Naira Scarcity Worsens Two Days to Christmas Despite CBN’s Sanction Threat to Banks

*Shoppers lament, PoS operators raise charges 

*Apex bank lifts restriction on cryptocurrency transactions

Omolabake Fasogbon

With about 48 hours to the Christmas celebration, Nigerians have been left cash-strapped, while hopes of resolving prevailing naira crisis dwindles, despite Thursday’s warning by the Central Bank of Nigeria (CBN) that it was going to sanction banks and point-of-sale (PoS) operators allegedly involved in the act of sabotage.

This was just as it emerged yesterday that the CBN has lifted its ban on transactions on crypt-currencies in the country.
The CBN had warned banks and PoS operators against acts undermining availability and flow of the Naira across the country.
The bank in a statement issued by its acting Director, Corporate Communications, Mrs. Sidi-Ali Hakama, had alluded to alleged cases of collusion between banks and PoS operators which had reportedly affected the availability of cash, as well as disruption of the seamless circulation of the Naira.

Also on Thursday, the House of Representatives had urged the CBN to improve on its monitoring and supervision of commercial banks in the country due to the worsening incidence of Naira scarcity.
The issue of cash scarcity began to creep into the economy late November and got more pronounced in December with widened cash demand for yuletide celebrations.

Finding by THISDAY in Lagos yesterday showed that the Naira scarcity has remained unabated as banks have continued to peg withdrawal limits downwards to as low as N2,000, with PoS agents coming to the rescue of desperate customers.
For instance, at a branch of Polaris Bank stationed in the bustling Ikeja Mall at Alausa, Lagos, THISDAY gathered that customers left the banking hall in anger when told they could not withdraw more than N10,000 over the counter, even as the bank’s ATM was not dispensing cash.
A customer, Nwafor Gloria, said she could not continue with her Christmas shopping due to the bank’s failure to release a reasonable amount of cash.
She said, “I have exhausted my N100,000 transfer daily limit on some items and I came into the bank to get more cash to buy more things only to be told I can’t withdraw more than N10,000.  N10,000 for what now?”
On his part, another customer, Mr. B. Anyebe, said he needed cash of up to N40,000 to give to his wife to get foodstuff ahead of Christmas, only to be told he could only withdraw N2,000.

“I had to pay N2,000 to a PoS operator to get  N40,000. It’s sad this is happening to us again in a country where we have a government, it shouldn’t even be this period at all,” he lamented.
Also, at the GTBank on Awolowo Road Ikoyi, customers could only get a maximum of N10,000 across the counter, even as the ATMs were not dispensing.
Some PoS terminals visited by THISDAY were not unusually crowded, but customers were made to pay as high as five per cent on withdrawals.
One of the operators at the Iyana-Ipaja area of Lagos, who simply gave her name as Bose, said she increased her charges because of the hassle she faced in accessing the cash.

“We are only given half or a quarter of the amount we requested. We have to visit different banks to collect the little they are giving so we can have enough.  It is that stressful,” she said.
Owing to the development, Nigerians, both traders and consumers are devising means to stay afloat even though they are not finding it easy.
Given the situation, most transactions at local market and organised retail stores are now consummated with electronic payment but the experiences are not too palatable for both transacting parties.
A visit to some of the markets showed unusual high footfalls, with many customers delayed further by failed electronic transactions.
One of the customers at Blenco Supermarket at Abule-egba, who did not disclose her name said she tried unsuccessfully for over 30 minutes to effect a transfer for items she had already picked.

At Ile-epo market at Abule-Egba, a petty trader popularly known as Iya Elepo, said she does not have a bank account but usually directs her customers to a nearby PoS agent to collect cash and give to her.
Commenting on the situation, the Bank Customers Association of Nigeria (BCAN) cautioned Nigerians against lavish and unnecessary spending.
President of the association, Dr. Uju Ogunbunka, said there were no signs of the crisis ending so soon.
He disclosed that CBN supply of cash to commercial banks has not improved and expressed concern why it was so despite the promise by the apex bank earlier in the week to address the anomaly.

