Top Stories

February 13, 2023

Cash squeeze, as rejection of old notes spreads

CBN

.

…as banks await fresh directives from CBN

•PoS operators defy CBN threat on charges, association gives reasons

•Naira black market booms as more banks’ branches close

•Okada riders, petrol stations others sell Naira

•New notes scarcity persists

•We have made our recommendations – Customers association

By Emma Ujah, Abuja Bureau Chief,  Peter Egwuatu, Asst. Business Editor, Yinka Kolawole, Nkiru Nnorom, Godwin Oritse, Godfrey Bivwere, Elizabeth Adegbesan, Emmanuel Elebeke, Gabriel Ewepu,

Ezra Ukanwa & Favour Ulebor

Despite the atmosphere of relief that greeted the Supreme Court order suspending the deadline for acceptance of old Naira bank notes as legal tender, compliance to the order was near zero across the banks and markets.

Also, operators of Point of Sales, PoS, cash services sustained their high charges during the weekend despite the threat by the Central Bank of Nigeria, CBN, to withdraw their licenses over the widespread hike in charges far beyond officially approved tariff.

Financial Vanguard’s findings across several locations in Lagos and Abuja show that banks did not open their branches on Saturday and Sunday (February 11 and 12, 2023) to receive old notes, indicating that they were sticking to the February 10, 2023 deadline.

Recall that in line with the Central Bank of Nigeria, CBN, directive, all commercial banks were opening their branches on Saturdays and Sundays for the purpose of receiving old banknotes since December 15, 2022, when the Naira change began with the introduction of the new banknotes.

Officials of the banks who spoke to Financial Vanguard simply said they were not directed to open the branches last weekend, adding that they were still waiting for directive on whether to collect the old banknotes as they open for business on Monday (today).

A security man at one of the branches of a tier-one bank visited by Financial Vanguard on Saturday stated: “The bank did not open. As you have seen, there is no cash. We are waiting for our management to tell us the next thing to do as deadline for submission of old notes ended yesterday (Friday). We will not open until Monday when we shall get further instruction on whether to receive old notes or not.”

Meanwhile, the tense cash withdrawal financial environment that pervaded the country in the past two weeks ahead the February 10, 2023 deadline for the old banknote, has remained despite the Supreme Court order removing the deadline.

Financial Vanguard’s findings across several locations indicated that as at Friday, two days after the Supreme Court order, most banks did not dispense new banknotes while many banks’ branches that were closed earlier in the week due to threat of violence remained closed.

Also most Automated Teller Machines, ATMs, were without cash throughout the weekend, indicating further deterioration in the cash supply situation after the court order.

CBN, Banks in uneventful deadline

There were also indications that the CBN and the banks were indifferent to the Supreme Court order as they maintained silence while continuing businesses within the limits of existing CBN directives.

On Friday, February 10, the official date announced by the apex bank as deadline for submission of old naira notes, and also two days after the court order suspending the deadline, the CBN’s countdown clock to the deadline was still running.

The notice on its website reads: “Current series of N200, N500 and N1000 notes remain legal until the deadline 10th February 2023”.

In the notice, the bank also encouraged Nigerians to deposit their old notes at designated commercial banks.

The commercial banks were also focused on the deadline.

One of the tier one banks even sent messages to its customers, on Thursday, a day after the Supreme Court order, to alert them that the deadline when old N200, N500 and the N1000 Naira notes would no longer be legal tender is next day and advised them to deposit such notes in the bank before it was too late.

Our reporters who visited several banks in Abuja observed unusual calm at banks’ premises.

Most banks in Abuja remained shut at the weekend, leaving only few ATMs with limited cash in new banknotes.

However, a bank official told one of our correspondents that they did not witness the anticipated rush to deposit old notes on Friday that could warrant opening at weekends.

He added that scarcity of the new notes made weekend banking totally unnecessary as many banks did not have the new notes, thereby leaving most ATMs empty.

None of the three banks in Kuje Area Council of Abuja, opened to customers on Saturday and Sunday. The three banks are, First Bank, FCMB, and UBA.

Most banks’ ATMs did not dispense.

In Kuje, UBA was the only bank dispensing cash when our correspondent visited the banks.

Uncertainty amongst publics

There was uncertainty among members of the public on whether the CBN would still allow circulation of the old notes, given the position of the Attorney-General of the Federation, Abubakar Malami, who said that the Federal Government would abide by the Supreme Court order that old notes should continue as legal tender until its final ruling.

A community health officer, Ms. Joy Alamene, who resides in Kabusa, a suburb of Abuja Municipal Area Council, Abuja, said, “I was in Kabusa Market to buy food items for my family, the woman selling told me that she would not accept old Naira notes because other sellers are not accepting the money in the market.

