Cash Crunch Hits Benin Despite CBN Directive

Our reporter

Banks in Benin City struggled to comply with the Central Bank of Nigeria’s (CBN) directive to ensure sufficient cash availability during the festive period, leaving many residents frustrated over the Christmas celebrations. 

Visits to several Automated Teller Machines (ATMs) across the metropolis revealed that most were out of service, with the usual crowds that typically surround cash-dispensing ATMs conspicuously absent.

This development coincided with increased cash demands, driven by heightened trading activities in local markets on Christmas Eve and the morning of Christmas Day. 

Public holidays meant cash deposits into banks were limited, exacerbating the situation. Point of Sale (POS) operators, who typically rely on banks for cash, reported having to source cash directly from market traders, often at a premium. Unlike in the past, where traders deposited their excess cash with these operators, the reverse was true this year, highlighting a shift in the cash flow dynamics. 

The cash shortage also saw some POS operators significantly raise their charges, with withdrawal fees reaching ₦300 for every ₦5,000 transaction – a sharp increase from usual rates. 

The CBN had earlier issued a directive on 1 December, urging Deposit Money Banks to ensure seamless cash distribution at branches and ATMs during the yuletide. The policy aimed to prevent a cash shortage and facilitate smooth currency circulation during the festive season, but implementation appeared inadequate in Benin City. 

 

The cash crunch has raised concerns among residents, who are now calling for stricter enforcement of CBN regulations to prevent a repeat of such disruptions during future festive periods.