By Babatunde Ayedoju
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Undoubtedly, this has not been the best of time for Nigerians with the myriad of challenges facing the citizens. From scarcity of naira notes to fuel scarcity and increase in fuel pump price.
Towards the end of last year, the Central Bank of Nigeria (CBN) rolled out a set of financial policies that have been affecting the citizens up till now. First, on October 26, 2022, the CBN Governor, Godwin Emefiele, announced the redesign of N200, N500 and N1,000 notes which were to be released into circulation on December 15, 2022.
Unfortunately, when the new notes were released, members of the public could not access them. The January 31 deadline for the old notes to cease to be legal tender was approaching, yet there were more old notes in circulation than the new notes. Even in the last week of January, commercial banks were still giving out more of old notes than new notes to customers. Meanwhile, there were allegations that people were spending the same new notes that could not be gotten through the legitimate means at parties.
Towards the deadline, some business owners and transporters stopped collecting the old notes from people, because they feared that if they should have too many old notes with them after the deadline, it would be wasted.
Between that time and now, there have been a lot of going back and forth by the CBN and even the presidency.
Meanwhile, about six weeks after the CBN first announced that it would be redesigning some of the naira notes, the apex bank directed that deposit money banks and other financial institutions should ensure that over-the-counter (OTC) cash withdrawals by individuals and corporate organisations did not exceed N100,000 and N500,000 respectively. The bank also pegged maximum cash withdrawal per week through the Automated Teller Machines (ATM) at N100,000, subject to a maximum of N20,000 cash withdrawal per day.
Aside advising bank customers to use alternative channels such as internet banking, mobile banking apps, USSD and eNaira among others for banking transactions, CBN also warned that financial institutions that aid and abet the circumvention of the new policy would be severely sanctioned.
The policy which was to come into effect in January 2023 elicited so much reactions from well meaning citizens that the CBN later adjusted it. In a circular released on December 21, 2022, and numbered BSD/DIR/PUB/LAB/015/073, the CBN modified the withdrawal limits to N500,000 and N5 million for individuals and corporate organisations respectively. It also stated that third-party cheques above N1 million would not be eligible for over-the-counter withdrawal.
The circular reads in part: “Following our circular BSD/DIRIPUB/LAB/015/069 dated December 6, 2022, on the above subject and based on feedback received from stakeholders, the CBN, hereby makes the following reviews:
“The maximum weekly limit for cash withdrawal across all channels by individuals and corporate organisations shall be N500,000 and N5,000,000, respectively.
“In compelling circumstances where cash withdrawal above the limits in (1) above is required for legitimate purposes, such requests shall be subject to a processing fee of three per cent and five per cent for individuals and corporate organisations, respectively.
“Further to (2) above, the financial institution shall obtain the following information from the customer, at the minimum, and upload the same on the CBN portal created for the purpose
a. Valid means of identification of the payee (National ID, International Passport, or Driver’s License); Bank Verification Number, BVN, of the payee; Tax Identification Number, TIN, of both the payee and the payer; Approval in writing by the MD/CEO of the financial institution authorising the withdrawal.
According to the CBN, any withdrawal above the set limits must be approved by the Managing Director of the bank in writing.
No doubt, the redesign of the naira notes, coupled with the restriction on cash withdrawal has made life difficult for Nigerians – civil servants, business people and others. People are no longer able to access cash, due to the aftermath of the novel CBN policies. Point of sale (POS) operators were charging customers 20 to 25 percent for every withdrawal made; ATMs were not dispensing up to what people needed. Even the bank officials were also not dispensing much money over-the-counter.
Even though these measures have brought untold hardship to citizens, to the extent that protests were even reported in some places, the situation has only grown worse. Unfortunately, cash has become even more scarce, bringing more hardship to the citizens.
Odun Ofere, a teacher, said, “We cannot access the bank easily. Even POS agents around our street have no cash to dispense; I had to walk miles last Saturday looking for cash, to no avail. In fact, I almost couldn’t go to church on Sunday.”
Talking about the way out, he noted that though the policy is good, the implementation is very bad. He said that the government should stretch the time for old notes until they fizzle out.
In the words of Paul Isah, a farmer, the ongoing CBN measures have not only aggravated inflation but have led to a drop in the standard of living of people. According to him, it came with the hardship of going to look for cash before one can transact with those who are not electronically inclined.
He suggested that government should ensure reliable and robust network that can feed the nation’s population if they think e-banking is the way forward, even as they take time to educate market women and drivers on cash transfer.
“They must ensure the reliability of cash transfer, as many, especially the uneducated ones, are afraid of fraud and fake bank alerts. They should supply free POS machines to those with petty business who cannot afford one, and make it at little or no charge for transaction. This will help sustain micro or, if possible, nano businesses,” he added.
Omolabake Matthew, a fashion designer, said it has affected her business negatively because there is a drop in sales. Her words: “Most of my customers complain that they don’t have cash, and without cash they can’t buy from me. Also, most people don’t accept transfer as a result of network failure. So, for us to buy something even to eat has been difficult.”
She recommended that there should be enough new naira notes in circulation and banks should load the ATMs with money to be disbursed to people promptly. She believes that such a measure would help reduce the scarcity of money in circulation.
Simi Gyang, a farmer, lamented that the cash crunch has affected her business very badly, which is complicated by difficulty in getting money from POS. She said, “Business has dropped drastically. Our customers no longer come in their numbers, because of fuel scarcity. It became worse in the last two weeks. Ugwu that we sold for N8,000 is now sold for N3,000, and that is if you’re lucky. Beyond that, you have to transport it to the customers because they can’t afford the cost of transportation to come to you.”
She suggested that the Federal Government should make the new naira notes circulate in large numbers, saying, “The issue of banning the use of the old naira notes, knowing fully well that the new notes cannot circulate well among the masses, is an error on the part of CBN and government in general.”
Rachel Jantiku, a writer, said that the scarcity of naira notes had not affected her so much, because she could get cash from church every Sunday.