“I also went to the supermarket which I normally patronize. The cashiers refuse to accept old Naira notes as well”.

However, Alamene said at the PoS they give customers old Naira notes, “The PoS operators are giving us old Naira notes, and it is them that gave me the old Naira notes market women rejected.”

Also a teacher in one of the private schools in Abuja central district, Margret Ojuola, said, “I was at the motor park to board a taxi to my place of work at Area 1, Garki,  the taxi driver said he would not accept old Naira notes from me, and it almost got me stranded, while standing with him, other drivers intervened and persuaded him to accept the money from me which he did.

“Meanwhile, as he departed the park he said the filling stations are rejecting old Naira notes, and that was why he also rejected the one from me. The PoS operators are accepting the old Naira notes. Some said they will take the notes to their banks.”

Financial Vanguard also observed that many commuters were stranded as many motorists and cyclists rejected the old notes during the weekend.

PoS operators differ on old Naira

Some PoS operators have also started rejecting the old banknotes as at Thursday, a day after the court order and many were still rejecting as at Friday after the statement by Malami.

A PoS attendant, Adekunle Adebimpe said: “I no longer collect old notes, I won’t take the risk of collecting it and end up not being able to change it.”

Another PoS operator, Ayuba Blessing, told our correspondent that she had stopped receiving old notes because of the uncertainties surrounding the CBN policy.

She said: “I have stopped receiving old notes because I wouldn’t want to lose my business capital. I learnt that the Supreme Court ordered CBN to stop its policy but I also heard from one of my friends who listens to news always that the CBN is insisting that all the old notes be taken back to the bank by Friday. So with this confusion, I decided to stand down the old notes. Although I collected old notes in the morning, I decided to take them to the bank and stay here in the shop for other transactions.”

But another POS operator, Tunde Taju, said that he was still receiving old notes because he believed he could still take them to the bank after the deadline and the money would be received.

He stated: “I still accept old notes. I don’t think there is anything to be scared of when I know I can still take the money to the bank and it will be accepted.”

Concerns mount over CBN’s silence

Bank customers who spoke to Financial Vanguard said that they still remain confused as to whether the February 10 deadline still stands, despite the Supreme Court order.

Amaka Chidindu, a resident in the Abuja Municipal Council, told our correspondent in a bank premises on Friday, “I am here to actually put my old notes into the bank. I don’t trust Nigeria. Whether the Supreme Court says yes or no, as long as CBN has been silent on the issue, then something is going on.

”I have a shop and I have stopped accepting old notes since yesterday (Thursday) to be able to come early today to pay all in.”

Visits to several branches of banks on Friday also reveal that the pressure on them is still mounting over limited availability of the new banknotes.

PoS operators ignore CBN threat

Reports across several parts of the country show that PoS operators are still charging between 15 and 20 per cent for cash withdrawals contrary to the official tariff of 2 per cent.

In a chat with journalists in Edo State earlier last week, Director, CBN Risk Management department, Mr Laise Ijebor, said the apex bank was aware that PoS agents were engaging in sharp practices of astronomical hike in charges.

He had stated: “We are monitoring the situation and anyone caught would have his or her license withdrawn and would not be in the business because we are going round with the Economic Financial Crimes Commission (EFCC).”

Why PoS charges are high – Association’s boss

Speaking to Financial Vanguard on the high charges at PoS services, the National Treasurer, Association of Mobile Money and Bank Agents in Nigeria, AMMBAN, Mr. Olowu Babs Azeez, noted that all recommendations made by the association was not accepted by the CBN hence the reason for agents closing of businesses and increase in withdrawal charges as agents needs to make up for the high cost they pay to get cash.

He stated: “We have to be sincere with ourselves, since there is no cash in circulation we have to go extra miles to source for cash in order to make such transactions and those charges incurred must be embedded into overhead cost and when you are doing a business you have to be able to be profitable and this is not a charity.

Assuming the CBN has followed our recommendations, what I recommended in a video is that the CBN should come up with the structure to accommodate PoS agents in order to do this cash swapping and since now the scheme has ended all CBN needs to do is to reckon with the agents and let there be a kind of agent categorisation where we have standard agents and we have retail agents.

“So the standard agents will be responsible for all the agents within his or her community. So this standard agents should be allowed to access funds either from the bank or from the super agents or the Mobile Money Operators, MMO.

“When they have access to funds the retail agents can approach them to source the cash and by so doing it is going to reduce the cash scarcity out there and it is going to reduce the chaos at the ATMs, the crowd and the violence will be reduced. People will have access to funds because this is what we have been doing before now and now that they came up with a policy of cash swapping then they have to incorporate PoS agents into this.

