A lecturer at Nasarawa State University, Professor Uche Uwaleke, has posited that the naira scarcity has persisted because the message by the old and new naira continues to be legal tender has not really got to the level where it can be believed and trusted at the grassroots.
He said as banks complain about insufficient supplies, the banking public are not depositing but hoarding the naira notes.
During an interview on Arise TV monitored in Lagos at the weekend, Uwaleke added that as usual, Christmas or end of year is a season when demand for cash is always high, so people are mopping up the little cash they can lay their hands on.
The Central Bank of Nigeria (CBN), in a recent statement, blamed the scarcity on hoarding of naira notes by some people due to the challenges they faced as a result of the naira redesign policy.
Also, the CBN said that the amount of naira notes in circulation climbed from one trillion naira in February 2023 to N3.4 trillion in December 2023, suggesting there is enough cash in circulation, yet the scarcity persists.
Meanwhile, point-of-sale (POS) operators have raised transaction fees in several regions of the country in reaction to the naira scarcity.
But according to the university teacher, the CBN should continue to come up with such messages that the old or new naira are not going be phased out.
“Now, the second reason has to do with what I just told you about inflation. The central bank is worried that inflation is going up. Central Bank is also worried that exchange rate is rising, which was why when the CBN Governor appeared before the Senate committee on Banking, he was said that he expects that in 2024, inflation pressure and external pressure will continue in the short term, but that before the end of 2024 this pressure will moderate, “ Uwaleke stated.
The CBN, he added, intends to use every tool at its disposal to ensure that money supply is reduced. So, the central bank is worried because the more you have too much money circulating outside the banking system, the more you make monetary policy transmission difficult for the Central Bank
He said, “I spoke to some managers of some banks, and they tell you that the fact of the matter is that the central bank is not supplying to them as much cash as it used to. So, that’s why if you go to banks today, other banks have imposed withdrawal limits, you can’t withdraw more than N20,000. That’s because of the fact that the central bank is not supplying as much as it used to.
“That’s on the one side and also on the other side, deposits are not coming in. People are not bringing in this deposit.”
However, CBN has again assured members of the public that it was addressing the reported cases of cash scarcity in some major cities across the country.
The bank’s acting director in charge of corporate communications, Mrs Hakama Sidi Ali, gave the latest assurance in a statement issued on last week in Abuja.
She said the CBN was monitoring the situation and had released sufficient cash to its branches across the country for onward distribution to Deposit Money Banks (DMBs).
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