CBN’s Cash Circulation Claims Questioned Amid Ongoing Scarcity

In the wake of the cash scarcity currently affecting Nigeria, the Association of Mobile Money and Bank Agents in Nigeria and the Association of Senior Staff of Banks, Insurance, and Financial Institutions  (ASSBIFI) have shed light on the reasons behind the ongoing scarcity.

Speaking on Radio Now’s ‘The Big Story’ which airs from 5:00-5:30 PM Mondays through Fridays, Mr. Oluwagunwa Ibirogba, Chairman of the Association of Mobile Money and Bank Agents in Nigeria, attributes the scarcity to fear of the unknown among business owners and the Central Bank of Nigeria’s claim of having over 4 trillion naira in circulation.

“The cash scarcity remains because of two things. One, that is the fear of the unknown by people who are in the business and obviously CBN’s thinks that he has over 4,000,000 cash in circulation. The question is where is the cash? Obviously it does not vanish into thin air which is within Nigeria and Nigerians are holding the cash. A lot of people are having cash and they are not ready to part with it. Why? Because the banks are not helping much. CBN also has its issues because the CBN failed to handle the information that came out earlier this year that old notes should be removed and also how intervention should take place.”

Also Read: CBN Introduces Contact Channels for Cash Withdrawal Complaints

Mr. Ibirogba further explains the intricacies of the cash management cycle and its impact on the availability of cash. 

 “Then the third aspect of it is the change in cash management cycle. Cash gets to the banks through the CBN and traditional depositors. CBN has released over 4 trillion through the banks and finds its way into the hands of their various customers.Ordinarily these cards are supposed to be returned back into the system or returned back to go to the banks, out, in and out like that. But unfortunately, these cards are in some people’s hands and they are making things difficult. The MMOs too are not helping matters because one, because of the indiscriminate churning out of terminals or whatever, things, there are so many agents there, even those defined and undefined, and there is a high demand on cash.And now the traditional depositors have not made it. You are supposed to have the cash back into the banks and not doing so. And basically, and basically this cash are now being handed over to some desperate agents who are willing to do things at any cost and they are not doing that in the field.The filling stations, the key distributors of goods and services, traders, they prefer to give cash to those agents at premium rather than give it to the banks. So if you do the math, we can also project that over 2.5 trillion are in the POS cash system.”

Meanwhile, Mr. Olusoji Oluwole, President of ASSBIFI, highlights the discrepancy between the volume of cash in circulation and the unmet demands from retailers.

“Cash in circulation is totally different from cash in the system because there are two different things. Cash in circulation is what is going around in public that has not come into the bank and has not come into the system. Now, if you have so much money around and it is not coming into a system, then it creates a distribution problem for the bank as well.Now, banks have only two sources of cash, the CBN and retailers. And when we are talking of retailers, we are talking of major retailers, the filling stations, big supermarkets, the big triggers in markets. They are the ones who traditionally bring in the bulk of the cash that is being recirculated by banks.But where the ones from the retailers have been truncated by those who are taking advantage, so they would rather give it to the purest operator who is going to pay them a premium than give it to a bank who’s just going to take it free of charge.”