Naira Scarcity Grips Nigeria: Challenges, Contradictions, and Calls for Action

With the revival of Naira scarcity, a cloud of concern lingers over Nigeria as the festive holidays of Christmas and New Year unfold.

Despite the Central Bank of Nigeria’s (CBN) assurances about the availability of currency notes, reports show a stark difference to the official position. 

This scarcity, typical of previous crises, has begun to impair Nigerians’ lives, prompting issues about the situation’s contradicting explanations.

The Current Situation

ATMs across the country are either dispensing cash in limited numbers or experiencing massive lines, creating a picture of financial stress for many individuals. Deposit Money Banks (DMBs) have imposed maximum withdrawal limitations ranging from N20,000 to N50,000, increasing the competition for cash. 

Point-of-sale (PoS) transactions have also suffered as a result of the paucity of Naira notes, with charges increasing.

CBN’s Point of View and Contradictions

The CBN blames the shortage on panic withdrawals by DMBs, claiming that the economy has an adequate supply of Naira.

 This official position, however, contradicts the reality of ordinary Nigerians. 

The Central Bank of Nigeria (CBN) recorded a huge increase in money in circulation in June, reaching N2.60 trillion from N982 billion in March 2023. 

Despite this, scarcity remains, raising doubts about the central bank’s narrative’s veracity.

Criticisms and reservations

The CBN’s response, according to Dr. Uju Ogunbunka, President of the Bank Customers’ Association of Nigeria, is worthless. 

He cites recent findings of evident scarcity and urges the central bank to fulfill its role by printing additional cash. Elegede Segun, Secretary-elect of the Mobile Money and Agent Banking business, emphasizes the negative impact on point-of-sale (PoS) operators, who have been compelled to raise fees to avoid losses.

Expert Diagnoses and Opinions

Prof. Segun Ajibola, a renowned economist, disputes the CBN’s logic, claiming that the banking industry has never suffered such cash shortages before. 

He asks the regulator to determine the core cause and remedy it as soon as possible to avoid potential counterfeiting. 

Idakolo Gbolade, CEO of SD & D Capital Management, blames the scarcity of poor communication between the CBN, DMBs, and the general public. 

He underlines the need for the CBN to improve its communication network and reassure Nigerians about the currency’s soundness.

Historical Background and Lessons Learned

The current situation evokes memories of the difficulties seen during the Naira redesign program from December 2022 to February 2023, which resulted in cash-restricting factors. 

The Supreme Court intervened, extending the deadline to December 31, 2023, only to later vacate it at the request of the government. 

 historical context emphasizes the necessity of efficient policy implementation and communication in preventing financial system disruptions.

Demands for Action

Given the complaints, concerns, and expert judgments, the CBN urgently has to take decisive action. To lessen the existing scarcity, clear communication, more money printing, and better distribution routes are required. 

Collaboration between the CBN, DMBs, and the general public can result in a more transparent and resilient financial system.

Conclusion

The discrepancies between official claims and ground reality cannot be disregarded as Nigeria struggles with the issues of Naira scarcity. 

The impact on daily transactions, from ATM withdrawals to point-of-sale transactions, emphasizes the need for a holistic solution. 

The CBN must address the concerns expressed by experts and citizens alike, taking swift and effective action to restore trust in the financial system. Only by open communication and firm action will Nigeria be able to overcome its current difficulties and pave the path for a more stable and resilient economic future.