AFTER the Central Bank of Nigeria’s farcical redesign of the naira a year ago ended in chaos, cash scarcity has returned in force. Since November, Nigerians have been traumatised while trying to withdraw cash at banking halls and ATMs. Many have resorted to PoS operators, who have promptly raised their charges. Coming ahead of the festive season when demand for cash spikes, this compounds the misery of Nigerians, who are undergoing privation following the removal of petrol subsidies and naira rate unification by President Bola Tinubu.

Despite official assurances, the situation is not improving. In November, banks started imposing daily individual withdrawal limits of between N20,000 and N40,000. Cash availability at the ATMs has also reduced considerably and long queues are now common. Traders are hard hit because many do not trust online transactions. By Monday, many bank branches had no cash to dispense. Organised labour has asked the President to intervene.

Amidst the turmoil, the CBN and its Governor, Yemi Cardoso, have repeatedly assured Nigerians that it had supplied the banks with enough cash. But this has not reflected at the dispensing points; instead, cash has become scarcer. Lately, the CBN has blamed the scarcity on hoarding. This is not convincing either.

This is reminiscent of the cash scarcity of late 2022, which was triggered by the CBN under Godwin Emefiele, its erstwhile governor. Emefiele had commenced the ‘naira redesign’ policy in December 2022, ostensibly in furtherance of the cashless policy. Unofficially, it was whispered that it was also designed to neutralise politicians who had stockpiled cash ahead of the February/March 2023 elections.

Ill-timed and terribly implemented, by early 2023, there was widespread cash scarcity. This inflicted pain on ordinary Nigerians who could not withdraw cash for food, transportation and health care. The CBN said it removed N2.3 trillion cash from circulation. It nearly crippled the economy, particularly the informal sector, which contributes about 65 per cent of GDP per IMF, and 80.4 per cent of jobs. About five persons reportedly died and some bank branches were set ablaze in riots at the peak of the crisis. The Centre for the Promotion of Private Enterprise calculated that the economy lost N20 trillion to the scarcity.

Temporary reprieve came for Nigerians when the Supreme Court overruled the CBN and extended the validity of the old naira notes to December 2023. In anticipation that there might be no extension, the CBN said Nigerians started hoarding cash again although the apex court later authorised both the old and new notes as legal tender.

It is obvious that the new CBN leadership did not adequately prepare for the current scarcity. It has continued the blame game by alleging insider abuse by the banks as being partly responsible. The buck stops at Cardoso’s desk; as the regulator, the CBN should punish errant banks.

Cash transactions are still very high in Nigeria while the CBN overlooks the institutional weakness affecting online financial transactions in the country. Nigerians frequently suffer losses using online banking channels: transfers fail, yet debit alerts are not reverted. Experts put the rate of failed online transactions at 40 per cent.

It is disappointing that Cardoso did not learn tangible lessons from Emefiele’s missteps. This has facilitated another round of unnecessary agony for Nigerians and businesses. He should quickly devise short- and long-term solutions. He must whip the banks into line and rebuild public confidence in the banking system.

Cardoso should initiate rapid expansion and deepening of ICT in the financial system. Together with the security agencies, the laws against abuse of the naira by public “spraying” at social functions should be rigorously enforced.

He should provide adequate naira notes and end the naira scarcity immediately.