Ogunbunka said, “The CBN has a mandate to promote a sound financial system which includes producing and distributing cash across the country in a way that will be sufficient for all.
“That this is happening is very sad and sadder at a festive period when physical cash is a priority. The apex bank should not put us in further trouble and avoid stirring unnecessary sufferings on the masses.
“If there is any issue, let them communicate appropriately so Nigerians can guard and prepare ahead. Nigerians have the right to know the truth.
“As much as we know that digital transactions can be substituted for cash, it cannot entirely play the role of physical cash. Even a merchant who accepts transfer for goods would still find himself in a position of needing cash,” he said.

He, however, appealed to Nigerians to remain patient and be frugal.
“Spend whatever you have now wisely. This is not time to spend carelessly,” he advised.
On his part, the CEO, Centre for the Promotion of Private Enterprises, CPPE, Dr. Muda Yusuf, described the lingering Naira scarcity as economic sabotage.
“Going by the CBN data, the currency in circulation is over N2.5 trillion, which is about what it was before the Naira redesign crisis. Hence, there is no basis for scarcity, except there is a deliberate act of sabotage. The CBN has a responsibility to investigate and identify those behind this,” he added.
He decried that many businesses have been disrupted as a result of the Naira shortage.

“Particularly, businesses in the distributive trade, informal and intra-city transport sector have been affected. Moreover, some elements in the cash distribution chain are taking advantage of the scarcity to sell Naira notes at between 10 per cent and 20 per cent premium.

“The CBN and the security agencies must put an end to this racket,” he said.

In his contribution, the General Partner, Stransact, Eben Joels emphasised the need for the apex bank to curtail the spraying of Naira at celebrations.

Joels added: “It does not help that there is still a significant amount of failed and unreversed payment transactions in the banking system. It adds to the demand for cash. The regulator must design a solution that works for all of us in the national interest.”

CBN Lifts Restriction on Cryptocurrency Transactions

The Central Bank of Nigeria (CBN) has lifted its ban on transactions on crypt-currencies in the country.

The central bank disclosed this in a circular dated December 22, 2023, signed by the Director, Financial Policy and Regulation Department, Haruna Mustafa.

The document titled, ‘Circular to all Banks and other Financial Institutions Guidelines on Operations of Bank Accounts for Virtual Assets Service Providers (VASPS),’ was addressed to the banks

It noted that its decision was informed by current trends globally which showed the need for crypto-regulation.

“The CBN in February 2021 issued a circular restricting banks and other financial institutions from operating accounts for cryptocurrency service providers in view of the money laundering and terrorism financing (ML/TF) risks and vulnerabilities inherent in their operations as well as the absence of regulations and consumer protection measures.

“However, current trends globally have shown that there is need to regulate the include providers (V/ASPs) which activities of virtual assets service cryptocurrencies and crypto assets. Following this development, the Financial Action Task Force (FATF) in 2018 also updated its Recommendation 15 to require VASPs to be regulated to prevent misuse of virtual assets for ML/TF/PF Furthermore, Section 30 of the Money Laundering (Prevention and Prohibition) Act, 2022 recognizes VASPs as part of the definition of a financial institution.

“In addition, the Securities and Exchange Commission in May 2022, issued Rules on Issuance, Offering and Custody of Digital Assets and VASPs to provide a regulatory framework for their operations in Nigeria.

“In view of the foregoing, the CBN hereby issues this guideline to provide guidance to financial institutions under its regulatory purview in respect of their banking relationship with VASPs in Nigeria,“ it added.

The apex bank noted that the new guidelines supersede it’s a previous one with reference number FPR/DIR/GEN/CIR/06/010 of January 12, 2017, and BSD/DIR/PUB/LAB/014/001 of February 5, 2021 on the subject.