The Central Bank of Nigeria (CBN) has announced stringent measures to address the nation’s prolonged cash crunch, warning that commercial banks failing to provide cash at automated teller machines (ATMs) and branches will face penalties starting December 1, 2024.
CBN Governor Olayemi Cardoso made the declaration at the annual bankers’ dinner in Lagos, emphasising the regulator’s commitment to enforcing compliance and ensuring adequate cash supply for Nigerians.
“We are conducting spot checks across deposit money banks (DMBs) and will impose penalties on institutions that fail to meet cash supply requirements. Financial institutions engaging in malpractices or deliberate sabotage will face stringent penalties,” Cardoso stated.
The CBN has urged customers to report issues with cash withdrawals at ATMs or bank branches through official complaint channels. Cardoso promised that public guidelines would be widely distributed to raise awareness about the new enforcement measures.
“We also encourage stakeholders, including mobile money operators and agents, to comply with regulations aimed at improving cash flow and digital transactions,” he added.
Nigeria’s cash shortage began in 2023 with the introduction of a controversial naira redesign project. The policy aimed to promote digital payments and reduce cash dependency but led to severe cash shortages nationwide.
Although the naira redesign project increased digital payment adoption—benefiting platforms like Opay and Palmpay—it caused a significant drop in physical cash circulation. This was compounded by a CBN policy that capped weekly over-the-counter withdrawals at $645.
With commercial banks unable to meet cash demands, businesses turned to point-of-sale (POS) agents. These agents sourced cash from informal providers such as supermarkets, fuel stations, and market vendors, creating a parallel cash ecosystem.
The increased reliance on POS agents has led to calls for tighter regulation. In May 2024, the Nigerian government mandated that all 1.9 million POS operators register with the Corporate Affairs Commission (CAC).
Despite its push for a cashless economy, the CBN acknowledged the necessity of ensuring adequate cash flow. Governor Cardoso assured Nigerians of the regulator’s readiness to meet cash demands, especially during high-demand periods like the festive season.
“The CBN will maintain a robust cash buffer to meet the country’s needs. Our focus is on ensuring seamless cash flow for Nigerians while fostering trust and stability in the financial system,” Cardoso said.
The ongoing cash crunch has disrupted business activities and strained household finances. Many Nigerians are optimistic that the CBN’s enforcement measures will restore normalcy, particularly during the year-end festive period when cash demands typically surge.
- The over-the-counter withdrawal cap of ₦500,000 converts to approximately $645 USD or €590 EUR, based on current exchange rates.
- POS agents charge customers significantly higher fees to access cash, adding to the economic burden on individuals and businesses.
With December’s enforcement date approaching, all eyes are on the CBN and its ability to alleviate Nigeria’s cash shortages. While the push for digital payments continues, many Nigerians hope that balancing this with improved cash availability will restore trust in the financial system.
