Business
Nigerians pay more for naira over cash scarcity
…as PoS operators hike withdrawal rate
Persistent rationing of cash by deposit money banks (DMBs), is forcing Point-of-Sale (PoS) operators into alternative and more costly sources of cash, making them charge more for withdrawals in order to remain within profit region.
In recent months, there has been serious naira scarcity in major cities across the country as several Automated Teller Machines (ATMs) stopped dispensing cash and commercial banks introduced limits on withdrawals.
This is further straining the income of Nigerian households already eroded by the spiraling inflation compounded by the reforms of President Tinubu-led Federal Government, especially the removal of petrol and electricity subsidies and liberalization of the foreign exchange market.
With inflation running at the highest rate in 28 years, hitting 34.60 per cent in November, and food inflation at 39.93 per cent, Nigerians are struggling to overcome the amplifying cost of living crisis and naira scarcity frustration.
The situation is aggravated by the N50 electronic money transfer levy (EMTL)imposed by the Central Bank of Nigeria (CBN) on financial technology (fintechs) companies as well as the new transaction limit imposed on the PoS agents and their customers.
In September, fintech companies announced plans to introduce a N50 stamp duty fee on transactions of N10,000 and above.The technology firms said the move complies with the Federal Inland Revenue Service (FIRS) regulations, noting that the fee will be applied to electronic transfers into personal and business accounts.
On December 1, the Federal Government began enforcing the policy across fintech platforms, such as OPay, Moniepoint, Kuda, PalmPay and others.
Also, the CBN recently set a daily withdrawal limit on PoS terminals to N100,000 per customer. The apex bank also limited the cash transactions of each PoS operator to N1.2 million daily. According to the banking sector regulator, the restriction is in line with its ongoing efforts to advance a cashless economy.
However, some pundits believe the new CBN directives—which will put 2 million agents under pressure— is aimed at limiting the influence of these agents.
Business Hallmark observed that PoS operators across Nigeria have increased withdrawal charges from N100 to N150 or N200 for every N5,000 transaction, attributing same to N50 EMTL and the transaction limit imposed by the CBN.
Alternative sources
Our correspondent visited some PoS operators across some major bus stops in Lagos to find out how they get the cash requirement for their daily business operations.
Bukola Ajayi, a PoS agent at Ojodu-Berger, Lagos, said she has increased her charges as she now buys naira from traders and fuel attendants. “I buy cash from traders because I cannot get the volume of cash I need for my business daily.”
“Yesterday, I went to the ATM with seven cards and it was only Access Bank ATM that was paying. The crowd was huge and I had to stay for over an hour before it got to my turn. The limit was N40,000 on each card, so I could only withdraw N280,000,” she said
“This cannot even last for an hour, so the alternative is to buy from traders.”
Another PoS operator, Chinyere Uka, told our correspondent that she has started charging N150 for a N5,000 cash withdrawal but that others are charging N200 within her location at Ibafo.
Like Ajayi, Uka said she has been sourcing the bulk of the cash she uses for business daily from market traders and filling station attendants.
“We pay to get the cash from market women and people that are selling something. We also go to filling stations to look for cash to use for our business. If customers come and you say you don’t have cash they will think that you are not serious.
“So, we have to go to them and buy the money from them. If they give us N10,000, we pay them N100 and if it is N20,000 they collect N200. That is why I am charging 150 to make back my money,” Uka said.
The National vice president of the Association of Mobile Money and Bank Agents of Nigeria (AMMBAN), Obiora Oti, reportedly said the CBN must not make cash policies in isolation with the PoS licensed operators.
He said, “CBN must give quota to the Mobile money operators in their cash disbursement policy. They should put us in the equations. We are at the mercy of the people and the government in most cases blame us for every misnomer in cash business,” he said.
He noted that the association has met with the Chairman House Committee on Banks and Auxiliary institutions, Eze Nwachukwu, to find a lasting solution to the problem.
The apex bank had recently threatened to sanction banks failing to dispense cash through their ATMs, as part of efforts to ensure sufficient cash in circulation.
The CBN Governor, Yemi Cardoso, who made this declaration at the end of the 297th Monetary Policy Committee (MPC) meeting in Abuja in November, directed banks to ensure there is always enough cash available for withdrawals.
“We have devised a monitoring system, a spot-checking system, whereby we will go to the banks and just ensure that these things are done in the way and manner in which they are meant to be done.
“And if they are not, again, there will be sanctions but I believe that at the stage we are in now, everybody realizes that stakeholders play their part in ensuring that cash gets to the desired places they are intended to be,” Cardoso warned.
Meanwhile, the House of Representatives has expressed concern over the ongoing cash crunch in commercial banks across the country, calling on the CBN to address the situation, which has imposed significant hardship on citizens.
In a motion brought under Matters of Urgent Public Importance by Uhuru Emmanuel, the House highlighted the severe economic and social implications of the cash scarcity, which has left many Nigerians unable to access funds even for basic needs.
Uhuru noted that while economic growth relies heavily on consumer spending and business investment, the persistent cash shortage had become a major impediment to these activities.
The lawmaker, representing the Abakaliki/Izzi Constituency, recalled that the CBN, in its policy directive of December 21, 2022, set cash withdrawal limits of N500,000 for individuals and N5 million for corporate entities.
However, he observed that commercial banks have largely disregarded this policy, often limiting cash withdrawals to as little as N10,000 or nothing at all.
“Entrepreneurs and individuals are subjected to long queues, sometimes spending days at banks without success. This situation has particularly affected rural dwellers, who rely on cash for transactions and lack access to digital payment systems,” he lamented.
He warned that unless the CBN takes immediate action, the situation could worsen, especially with the approaching festive season, leaving businesses frustrated and citizens plunged into deeper economic hardship.