Mr Viral
Nigeria’s Central Bank (CBN) has imposed a ₦150 million fine on deposit money banks and financial institutions caught selling newly minted banknotes to currency hawkers. The details of the fine, contained in a Friday circular seen by TechCabal, come as Nigeria grapples with a prolonged cash shortage that has left customers struggling to access cash at ATMs and over-the-counter.
“The CBN has noted with dismay the prevalence of illicit flow of mint banknotes to currency hawkers and other unscrupulous economic agents that commodify naira banknotes, thus impeding efficient an effective cash distribution to banks’ customers and general public,” said the circular dated December 13.
The cash crisis began in late 2022 with the CBN’s controversial currency redesign policy, aimed at curbing counterfeit currency and “reducing cash outside of banks.” The unintended effect was a cash shortage that led to widespread frustration among citizens who could not access cash in banks and ATMs.
The shortage continued long after the currency redesign was shelved and has led to a surge in demand for cash via alternative channels, including POS agents who have sourced banknotes from informal traders, including supermarkets and fuel stations.
Beyond POS agents, currency hawkers—who buy fresh notes from banks and resell them at a markup at parties and functions-are also believed to have worsened the problem. One publication recently reported that POS agents were selling newly minted notes in busy Lagos markets, exacerbating the dire situation.
In response to the new fine, several banks have already taken steps to comply with the CBN’s directives. According to sources close to the matter, at least two major commercial banks in Lagos stopped disbursing mint banknotes over the counter since Wednesday.
“Any erring deposit money banks or financial institution that is culpable of facilitating, aiding or abetting, by direct actions or inactions, illicit flow of mint banknotes to currency traders and unscrupulous economic agents that commodify naira banknotes shall be penalised at first instance N150 million per erring branch and at later instances apply the full weight of relevant provisions of BOFIA 2020,” the CBN statement read.
It is unclear if fines on mint notes will solve what is likely a systemic problem that has incentivised cash-heavy businesses to sell their bank notes to POS agents, circumventing the banks and ultimately reducing the amount of cash at the banks.
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