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Opinion

Re: Concerns over cash squeeze in states despite increased CBN supply

The above titled story in the Daily Trust newspaper of Friday, November 15, 2024, made an interesting reading. It captured the complaints by bank customers and Point of Sale (POS) operators across the country over alleged cash squeeze, noting that this is happening as “citizens try to meet their increasing demands for notes especially as yuletide shopping begins.”

Fair enough, the story acknowledged the fact that the cash scarcity was happening in spite of increased supply by the Central Bank of Nigeria (CBN).

But why are we having to deal with cash squeeze at this time when even petty traders and others in the informal business sector have started incorporating electronic transactions into their day to day activities? Why is a whopping N3.87 trillion out of the N4.14 trillion in circulation currently outside the banking system?

The reasons are many, but we will just list and look at some. As recent CBN data indicates, “93.34 per cent of the nation’s currency is in the hands of individuals and businesses, while only 6.66 per cent remains within the banking sector.”

Have not seen the viral photos and videos of politicians sharing huge amount of physical cash (the type that one sees only in banks) to the Constituents in the name of empowerment? Of course, it is okay to empower people, but do we need violate the money laundering act in doing so? I srill remember the day a lawmaker stormed his constituency in Niger State with N50m physical cash which he shared to his people as Ramadan gift.

As for PoS operators, there presence has no doubt eased the difficulties many people face while trying to access money. Banks have also seen reduction in the number of customers trooping to their offices daily because their demands can be met by PoS operators.

But we must admit the fact that many PoS operators have now been turned into money laundering points by people with skeleton in their cupboards. And the PoS operators, wittingly or unwittingly, now carry out transactions well beyond their legally allowed limits. Indeed, some no longer use the banks for any of their transactions, all in their efforts to avoid trace. They go from PoS to PoS mopping up cash and stashing same at home.

And to meet the demands of these questionable customers, PoS operators now strike deal with filling stations and others dealing in physical cash in order to meet their ever-increasing supply. Inasmuch as the banks have their own issues, they are sometimes powerless in this regard, because these questionable characters continue to intercept the Naira notes before they reached the banks.

As for those who patronize local markets, the use of mobile wallets is gradually making inroads there. However, those moving from market to market buying up the grains with the intent of hoarding same are using physical cash to entice the sellers on one hand and avoid the watchful eyes of the authorities.

Just like the CBN Governor Olayemi Cardoso said at the penultimate Monetary Policy Committee (MPC) meeting, the apex bank is doing everything possible to ensure that there’s sufficient cash in the system – there’s no excuse for not having sufficient cash in the system, as he noter – we must help in checking the activities of money launderers and other questionable characters who continue to push us to the edge for their selfish reasons.

  • Nasir writes from Abuja

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