National Assembly.
He particularly applauded Emefiele over the pledge to adhere to the CBN Act on the acceptability of the old naira notes after the expiration of the deadline.
He, therefore, directed the CBN chief to submit a weekly report of the disbursement of the new notes vis-a-vis the receipt of old notes by commercial banks and other banking outlets in the country.
Sada Soli (APC, Katsina), who initiated the motion on shoddy implementation of the naira swap policy, pleaded with CBN to increase the N20,000 withdrawal limit of the new notes at ATMs.
The apex bank, yesterday, said it has uncovered N4 million of new notes mismanaged by a commercial bank in Ogun State. It also accused commercial banks of sabotaging CBN’s efforts in making the new notes available.
The Deputy Director, Banking Supervision Department, CBN Lagos, Kayode Makinde, disclosed this to newsmen while leading a team on the monitoring exercise in Ogun.
Makinde said this week would be the third week of the monitoring exercise in the state to ensure compliance to the directives of CBN as regards issuance of new notes.
He said CBN should not be blamed for scarcity of new notes but the commercial banks, disclosing that the team uncovered that a commercial bank mismanaged new notes given to it, adding that the bank involved and its officials will be sanctioned appropriately.
Meanwhile, CBN has clarified the position of Emefiele that old N200, N500 and N1,000 notes will be accepted after the February 10 fresh deadline. Speaking with newsmen in Abuja, the Director of the Corporate Communications Department at CBN, Osita Nwanisobi, explained that the old notes would cease to be legal tender after February 10, and can no longer be used for any form of transaction afterward.
Nwanisobi said after the deadline, Nigerians would be able to redeem the face value of the naira only at the CBN and not at commercial banks. He also added that the acceptance would be subject to meeting certain conditions.
The duration for the acceptance of the old notes after the expiration of the deadline was, however, not stated.
Citing instances in other climes, Nwanisobi explained that banknotes that cease to be legal tender are only redeemable by the monetary authorities of such jurisdiction upon demand subject to conditions and processes as may be prescribed by that Central Bank.
MEANWHILE, supply of banknotes appears to be a drop in the ocean, considering the rising need for cash. Customers, who have exhausted the old notes in their possession, continue to troop into banking halls for unavailable cash.
With other options completely exhausted, many have turned to Point of Sale (PoS) operators, who have increased their charges to as much as 10 per cent. Sadly, they can only meet a tiny portion of the cash demand.
In most cases, PoS withdrawals are restricted to as low as N2,000 per individual. Before now, PoS operators charged an average of N200 for N10,000 withdrawal. As at yesterday, it cost about N1,000 for a N10,000 withdrawal even though the amount is a tall order.
The de facto new cash restriction does not apply to PoS withdrawals. Third-party withdrawals at some ATMs in Lagos were limited to N2,000 while N5,000 seems to be the upper cap now.
The squeeze is beginning to take its toll on businesses, especially small enterprises. And with an increase in failed electronic transfers, some businesses are increasingly holding back on electronic payment adoption or imposing bizarre conditions on customers.
After being cheated by failed transactions previously, some business owners are going as far as opening registers for personal details (phone numbers and house addresses) of customers wishing to use alternative payment channels.
A customer, who narrated his altercation with a vendor, told our correspondent that he would rather not transact than give a trader his “personal details.”
Customer service workers of banks are also grappling with mass of customers complaining of failed electronic transactions. Most of the complaints border on failed transfers that have lasted days without reversals.
There are concerns the rigid payment system may have negative consequences for business performance and productivity if the challenges linger.
Millions of Nigerians have taken to social media to vent their anger and frustration, calling for an immediate review of the policy. A section of the social media protesters has also called on the CBN governor, Godwin Emefiele, who appeared before the House of Representatives yesterday to defend the policy, to act fast to save the economy and restore sanity in the monetary system.
But a coalition of Civil Society Organisations (CSOs) has accused commercial banks and their staff of hoarding the new naira notes to sabotage the currency swap policy.
At a rally in Lagos, the Coalition of Civil Society on Good Governance (CCSGG), led by its President, Bassey Etuk, said saboteurs are working hard to derail the entire process.
“While the generality of the people embrace the policy, we are shocked to note that the ruling class and a section of the country are opposing it and fighting it shamelessly without an iota of patriotism for the country,” Etuk said.
Also, the former Secretary to the Government of the Federation (SGF) and Minister of Finance, Oba Olu Falae, yesterday, described the withdrawal of the old notes from circulation as well as introduction of the redesigned notes as ill timed.
Falae, who is the monarch of Ilu-Abo in Akure North Local Council, disclosed that the CBN policy might disrupt the forthcoming general elections.
Disclosing this to newsmen in Akure, the Ondo State capital, the elder statesman emphasised that the apex bank ought not to have fixed a deadline for when the old notes would cease to be legal tender.
He said: “The timing could have been better. Being so close to the election, it’s rather disruptive because people would be moving around. The scarcity of funds may disrupt those movements. The timing could have been better and the organisation could have been better too.
“Normally, when you want to withdraw an existing currency from circulation, you ensure whatever goes into the banking system does not go out. Then, in exchange for that, you pay out the new one.
“If you did that, then in a short period, the old currency could have been taken to the banking system and the new currency could have been in circulation. They could have improved on the timing and the sequence.”