By Adedotun Ajayi
The extensive cash shortage in banks persisted during the Yuletide season with legal icon, Aare Afe Babalola, SAN, warning of dire consequences, including debilitating hunger, high mortality rate, uncontrolled crimes and increased insecurity.
Investigations however revealed that the cash shortage emerged about two months ago, with bank customers complaining of inability to withdraw cash from many banking halls.
Afe Babalola, last week Monday decried the current dearth of cash in banks, stating that it kills faster than COVID-19, and calling for the federal government intervention.
“COVID-19 is regarded as a dangerous and dreaded epidemic which kills its victims but I dare say that cash crunch kills faster and certainly can kill more people than the pandemic,” Mr Babalola said in a statement issued on Monday in Ado-Ekiti.
The renowned lawyer said banks now lack cash, insisting that the Central Bank of Nigeria and commercial banks have inflicted a cash crunch on customers across the country.
Chief Afe Babalola, who is also the founder of Afe Babalola University, Ado-Ekiti (ABUAD) said “the cash crunch is being felt in virtually all parts of the country. Many banks have turned customers back for lack of funds, while those who gained entrance into the banking halls went home disappointed.
“Customers cannot withdraw cash from the ATM machines in my university. The banks operating in the institution also have no cash to pay to customers.
“The saving grace is that the students who rely on ATM machines are on holiday,” he said.
The legal luminary said the nation’s economic growth was known to be basically trade-by-cash dependent, whereby traders exchanged goods for cash.
He said that presently, most Nigerians including market women, transporters, hawkers, vulcanizers, plumbers, roadside mechanics, and hair-dressers earn their living from daily sales.
But he believes that many Nigerians suffers the cash crunch more than the wealthy ones in absence of sales through cash.
“The popular African adage is that “when hunger is eliminated from one’s problems, the remaining problems become easier to solve.“A man without cash will certainly go without food; he becomes hungry. Of course, a hungry man becomes an angry man, and an angry man becomes violent,” he said.
The legal luminary further said that a violent man could kill, behave irrationally and even commit suicide.
Chief Babalola acknowledged the fact that cashless policy thrive in developed countries, adding, however, that much cash might not be in high demand in Nigeria because of the policy.
”Yes, it only works because their governments have created enabling environment for such technology to thrive.
“Even if the motive is to fully implement a cashless policy, then a robust change management policy must have been put in place not to inflict hardship on the masses,” he said.
Confirming this development to The Hope, a senior bank official in one of the banks in Akure, said the cash shortage was a challenge and it emerged about two months ago.
He said, “Yes, it is in all the banks. I don’t really know what is going on. I will just be in my office and hear customers calling me that they want to withdraw cash and the staff are saying there is no money, and I will call somebody downstairs to help me look for cash or call another branch that we need cash, ‘can I send someone to you to collect some cash?’
“It has been like that for a while. There is even no cash to feed the ATMs.“ I know that sometimes in 2020, there was an issue with the Inspector General of Police, when he said the number of policemen escorting bullion vans were too small, and that the banks should increase the number.
“It was an issue because the banks said that the cost of moving cash was too expensive and they cannot afford, adding five policemen to the number that escort bullion vans.
“The fact is that the cost of moving cash is too expensive and the customers are not ready to pay.
“As a result of that, there was a cash shortage around that time in 2020 but somehow they were able to resolve the issue. But in the last three or two months, the shortage has re-emerged and I don’t really know what is going on.
“It is not that the banks are insolvent, but customers can’t transfer money. It is just that there is no cash. Cash is the problem.
“The customers’ funds are there in the banks. They can move their money, it is just that there is no cash and it is an industry challenge.
“We have not been supplying cash, we don’t have cash in the last few days, we have had to rely on customers whose businesses are cash-oriented. That is what has been happening.”
Richard Nathaniel, an accountant and analyst, said the cash shortage may be due to the discretionary Cash Reserve Ratio, CRR, debits imposed on banks by the Central Bank of Nigeria, CBN.
The CRR is the amount of deposit banks are mandated to keep as cash with the CBN.
Presently, the CRR is 22.5 per cent but the apex bank in its bid to manage money supply imposed discretionary CRR debits on banks. Speaking in this regard, Mr Richard, described the widespread cash shortage as alarming, saying that it justified the call for a reduction in CRR deposits.
According to him, “The cash crunch is a serious issue. It is capable of eroding depositors’ confidence in the banking industry. “If the situation leads to a run on banks, it can lead to collapse of the payment system.
“The situation is highly alarming. It needs immediate intervention from the CBN. The banks have been complaining bitterly about the impact of the high CRR on their cash positions. What is happening appears to justify the call for reduction in CRR and also for CBN to pay interests on bank statutory deposits. Cash needs to be urgently moved to banks by CBN to avoid catastrophe,” he said.
