Cash scarcity threatens economy, as ATM, PoS transaction disruptions continue

THE Nigerian economy is currently being threatened by cash scarcity and high cost of charges by Point of Sales (PoS) merchants as commercial banks continue to ration cash dispensing to consumers.

Despite the Central Bank of Nigeria (CBN) claim of N3.4 trillion in circulation, Nigerians still face lots of difficulties in accessing cash for business transactions.

Most Automated Teller Machines (ATM) dispensing spots in Abuja Federal Capital Territory (FCT) are currently not dispensing, forcing most businesses to rely on PoS merchants for their transactions.

Already, charges for transactions are going up, as most PoS operators devise means of ‘buying’ money at higher costs (charges) to transact with customers.

PoS merchants in Kubwa-FCT

“Most of us have to negotiate with pump attendants at filling stations to buy their cash at a high cost, otherwise we won’t be in business again. Some also negotiate with wholesale and retail businesses to buy cash from them. We also have to put our own mark-up charges to be able to sustain our business, “a PoS attendant, Memunat Yusuf, told our correspondent.

She added that commercial banks’ N20,000 daily rationing of money to PoS operators is not sufficient.

While expressing similar concerns, another PoS merchant, Emmanuel Oganihu, told The ICIR that cash scarcity is currently threatening their business since banks don’t give licensed operators the requested amount.

“I have to devise means of sourcing my own cash for transactions. Sometimes, we go around markets negotiating with businesses, and they impose high charges for such. For N100,000, we pay N2000,” he said.

Rise in withdrawal charges to spike inflation

For N10,000 withdrawal formerly charged N200 by point of sales (PoS)merchants, the current charge is N500. For N20,000, the charge is N800, but it varies depending on your negotiation skills.

With an almost 100 per cent rise in transaction charges, there are concerns that Nigeria could witness further worsening of its current double-digit inflation of 28.02 per cent with the rising cost of goods currently squeezing Nigerians’ spending at the yuletide.

Knowledgeable economists believe the effect of cash scarcity would likely influence further inflation surge when the next inflation figures are released as charges (cost for transactions) impact the prices of goods.

“If you look at inflation figures for November, you’ll notice a double-digit figure of 28.02 per cent, which is not healthy for the economy. This development will impact the next inflation figure for December. This will squeeze rural economies further where there is – driven scarcity,” a development economist, Celestine Okeke, told The ICIR.

A development economist Celestine Okeke believes rural inflation could worsen because of this

Another development economist, Kingsley Obiakor, told our correspondent that the CBN needs to ensure cash flow this season to forestall further inflation spread.

“More worrisome is that this development will spike further rural inflation, which will compound rural poverty,” he said.

Data from the National Bureau of Statistics (NBS) showed that the rural inflation rate in November 2023 was 26.43 per cent on a year-on-year basis, showing 5.55 per cent points higher compared to the 20.88 per cent recorded in November 2022, while on a month-on-month basis, the rural inflation rate in November was 1.99per cent, up by 0.31per cent points compared to October which was 1.67 per cent.

Festive season’s Intra-state travellers and concerns about transfer charges

Intra-state travel is currently witnessing a hit as most travellers, with ATMs not dispensing with cash, have to do transfers at higher costs.

An official of the National Union of Road Transport Workers (NURTW), Chibueze Okonkwo, told The ICIR that the cash scarcity is causing problems for their transport business.

Cashless travellers risk travelling with network cash transfer glitch

“We have to pay our drivers mostly cash to enable them to buy fuel. If we send a transfer to them, sometimes network delays would affect their fuel purchase and delay their movements. Even security officials on the way don’t accept transfers,” he said.

ATMs empty, despite festive period

Checks by The ICIR around some ATMs in Abuja revealed no dispensation in many locations, while some people cluster around the stands looking infuriated and frustrated.

“I have been here since the morning after my first service and could not find any of the ATM in dispensing. I don’t have any money to part with the PoS guys since I have already planned my spending,” a customer, Mohammed Yusuf, seeking for cash withdrawal, told our correspondent.

ATM not dispensing at GT Bank in Kubwa-FCT
FCMB in Kubwa dispensing only N5000 per person with queues

CBN blames currency hoarders

Despite the CBN’s claim of N3.4 trillion in circulation, Nigerians still have difficulties accessing cash for their businesses.






     

     

    Apex banks blame currency hoarders for the current cash scarcity; however, The ICIR reports that Naira rationing by commercial banks is taking its toll on currency circulation as PoS merchants seek unconventional means to sustain their business.

    “I still believe that some Nigerians are exercising caution and are hoarding the Naira for fear of a repeat of what happened earlier in the year before the general elections. Banks are also controlling their cash dispensing,”a businessman, Onyekachi Okeke, told The ICIR.

    He suggested to the government to dispense more cash, especially during this Yuletide celebration, to lessen the negative impact of this on the economy.

    “Let the government manage inflation with proper cash flow. If people keep paying higher charges for transactions, traders will pass it on to business, and it will keep affecting our double-digit inflation,” he said.

    Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.

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