The cash crunch imposed on the economy by the bungled naira redesign scheme has thrown the entire banking system into chaos. It has taken us back to the days of COVID-19 when the banks had to erect canopies outside their offices to accommodate customers coming to sort out various problems.
The COVID-19 congestion was caused by the scramble to reduce the number of people in the banking hall to avoid physical contacts through which the virus was transmitted.
This time no one complains about physical contact. The congestion in the banks is caused by thousands of depositors visiting banks daily not only in search for cash but to rectify problems created by the consummate failure in banks’ electronic networks.
Thousands of transactions are now hanging because of the enormous pressure mounted on the banking systems’ electronic network by the cash crunch. Last Thursday at the U-Turn branch of First Bank in Lagos, more than 400 account holders besieged the branch to rectify failed transactions on electronic transfer platform.
The number of people coming with the same complaint practically overwhelmed the bank’s customer relations unit.
One of the complainants, a shopkeeper whose customer transferred the sum of N7, 500 to her since Saturday, February 11, 2023 had quarreled with the payer for delaying her money. Conversely, Eco Bank, the bank through which the payer transferred the money to the woman’s account in First Bank, told him that the money had left their bank and could only be in First Bank.
The troubled shopkeeper spent five hours at First Bank only to discover that the money had entered First Bank but her account could not be credited with the transfer because the money entered First Bank a day after the transaction was consummated by Eco Bank. The shopkeeper could not be sent an alert on the transaction and even a check with her ATM card could not spot the new payment.
Thousands of such unconsummated transfers have now turned the banks into a beehive of activities that has dwarfed the COVID-19 crisis period.
Experts trace the failure of the banking system’s electronic network to the unparalleled pressure mounted on the system by the sudden switch by millions of bank customers to the use of electronic transfer as a medium of transaction in the absence of cash.
The story making the rounds is that the electronic transfer system was designed to handle 1.2 million transactions in a day. It is now handling 3 million transactions as the cash crunch compels millions of depositors to abandon the use of cash as a medium of transaction.
Last week I watched many consumers paying for pepper, tomatoes and vegetables through electronic transfers because they had no cash.
Petrol retail outlets created problems for their customers as they refused to allow buyers pay through their point of sales (PoS) terminals. Many could not buy petrol because they had no cash and could only pay through ATM with PoS terminals. The retailers’ refusal was grounded on claims that most PoS transactions were declined even as the consumer’s account had been debited.
Market women who had no bank accounts into which their money could be transferred, watched helplessly as their vegetables rot away in Ile Epo Market in Abule-Egba, Lagos. Consumers had no cash to pay for the transactions.
Those who contend that the naira redesign crisis would strip banks of needed depositors should go back to the markets to verify their claims.
Everything points to the fact that many more Nigerians who had no bank accounts would scramble to open some after the crisis.
One of the crucial lessons of the naira redesign cash crunch is that everyone has realised that as devilish as Nigerian banks are, they remain the unchallenged custodian of medium of transaction.
When banks sabotaged the naira redesign project by selling money to greedy politicians and exploitative PoS operators and left millions of innocent depositors gasping in search of cash, no one resorted to trade by barter.
The only medium of transaction left for the frustrated depositors was the electronic transfer facility which the banks are firm custodians. That unfortunate message has sunk into the heads of the women who lost tones of vegetables and fruits in Lagos markets. Many will open accounts.
Even as they regard the banks as devilish operators who subjected millions of Nigerians to untold suffering, they know that under critical circumstances like the one created by the banks’ sabotage and the miscalculation by the Central Bank of Nigeria (CBN), those without bank accounts would simply be squeezed out of business.
Consequently, though the cash crunch created by sabotage and miscalculation in the naira redesign project has tremendously discredited banks, it would almost certainly increase the number of account holders.
The other misdemeanour that the bungled naira redesign project has thrown up is Nigeria’s embarrassingly high corruption rate.
When Transparency International (TI), the global corruption watchdog, released its 2022 report showing Nigeria slipping by five rungs in its transparency rating ladder, the federal government raised the alarm and faulted TI’s rating of Africa’s largest economy.
The bungled naira redesign project has vindicated the corruption watchdog as it suggests that corruption in Nigeria might be deeper than TI captured. The litigants in the Supreme Court demanding the extension of the use of old notes are by no means defending Nigeria’s inconsequential majority now being starved of cash by greedy bankers and corrupt politicians.
They are all bidding for time to spend the mountain of looted old notes in their houses.
One of the governors is reported to have paid several months of state civil servants salary arrears with old notes from his house.
Another governor openly shared the old notes to people in the streets and directed them to change the notes in the banks.
The naira redesign cash crunch has established the fact that Nigeria’s infamous toga as the world’s headquarters of poverty emanates from the ruthlessness of greedy politicians mercilessly looting the economy, rather than dearth of resources.