“As an association, we have written to CBN, we have visited CBN and the request from our recommendation has been submitted but we have not gotten any positive response. The only response that was yielded when we approached the CBN was the cash withdrawal limit that was increased to N500,000 per week from N100,000.

“Though they recognized our presence but we are not part of this excercise. We should be part of these exercises”

Naira black market booms

Last Friday the black market trading in banknotes heightened as more banks’ branches closed shop for lack of new notes as well as fear of disruption of activities by angry customers.

Financial Vanguard’s findings from visits in many locations across Lagos and Abuja revealed that more businesses including tricycle riders (Okada), petrol stations, supermarkets and some other retail businesses that collect cash are now selling same to both PoS operators and individuals at rates between 5 and 10 per cent.

A PoS operator in Ikeja area of Lagos told Financial Vanguard: We now buy cash from supermarkets and petrol stations. Sometimes some people just bring cash to us and we buy since we cannot get the new notes from banks.

They sell between N400 and N500 for N5000 while supermarkets sell cheaper at about N300. Okada riders also sell cheaper. But some of them sell more than that, and we put our own profit to sell to other people”.

PoS activities

Financial Vanguard observed that many PoS operators who used to be the last resort for most members of the public in need of cash closed shop for lack of cash. The few ones that opened charged as high as N1000 for N5000.

They complained that even after spending many hours in queues at ATMs, they were forced to leave without being able to make any withdrawal.

Customers’ frustrations

The large crowd at the various banks and ATMs in Lagos and Abuja on Thursday and Friday began to reduce during the weekend and almost disappeared yesterday as the banking public began to notice that ATMs are now dry. Most banks’ premises were also deserted.

An official of one of the banks visited by our correspondent said that money in their vaults will not go round the customers present at the bank as at 8am on Friday adding that they would not want to pay some and not pay others, hence the bank decided not to open the branch to avoid breakdown of order.

Commenting, a customer of the bank who gave her name as Yemisi Ojo said: “Many customers including myself came to this branch today before 7 a.m. to withdraw only for some officials to come around 8a.m. to say they are not opening because no cash is available and we are afraid of some of these customers who may want to cause problem.

Another customer in the bank’s premises who gave his name as Jonah Alabi said: “I have been here at 8am to see if I can get small money. The bank has not opened. The ATM is not dispensing as well.  Because I needed cash urgently I went to PoS operator and she said we are buying Naira from petrol stations or any other place we see cash because of the scarcity of new notes. So you have to pay N1,000 to get N5,000 or N2,000 to get N10,000 of the old notes”. 

Another bank customer, Mr Mike Azubuike said he had to pay N12,000 to withdraw N40,000 from a PoS operator.

“I needed to use cash for some transaction as my bank’s network was very bad. When I visited the PoS agent, he charged me N12,000 to withdraw N40,000. I had no option as I was really in need of cash”.

Old notes still circulates

Meanwhile, there were instances where the old Naira notes are still being used on Friday as the scarcity got worse.

A general goods trader in Surulere area of Lagos who identified herself as Madam Grace said ”’a few PoS are our saving grace”, adding that she still collected old naira notes from a PoS near her shop but revealed that some of her fellow traders refused to collect the old naira notes.

Blitz who said that the women rejecting the old notes preferred to go home empty than collecting the old naira notes, lamented that her business has dwindled as a result of the situation.

According to her, “Before now, I do not sell less than N300,000 daily, but since last week, hardly will I count N100,000. Even for me to restock my shop is a big problem, because bank networks are not working efficiently, sometimes you can spend an hour waiting for network to restore.

”Going to the market to purchase goods has become even more difficult and those who want to buy from us, retailers, are also facing same challenges because they will not leave until we see alert. How long are we going to continue with this?”

Bank customers association urges patience

Commenting on the development, the President, Bank Customers Association of Nigeria, BCAN, Dr. Uju Ogubunka advised bank customers to be patient.

He stated: ”I will advise bank customers to be patient. They also have to be very cautious.

“You know when people are under serious pressure like we are now, they can do things that they never planned to do. We know that it is a passing phase. It will not last forever.”

On the effort of the association on the current issue of new naira notes scarcity he said: “What we have done is the effort we made. We are not operators or regulators; all we can do is to make our little suggestion.

“One of the suggestions that we have made is that given the situation that we have found ourselves, authorities should allow both the old and new currency to circulate alongside until we are able to have enough of the new notes and then as the new notes keep coming in we gradually withdraw the old ones.

“I believe that that is the best way to go since we still have the old notes, they have not been destroyed yet.

“Even if they have been sent back to CBN which I don’t believe they might have sent all of them, but if they have, the CBN can re-issue some of them pending the time it is able to print enough new notes and allow them to circulate side-by-side.

“And when they do this they will have to leave the terminal date open as long as possible until you get enough of the new notes in circulation.”