By Tumininu Ojelabi Hassan
With the fiasco that attended the naira redesign policy and the apparent return to normalcy in the banking system, a new crisis is rearing its head which seems to prolong the cash crisis. Three weeks after the Central Bank of Nigeria, CBN, had directed bank to pay out all currency denominations, crowd and queues have remained, although cash is now relatively available.
The new challenge is the scarcity of cash due the absence of depositors, as Nigerians appear to be hoarding the currency in anticipation of any change. As a result, the banking system is facing liquidity crisis as customers shun cash deposits and forcing the banks to depend of daily supply from the CBN. This is due to the prolonged cash crunch and implementation of cashless policy which heaped hardship on Nigerians.
Interaction with bank customers across Lagos revealed that they dread depositing cash to avoid a reoccurrence of Naira scarcity.
Our correspondent visited branches of commercial banks at Ojodu Berger and Ketu areas of Lagos. Based on observation, most of the bank customers were at the bank to either withdraw cash or lodge complaints. Only a few customers were there to deposit cash.
Joshua Abayomi, a technician, who interacted with our correspondent at the First bank, Ojodu Berger branch, shared the reasons bank customers refused to deposit cash.
“The major challenge is that the cash in circulation is not enough, people don’t have cash to deposit. The little cash we get from the bank is just for feeding and transport, we don’t have cash to deposit. 95% of the people here came to withdraw cash or lodge complaint, no one is coming to deposit cash because access to cash is limited due to the cashless policy,” he said.
Also, Joy Onuoha, a provision store owner, who discussed with our correspondent at the Sterling bank, Ketu branch revealed that shortage of cash was the major cause of the decline in deposits.
“I own a provision store at Ketu market, customers hardly bring cash to us. Most of them make payments via e-transfer. It’s when you have access to cash, you can deposit cash at the bank. The little cash I make daily is to sort out basic needs. Due to the difficulty I experienced during the cash crisis, I can’t bear the risk of depositing the little cash I have at the bank,” she stated.
A staff member of First bank, who pleaded to be anonymous, confirmed the decline in cash deposits, stating that the liquidity crisis was as a result of the circumstances surrounding the cash crunch.
“Customers are agitated due to the hassle they encountered during the cash crisis in the past months, hence the decline in cash deposits. Nonetheless, I believe with time business would bounce back to its normal state, especially now that there’s cash in the banking system,” he explained.
“The main challenge with the decline in cash deposits is owing to the fact that the cash in circulation is not enough. This can be attributed to the implementation of the cashless policy. Although we have been disbursing cash, but access to cash is not like it used to be. These days, most transactions are done online, 90% of customers come to the banking hall to withdraw cash, lodge complaints on failed transactions and get debit cards,” he added.
Abiola Oladejo, a businessman disclosed his reason for hoarding cash.
“I don’t want to experience what happened during cash scarcity again. I spent days at the bank trying to withdraw cash, despite the struggle I couldn’t withdraw cash. My business suffered a great loss this period because I had no transport fare to go to my office. It’s absolutely unnecessary to deposit the cash with me in the bank when I would suffer to get my money back,” he said angrily.
According to Helen Obiora, a businesswoman, who owns a food store, “I went through hell to get cash in February. The suffering was too much and uncalled for. Do you know how many lives were lost due to the naira scarcity? Do you know how many families could barely feed? We used money to buy our own naira at exorbitant charges. Once bitten, twice shy. It’s better to keep my money than suffer and starve to get cash,” she said.
In addition, a POS agent, Idowu Olayiwola cleared the air on the decline in cash deposits at commercial banks.
“People are scared of depositing cash in banks because of the shortage of cash. Where is the cash to deposit? The cash is nothing in circulation as expected, a lot of people are still struggling to get cash. I have been buying cash from business owners because the cash given to us at the bank is not sufficient for my business.
“The poor implementation of the naira redesign policy and cashless policy has broken the trust of people, it would take time to regain this trust,” he opined.
According to a twitter user, @woye1, Nigerians have abandoned the banking culture.
“Banks are begging people to return to Naira deposit. That people have abandoned banking culture. They are suffering from low cash deposits. Is it our fault?,” he tweeted.
Other twitter users, who replied to the above tweet stated the reason for the decline in cash deposits.
“This policy aftermath is the near totally reversal of decades of advocacy on trust building for the banking sector, now it will take miracle to get the vast unbanked to trust the industry,” @DayoOWOSINA tweeted.
“Many people will rather keep their monies at home. Experience in last weeks didn’t give anyone confidence at all. It will affect Nigeria banks in the short term,” @Olanrewaju_mohd tweeted.
“People will not deposit cash for a long while. Only people who deal with large cash daily/weekly like Churches and petrol stations. But to get cash deposits from individuals will be hard and it’s not our fault,” @Chrisbamidele tweeted.
A banker who replied to the tweeted confirmed the low cash deposits in commercial banks.
“In my branch, we have paid out over N150m and no single naira comes back as a deposit. If this continues then we will never have money in circulation again,” he tweeted.
Based on BH findings and interaction with bank customers, the decline in cash deposits can be attributed to apprehension, broken trust in the banking system as a result of the cash crisis and the poor implementation of the cashless policy. Optimistically, the banks would regain the trust of its customers and normalcy will be restored in the banking system.