The Central Bank of Nigeria (CBN) has announced tough measures to address the ongoing cash shortage in the country, warning that commercial banks failing to provide cash at automated teller machines (ATMs) and branches will face penalties starting December 1, 2024.
Speaking at the annual bankers’ dinner in Lagos, CBN Governor Olayemi Cardoso emphasized the regulator’s commitment to ensuring an adequate cash supply for Nigerians, alongside stricter enforcement of compliance. “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 also urged customers to report any issues with cash withdrawals through official complaint channels. Governor Cardoso assured that public guidelines would be widely circulated to raise awareness of the new enforcement measures. Additionally, stakeholders, including mobile money operators and agents, have been encouraged to comply with regulations designed to enhance cash flow and promote digital transactions.
The cash crisis in Nigeria began in 2023 following the controversial naira redesign project, which aimed to promote digital payments and reduce the country’s dependence on cash. However, the policy led to widespread shortages of physical cash, exacerbated by a CBN directive that capped weekly over-the-counter withdrawals at approximately $645. While digital payment platforms such as Opay and Palmpay saw increased usage, the shortage of cash disrupted the economy and businesses, who turned to point-of-sale (POS) agents for cash. These agents, in turn, sourced funds from informal providers like supermarkets, fuel stations, and market vendors, creating a parallel cash economy.
The surge in reliance on POS agents has prompted 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 pushing for a cashless economy, the CBN has acknowledged the importance of ensuring sufficient cash circulation. Governor Cardoso reassured Nigerians that the CBN is committed to maintaining a robust cash buffer, particularly during high-demand periods like the festive season.
“The CBN will ensure seamless cash flow for Nigerians while fostering trust and stability in the financial system,” Cardoso said.
The ongoing cash crunch has strained household finances and disrupted business operations, with many Nigerians hoping the CBN’s enforcement measures will restore normalcy. As the enforcement date of December 1 approaches, there is growing optimism that the CBN’s actions will address the severe cash shortages, especially during the year-end period when cash demand typically spikes.
While the push for a cashless economy continues, many Nigerians hope that balancing the digital transition with improved cash availability will restore confidence in the financial system.
