Categories: Business

Yuletide: Cash crunch persists amidst temporary shutdown of financial market

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1 year ago

Nigeria’s financial market, involving players like commercial banks and other financial institutions nationwide will be closed today, December 25th and tomorrow, December 26th, 2023.

Multiple types of financial markets exist, including: Stock market – to buy and sell ownership shares of companies called stocks; Bond market which trades new and existing bonds, that are loans with stated terms; Money market that trade short-term securities that are very liquid

The main roles of financial markets are ensuring a low cost of transactions and information, ensuring liquidity by providing a mechanism for an investor to sell the financial assets, providing security to dealings in financial assets, and providing facilities for interaction between the investors and the borrowers.

The latest closure is in observance of the Christmas and Boxing Day public holidays, as directed by the federal government of Nigeria.

However, staholders are worried that the holiday closure will compound the troubles for Nigerians in search of cash.

Already, banks are advising customers expected to make transactions today and tomorrow to use electronic banking services.

The major types of E-banking are online Internet banking, mobile banking, USSD, and Automated Teller Machines (ATM).

Africa’s global Bank UBA in a message to its customers stated: “Dear Customer,

As we mark this year’s Christmas celebrations, our branches will be closed on Monday, 25th of December 2023 and on Tuesday, 26th of December 2023.

“Normal banking activities will resume on Wednesday, 27th of December 2023.

“While our branches take a break, our digital channels, UBA Mobile Banking, Leo, *919# or Internet Banking, are available 24/7 for all your banking needs.”

Wema Bank, in its message to customers, reads: “Dear Customer: This is to notify you that our branches will be closed for the Christmas holidays on Monday 25th and Tuesday 26th December, 2023 and will resume regular operations on Wednesday 27th December, 2023 Read more:

“We encourage you to take advantage of our alternative banking channels for your financial needs during this period.”

However, Automated Teller Machines (ATM) are running dry across the country, causing frustration and uncertainty amongst Nigerians.

This shortage not only hampers day-to-day transactions but also raises concerns about the robustness of the financial infrastructure;

This, according to some industry analysts, poses risks to ordinary Nigerians as the shortage of physical cash is particularly burdensome for citizens who rely on cash transactions for their daily needs.

Such category of people are small businesses, street vendors, food sellers, cart pushers and those without access to digital payment systems, among others.

Point of sale (POS) charges are an added burden on Nigerians, as the increase in charges for cash withdrawals via POS transactions is now on the rise. This development places an extra strain on the pockets of individuals already grappling with rising costs.

There is deepening of the naira’s depreciation and exchange woes due to the unavailability of cash in banks and the financial system.

With fewer naira in circulation, the demand for foreign exchange will intensify as an alternative, thereby placing additional stress on the naira’s value.

“This, in turn, is already affecting the purchasing power of the common man and adding to the negative complexities of an already challenging economic landscape.

“Cash hoarding by banks, businesses and individuals will rise as people are unable to withdraw cash. They hold onto their funds, and deprive the banking system of the much-needed liquidity, “ a Kaduna based analyst Adamu Rabiu posited.

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