As Nigeria enters the festive season, the nation faces an escalating cash crunch that threatens to disrupt the livelihoods of millions and undermine the country’s economic momentum.
The ongoing shortage of cash, marked by severe withdrawal restrictions and systemic banking failures, is more than just a minor inconvenience. It has the potential to trigger a significant economic crisis, and urgent measures are required to avert widespread hardship.
The central issue revolves around severe cash limitations imposed by commercial banks, with daily withdrawal caps as low as N5,000 to N10,000 for both over-the-counter and ATM transactions. This restriction comes at a particularly damaging time—when Nigerians typically require greater liquidity to support holiday expenses, family gatherings, and end-of-year activities that form the backbone of the country’s seasonal economy.
The causes of this crisis are complex and multifaceted. The Central Bank of Nigeria (CBN) finds itself at the centre of the storm, grappling with a combination of issues including a limited cash supply, dwindling customer deposits, and a breakdown in the implementation of regulatory directives.
According to the Association of Senior Staff of Banks, Insurance, and Financial Institutions, the CBN has failed to meet the cash demands of commercial banks, causing a systemic bottleneck that ripples throughout the entire financial ecosystem.
This crisis is not merely an inconvenience but a potential economic catastrophe. Consumer spending during the festive season is a critical driver of economic activity in Nigeria. Limiting access to funds at this time not only stifles individual financial planning but also hampers broader economic growth.
The House of Representatives has rightly reaffirmed the severe impact of cash scarcity, warning that it could undermine investment, disrupt business activity, and hinder overall economic development.
This cash shortage recalls the painful experiences of the 2023 general election, during which similar disruptions to cash supply led to widespread social unrest, economic stagnation, and, tragically, loss of life. Nigerians, still reeling from the aftermath of that traumatic period, are now faced with the unsettling reality of yet another financial crisis. The spectre of past mistakes looms large, further heightening public anxiety.
Parallel markets have emerged as a disturbing consequence of the ongoing shortage. Point of Sale (PoS) operators, who are selling cash at inflated rates, have created an exploitative market that bypasses formal banking protocols. This thriving underground economy essentially turns access to one’s own money into a commodified resource that can only be obtained at exorbitant prices, placing an even greater burden on ordinary citizens.
The Human Rights Writers Association of Nigeria (HURIWA) has boldly characterised the situation as evidence of a “collapsing economy,” a sentiment that, while harsh, resonates with the widespread frustration and economic anxiety felt by the public. When citizens are unable to access their own funds—particularly during a time of year when economic activity peaks—it signals a deep dysfunction within the financial system.
Despite reassurances from the CBN, which has pledged to intensify monitoring and improve the disbursement of cash, the reality on the ground tells a different story. Banks continue to operate under severe liquidity constraints, and customers are left struggling with unreasonably low withdrawal limits.
These issues are compounded by a growing sense of distrust in the banking sector, as citizens find themselves increasingly disenfranchised by a financial system that seems to prioritise bureaucracy over practical solutions.
The small business sector, which forms the backbone of Nigeria’s economy, is particularly vulnerable to this cash shortage. Many entrepreneurs, artisans, and traders rely heavily on cash transactions, especially during the Yuletide season. For these businesses, the cash crunch threatens to disrupt essential sales and revenue generation, potentially pushing them into financial ruin.
What is perhaps most frustrating about this situation is that it appears preventable. Nigeria is not a cash-poor nation; rather, it suffers from a distribution problem. There is a clear disconnect between the available cash supply and its accessibility to the people who need it most. This breakdown in the system reflects deeper, structural flaws in the country’s financial infrastructure, suggesting that the problem is not merely a technical banking issue but one of governance, economic management, and institutional failure.
The timing of this crisis could not be worse. Traditionally, the Yuletide season is a period of economic activity, celebration, and family reunions. Instead, many Nigerians find themselves struggling to access their own money at a time when economic participation is most needed.
This financial frustration has led to a growing sense of helplessness and eroded trust in the system, weakening the very economic confidence that drives growth and investment.
The Central Bank of Nigeria (CBN) must take immediate and decisive action to resolve this crisis. The bank must significantly increase the cash supply to commercial banks, ensure strict compliance with cash disbursement regulations, and take firm action against the exploitative PoS cash-selling market.
Furthermore, transparency and real-time communication about cash flow strategies are essential to rebuilding public trust and confidence in the financial system.
While digital banking solutions offer alternatives, they cannot fully replace cash, particularly in a country where a significant portion of the population remains unbanked or lacks reliable access to digital services. Therefore, any solution must take into account the diverse economic realities faced by Nigerian citizens, particularly those in rural areas or lower-income groups who rely more heavily on cash.
This cash crunch is not merely a banking issue; it is a test of Nigeria’s ability to govern effectively and manage its economic resources. Nigerians do not want excuses; they demand a functional and responsive banking system that facilitates their economic activities rather than obstructs them.
The CBN has an opportunity to restore faith in the nation’s financial infrastructure, and it must act swiftly and decisively to prevent further economic turmoil.
In the face of this crisis, the resilience of the Nigerian people remains strong, but even the most resilient communities have their limits. The financial system must work for the people, especially during times of economic vulnerability. It is time for the CBN and all relevant authorities to step up and ensure that Nigerians can access their funds and engage in economic activity without unnecessary hindrances.
Failure to do so will only exacerbate the economic challenges that the nation is already facing.