Lingering Cash Crunch Frustrates Small Businesses and Farmers

Grassroots farmers and petty traders in Nigeria find themselves ensnared in the web of a persistent cash crunch that has cast shadows on their once-thriving businesses.

The frustration is palpable as individuals, driven by the fear of funds being trapped, opt to keep their cash away from traditional banking channels.

Small and medium-scale enterprise associations, serving as the voice of these economic actors, voice concerns that the enduring cash scarcity threatens to erode government efforts to foster financial inclusion, particularly at the grassroots level.

Mr. Dele Bamigboye, a farmer from the Igboho area of Oyo State, shares the grim reality: “Many of those who bought from my farm produce have not paid me. They said they could not get money from the banks. It is affecting my business. I sell my things in cash, and I have someone who helps me collect the monies and keep them in her bank account when it is much. Now, I cannot get cash because my monies are trapped.”

Mama Kudi, a trader in Ogidi, Ilorin, adds her perspective: “I am selling to only those who have cash to pay. I maintain this position because if they send money to my account, I cannot access cash from the PoS, and banks are rationing their cash. I need cash to buy goods and do my transactions. I am not taking money to the bank.”

Despite reassurances from the Central Bank of Nigeria about adequate cash in the economy, Nigerians continue to grapple with cash scarcity, with ATMs frequently running dry and banks rationing cash over-the-counter.

Dr. Femi Egbesola, President of the Association of Small Business Owners in Nigeria, said: “People are trying to get their businesses structured and take their monies to the bank. With what is happening now, the confidence is eroded, especially at this festive period. A lot of transactions in the economy still go with cash. Grass-root business is still cash dependent, and when there is no cash, there will be apathy in going to the bank to lodge their funds.”

Solomon Aderoju, Vice President of the Nigerian Association of Small and Medium Enterprises, South-West Region, concurs, emphasizing that the cash crunch undermines the confidence of grassroots individuals in the banking sector.

As the struggle persists, the resilience of grassroots businesses faces a severe test, raising questions about the future of financial inclusion initiatives in Nigeria.