The Organised Private Sector (OPS) has urged the Central Bank of Nigeria (CBN) to quickly address the ongoing cash scarcity across the country.
According to the OPS, Nigeria’s economy is not ready to fully adopt cashless transactions, and the situation is putting businesses, especially Micro, Small, and Medium Enterprises (MSMEs), at risk of collapse.
Segun Kuti-George, the National Vice President of the Nigerian Association of Small-Scale Industrialists, explained that many businesses depend on cash for daily transactions. He warned that the cash shortage is hurting operations and creating serious challenges for the economy.
“Nigeria’s economy is not yet developed enough to function effectively on a predominantly cashless basis. A significant portion of the population still relies heavily on cash for daily transactions.
“In Canada, for instance, one can withdraw up to $1,500 in a single ATM transaction. Comparatively, Nigeria’s withdrawal limit of N20,000 (approximately $26) per transaction is impractical and reflects a lack of consideration for the needs of businesses and individuals,” he said.
Dr. Femi Egbesola, President of the Association of Small Business Owners of Nigeria, said many small businesses are struggling because they sell low-priced items that require cash transactions. He explained that some business owners now buy cash from Point of Sale (POS) operators at high rates, which cuts into their profits or forces them to increase prices.
“Another negative outcome of the scarcity is that it discourages small business owners from banking, thereby reducing financial inclusion and increasing financial insecurity associated with carrying cash.
“It is pertinent then, that CBN responds swiftly to arrest this anomaly before it impedes more negatively on micro and small businesses to the extent of extinction of a substantial fraction of the sector,” Egbesola said.
Dr. Muda Yusuf, Director of the Centre for Promotion of Private Enterprise, pointed out that cash scarcity has slowed down business activities, especially in rural areas where cash is the main form of payment.
“Economic activities are affected and that is not good for any economy. (This is) because you want economic activities to be seamless and you need a very efficient payment system to make that happen. And cash, of course, is a means of payment. So that is the negative effect it has on the economy,” Yusuf said.
In response, the CBN has introduced stricter rules to control the illegal sale of new naira notes. It announced penalties of up to ₦150 million for any bank branch found selling cash to hawkers or other unauthorised agents.
The CBN said it will also increase inspections in banking halls and ATMs to ensure fair distribution of cash. A circular signed by Acting Director of Currency Operations, Mohammed Olayemi, revealed that mystery shoppers would be used to catch offenders.
Business leaders and economists have called for a balanced approach to transitioning to a cashless economy. They recommend improving financial inclusion, rebuilding trust in banks, and addressing issues like poor infrastructure and literacy levels in rural areas.
Yusuf warned that if the CBN does not act quickly, the negative effects on businesses and the economy could become more severe.
The CBN has assured the public that it is working to improve cash distribution, especially as the festive season approaches.
