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Naira Scarcity Crippling SMEs, Financial Operations as Banks Battle Public Backlash

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If the Central Bank of Nigeria (CBN) had known that redesigning the N1000, N500 and N200 notes could threaten the economy of the nation as it appears, maybe it would have had a second thought or plan the policy better.

Since the redesign policy came to operation, it has been a litany of woes, not only to the financial institutions in the nation, but to the Small and Medium Scale Enterprises and Businesses.

Checks by Investors King showed that since the scarcity of Naira notes has bedeviled the country, average Nigerians who have accounts at various commercial banks have been left frustrated while some who appeared to have been pushed to the wall, have launched attacks on some banks in some parts of the country.

In Ibadan, some angry bank customers attacked some banks and destroyed Automated Teller Machines (ATMs), vehicles owned by bankers and customers alike because of the inability of the banks to release cash to them.

Notwithstanding the threat of sanctions by the nation’s apex bank, cases of alleged naira hoarding has not abated across the country as revelations of bank managers allegedly hoarding new notes have been hitting the public in torrents.

Officials of CBN had exposed some culpable bank officials and warned them against unethical practices. Also, operatives of the Economic and Financial Commission (EFCC) and Independent Corrupt Practices and Other Related Offences Commission (ICPC) have arrested some bank managers and other principal officers in some parts of the country for allegedly hoarding tye redesigned notes.

Nonetheless, the nation still battles cash scarcity as banks continue to witness crowd of customers who make frantic efforts, even to the point of fighting and engaging in chaos, to withdraw their money.

Apprehensive of customers’ wrath, Investors King gathered that banks’ officials have now improvised a new way of leaving the bank premises without being noticed by angry customers who have refused to the financial institutions environments even after close of work.

In Asaba, Delta State, some bank workers were seen scaling through fence when they could not make cash available for customers who had already been held stranded at the entrance.

While some Nigerians have accused Point of Sales operators of extorting them whenever they want to transact, the operators have justified their acts of increasing their charges.

Operators now charge between N500 and N1000 for N5,000 withdrawal across the country.

Some of the operators who confided in Investors King claimed that they had to pay or in some cases buy the new notes from banks officials, citing these as reasons for the increased charges.

Others said they had to tip some Nigerians to get the money in their through ATMs before they could get money to do business with.

A POS operator who simply identified himself as Adex said, “people should not blame us much because since this naira scarcity started, we go through a lot to get cash to do business with. Sometimes, I have to get my friends’ ATM cards so that I can withdraw the sum of N20000 which is the daily limit of withdraw in order to have enough cash to do business with.

“There is no way I will get ATM cards of people and borrow their money for business that I won’t give them some amount of money. So, the charges that we are collecting are part of the means of settling those whom we have already given tips. My other colleagues have to buy the naira from some bankers before they could work. Those who can’t go through all these things have closed their businesses,” he said.

As a result of failure to get cash, no fewer than 50 per cent of PoS operators have closed their shops.

The National Chief Aggregating Officer of the Association of Mobile Money and Bank Agents in Nigeria, Hussein Olanrewaju, stated that the impact of the ongoing shortage of new and old naira notes had worsened the conditions of their members.

Hussein noted that the ongoing policy meant to swap cash in unbanked areas might not achieve its mandate due to the low number of agents selected for the scheme.

He added that including more agents remained the best solution to easing the financial stress Nigerians were currently facing.

Meanwhile, proferring a headway to the crisis,, Vice President Yemi Osinbajo called on major players in the FinTech space wade in.

Some Civil Societies Coalition and Peoples Advocates have called on President Muhammadu Buhari and the Central Bank of Nigeria to be sensitive to the plights of citizens and arrest the ugly trend.

In their separate interviews, the leaders of the civil societies threatened to mobilise Nigerians in nationwide protest against scarcity of Naira as they lamented that small businesses were already shutting down.

The chairman of Osun Civil Societies Coalition, Waheed Lawal and the Publicity Secretary of Peoples Advocates, Emmanuel Olowu, decried the current hardship Nigerians are battling and informed Buhari that the nation is falling apart under his administration and that if nothing urgent was done to arrest the torturous situation, they would mobilise mass protest in the state.

Lawal said, “While we are not questioning the sincerity of the Federal Government on the financial policy, we are constrained to give volume to the murmuring, groaning and cries of Nigerians who have been badly hit by the economic dragon. Considering the pains being experienced by the common men in getting cash for their livelihood, it would not be out of place to declare that the President Muhammadu Buhari-led Federal Government is inconsiderate and insensitive to the plight of the citizens.

“The Central Bank of Nigeria led by Mr Godwin Emefiele has clearly been playing hide-and-seek game on the circulation of the new naira notes. We acknowledged the fact that there are saboteurs among the top echelon of the banking industries, but the CBN has not also released enough amount of the redesigned denominations to banks through which they can be disbursed to the generality of people. This is responsible for the ridiculous amount of cash being paid to the people over the counter.”

According to Olowu, the redesigning of the naira has turned to unjust punishment for Nigerians, adding that many small scale businesses have collapsed due to cash scarcity.

