Cash Shortages Persist in Nigeria as CBN Targets Banks and Currency Hawkers

With ATMs frequently running dry, Nigeria’s ongoing cash shortage has left millions scrambling for money. Amid this crisis, the Central Bank of Nigeria (CBN) has introduced tough penalties, imposing a hefty ₦150 million fine on banks and financial institutions found selling newly minted banknotes to currency hawkers.

The problem began in late 2022 when the CBN launched a currency redesign policy. Intended to combat counterfeiting and reduce cash circulating outside the banking system, the policy inadvertently sparked a severe cash shortage. Even after the redesign was paused, the scarcity continued, leaving Nigerians turning to alternative means to access cash.

How PoS Agents and Hawkers Fuel the Crisis

As ATMs and banks failed to meet demand, many Nigerians turned to Point of Sale (PoS) agents for cash. However, these agents often sourced fresh notes from unconventional sources such as supermarkets and fuel stations. Currency hawkers exacerbated the issue, purchasing fresh banknotes from banks and reselling them at inflated prices during events, markets, and parties.

In Lagos, reports surfaced of PoS agents reselling fresh notes in busy markets, further destabilising cash flow. This created a parallel system where banknotes were traded like scarce commodities, adding to the public’s frustration.

CBN’s Hardline Measures

In response, the CBN warned financial institutions sternly that any branch caught funneling fresh notes to hawkers would face a ₦150 million fine. Repeat offenders risk even stricter penalties under the Bank and Other Financial Institutions Act (BOFIA) 2020.

However, the issue appears to go beyond hawkers. Many cash-dependent businesses bypass banks, opting to deal directly with PoS agents. This disrupts the cash flow within banks and raises questions about whether fines alone can resolve the crisis.

The CBN’s actions signal a tough stance on irregularities in Nigeria’s financial system. Still, experts argue that a broader strategy may be needed to address the cash shortage’s structural issues.