Cash crunch in Nigeria: Rising hardship as banks enforce rationing amid economic challenges

The resurgence of cash rationing by Nigerian banks is exacerbating the country’s already severe economic challenges.

Widespread restrictions on over-the-counter (OTC) and Automated Teller Machine (ATM) cash withdrawals have left citizens struggling to access funds amidst surging inflation and high living costs.

Investigations revealed that most banks now impose withdrawal limits of N5,000 to N10,000 per transaction, with some regions slightly increasing limits to N20,000 or N50,000 depending on availability.

These measures, bank officials disclosed, are driven by limited cash supplies from the Central Bank of Nigeria (CBN) and reduced cash deposits from customers.

Central Bank’s Response and Public Frustration

Despite a recent directive from the CBN urging efficient cash disbursement, compliance remains patchy. The bank has advised customers to report instances of non-compliance through designated channels, but widespread dissatisfaction persists.

In Lagos, Abuja, and other major cities, customers narrate harrowing experiences, including long queues, malfunctioning ATMs, and insufficient OTC cash. Mrs. Yetunde Usman, a Lagos resident, lamented the difficulties, stating, “I don’t have an ATM card because three of my cards were swallowed this year, leaving me dependent on OTC withdrawals.”

Another customer, Miss Bamgbose Adura, decried the rising cost of POS services, saying, “You now pay N200 to get N5,000, pushing more people to rely on banks.”

Regional Disparities

In Ekiti, customers report being limited to N20,000 to N30,000 daily, while Oyo residents endure withdrawal limits of N10,000 at the counter and N20,000 via ATMs.

Meanwhile, in Ogun State, traders seeking substantial amounts for seasonal business activities expressed disappointment at being restricted to far lower sums.

Bank officials in states like Ebonyi and Anambra attribute the cash scarcity to hoarding by Point-of-Sale (POS) operators and inadequate cash supply from the CBN. Some banks are accused of deliberately limiting withdrawals to promote cashless transactions.

Rising Costs at POS Outlets

As bank cash shortages intensify, POS operators have become the go-to option for many Nigerians. However, they now charge exorbitant fees due to the high demand for cash. For instance, withdrawing N10,000 from POS operators in states like Rivers and Nasarawa now costs N400, with charges as high as N1,600 for N40,000.

Economic Implications

The ongoing cash crunch is disrupting economic activities and imposing significant hardship on small business owners. Traders, particularly in rural areas, find it challenging to sustain operations, with some unable to source funds for stock purchases.

Mrs. Rose Nworie, a trader in Ebonyi State, lamented, “I needed over N500,000 to buy foodstuffs, but my bank could only give me N20,000.”

Way Forward

As public frustration mounts, stakeholders urge the CBN and banks to address the liquidity crisis urgently. Implementing measures to increase cash supply and ensure compliance with withdrawal directives could alleviate the economic strain on citizens, especially as the festive season approaches.

For now, Nigerians remain burdened by limited access to their own money, long queues, and increased reliance on POS operators, further highlighting the need for systemic reforms in the nation’s financial sector.