“Economically, the scarcity of cash has crippled many businesses and further push millions of Nigerians far below the poverty line. Petty traders do no longer make sales because of cash transaction which their trading depends upon. We make bold to say that this financial policy of the Federal Government is doing more harm than good presently. There should have been another way round to maintain a balance between cash control and the wellbeing of the people,” he said.

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Finance

Government Revenue Surges to N2.07trn in January 2024, FAAC Discloses

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FAAC

The Federal Accounts Allocation Committee (FAAC) has revealed a significant surge in government revenue to N2.07 trillion in January 2024.

This substantial increase reflects the buoyancy of Nigeria’s economic activities despite various challenges faced by the nation.

According to FAAC’s communiqué issued after its monthly meeting in Abuja, the N2.07 trillion revenue was distributed to meet the financial needs of the federal, state, and local governments.

N1.15 trillion out of the total revenue was disbursed to the various tiers of government, indicating a robust financial inflow.

The breakdown of the revenue distribution showcased that the Federal Government received N407.267 billion, state governments obtained N379.407 billion while N278.041 billion was disbursed to local governments.

Also, N85.101 billion, equivalent to 13% of mineral revenue, was allocated to the states as derivation revenue.

FAAC also highlighted that the revenue composition included N463.1 billion from distributable statutory revenue, N391.8 billion from distributable Value Added Tax (VAT) revenue, N15.9 billion from Electronic Money Transfer Levy revenue, and N279.03 billion from exchange difference revenue.

Despite the impressive revenue figures, FAAC noted a decrease in VAT collection by N71.7 billion compared to the previous month.

This decrease suggests fluctuations in consumer spending and economic activities, which could be influenced by various factors such as policy changes, economic conditions, and consumer sentiment.

Furthermore, FAAC reported increases in revenue from Companies Income Tax, Import Duty, Petroleum Profit Tax, and Oil and Gas Royalties.

However, revenue from Value Added Tax, Export Duty, Electronic Money Transfer Levy, and CET Levies experienced declines during the period.

FAAC’s disclosure of the January 2024 revenue underscores the importance of prudent financial management and effective allocation of resources to drive sustainable economic growth and development in Nigeria.

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Private Sector Credit Hits Record High of N76.94 Trillion in January 2024 – CBN Report

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Private sector credit in Nigeria reached a record N76.94 trillion in January 2024, according to the latest report from the Central Bank of Nigeria (CBN).

This represents a 85.2% year-on-year increase from N41.54 trillion reported in January 2023.

The CBN’s Money and Credit Statistics report unveiled that credit to the private sector experienced a substantial month-on-month surge of 23.06%, or N14.42 trillion, from N62.52 trillion in December 2023.

This surge occurred amid the implementation of the CBN’s policy to unify the naira exchange rate.

Analysts attribute the reported N76.94 trillion credit to the private sector to the recent depreciation of the naira against foreign currencies.

The naira closed at N1,356.88 per dollar in January 2024, representing a 50.87% decline or N457.49 against the dollar compared to December 2023.

This depreciation compelled banks to extend credit to major corporations to meet the CBN’s mandated Loan-to-Deposit Ratio (LDR) threshold.

The CBN’s decision to resume the enforcement of the LDR policy, effective July 31, 2023, further propelled banks to increase lending to customers, stimulating the real sector of the economy.

With the CRR mechanism updated, banks with an LDR below the prescribed level faced a 50% lending shortfall penalty.

Experts suggest that the significant increase in private sector credit underscores the growing need for businesses to secure funds amidst economic uncertainties and exchange rate volatility.

It also signifies banks’ efforts to comply with regulatory requirements and support economic growth initiatives.

As Nigeria navigates its economic landscape, stakeholders anticipate further developments in credit dynamics and monetary policies to sustain financial stability and stimulate economic expansion.

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Senate Initiates Probe into N30tn Ways and Means Loans under Buhari Administration

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Muhammadu Buhari

The Nigerian Senate has embarked on a comprehensive investigation into the disbursement and utilization of the N30 trillion Ways and Means loans obtained by the Central Bank of Nigeria (CBN) during the administration of former President Muhammadu Buhari.

The Ways and Means facility allows the CBN to provide financial support to the government to cover budget shortfalls.

The decision to probe the massive loans comes amid concerns about the transparency and accountability surrounding the utilization of these funds, particularly as the country grapples with economic challenges, food crises, rising inflation, and worsening insecurity.

The Senate’s investigation aims to shed light on how the substantial overdrafts from the CBN were acquired and expended under the leadership of former President Buhari.

There is growing apprehension that the indiscriminate spending of the overdrafts, particularly during Godwin Emefiele’s tenure as CBN governor, may have contributed significantly to the current economic predicament facing the nation.

The probe will delve into the details of the N30 trillion overdrafts, with a specific focus on examining the purpose for which the funds were allocated and how they were utilized.

Also, the Senate will scrutinize the N10 trillion disbursed under the Anchor Borrowers Scheme, as well as the utilization of $2.4 billion out of the $7 billion earmarked for forex transactions.

The initiative underscores the Senate’s commitment to ensuring transparency, fiscal responsibility, and prudent financial management in the country’s economic affairs.

It is anticipated that the probe will unearth vital insights into the financial transactions of the past administration, enabling corrective measures to be taken to address any mismanagement or discrepancies discovered.

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