Naira Hawking Surges Despite CBN Warnings: A Deep Dive into Nigeria’s Cash Crisis

 

The hawking of naira notes at exorbitant rates has surged across the country, as Nigerians continue to grapple with limited access to cash in banking halls. This persists despite repeated warnings from the Central Bank of Nigeria (CBN) to penalize Deposit Money Banks (DMBs) involved in supporting such activities. The cash scarcity crisis has left many citizens frustrated, struggling to withdraw their own money, while currency hawkers seem to have an abundant supply available for sale at exploitative rates.

CBN's Warning and Banking Sector Accountability

In a circular dated November 13, 2024, signed by the acting Director of Currency Operations, Muhammad Olayemi, the CBN reiterated its stance against cash hoarding and diversion by banks. The circular, released publicly on November 15, emphasized that any financial institution found complicit in these activities would face severe sanctions. However, the enforcement of these policies remains a concern as cash shortages continue to affect everyday Nigerians.

Despite these warnings, the problem persists, raising critical questions about the effectiveness of the CBN's regulatory oversight. Are banks truly adhering to these directives, or is there a systemic issue that allows cash hoarders and black-market traders to thrive?

The Reality on the Ground: Naira Hawkers and Public Frustration

Despite the CBN's regulations, naira hawkers continue to operate openly in major Nigerian cities, including Lagos, Abuja, Kano, and Port Harcourt. Reports indicate that while bank customers struggle with cash withdrawal limits, hawkers appear to have an unrestricted flow of physical currency, which they sell at exorbitant prices.

For instance, some citizens have reported that to withdraw N10,000 in cash, they must pay an extra N2,000 to N3,000 to cash hawkers, creating an informal and illegal cash exchange system that preys on people's desperation. This situation has fueled widespread frustration and led to public outcry over the inefficiency of banking operations and the apparent failure to control illicit financial activities.

Causes of the Cash Scarcity and the Rise of Naira Hawkers

Several factors have contributed to this ongoing cash crisis:

1. CBN’s Cash Withdrawal Limits: The apex bank introduced stricter cash withdrawal policies, capping daily and weekly cash withdrawals to promote a cashless economy. However, these limits have inadvertently created a black market where cash is sold at a premium.

2. Bank Non-Compliance: While banks are supposed to adhere to cash distribution regulations, many reports suggest that some banks divert cash to third-party vendors or engage in hoarding to create artificial scarcity.

3. Corruption and Middlemen: Some bank staff and Point of Sale (POS) operators allegedly collaborate with currency hawkers, supplying them with cash at a fee, which is then resold to desperate individuals at higher rates.

4. CBN's Struggle with Enforcement: Despite warnings, monitoring and enforcement mechanisms remain weak. The CBN lacks a robust framework to track cash movements and hold offenders accountable effectively.

5. Economic Factors and Inflation: Nigeria's economic instability and rising inflation have also played a role in the cash crisis. Many citizens prefer physical cash transactions due to unreliable electronic banking services and frequent system failures.

How Cash Hawkers Operate

The modus operandi of naira hawkers is relatively straightforward. They obtain cash in bulk, often through undisclosed channels, and then resell it at inflated rates. Common locations for these transactions include:

• Markets and Commercial Centers: Traders and business owners, who rely heavily on cash, are often willing to pay extra to obtain physical currency.

• Bank Vicinities: Some hawkers strategically position themselves near banks where frustrated customers, unable to withdraw sufficient cash, turn to them for quick solutions.

• POS Agents and Informal Money Lenders: Some POS operators collaborate with cash hawkers, charging higher service fees to dispense money, particularly in high-demand areas.

Public Reaction and Calls for Stronger Enforcement

The continued rise of naira hawking has led to significant public outcry. Many Nigerians feel that the CBN’s policies are not being enforced properly, allowing illegal cash sales to thrive.

Some citizens have taken to social media to express their grievances:

• "I spent two hours in the bank and couldn’t withdraw N5,000, but the hawkers outside had wads of cash for sale." – Twitter User

• "Why is it that banks never have cash, but hawkers always do? There’s definitely corruption going on here." – Facebook Comment

The frustration has also been echoed by business owners, who face daily challenges conducting transactions due to limited access to physical cash. Many traders, transport operators, and small businesses prefer cash over digital payments because of poor internet connectivity and frequent banking network failures.

CBN’s Response: Strengthening Measures to Curb Naira Hoarding

In response to the worsening situation, the CBN has pledged to intensify its crackdown on cash hoarders and strengthen monitoring mechanisms. Some of the key measures proposed include:

1. Increased Surveillance of Banking Halls: The CBN plans to deploy inspectors to monitor cash disbursement in banks and ensure that ATMs are loaded appropriately.

2. Severe Penalties for Non-Compliance: The apex bank has warned that any bank caught hoarding cash or diverting it for illegal sales will face heavy fines and license revocation.

3. Encouraging Digital Transactions: The CBN continues to push for a cashless economy by promoting digital payment systems, mobile banking, and fintech solutions.

4. Collaboration with Law Enforcement Agencies: The CBN is working closely with the Economic and Financial Crimes Commission (EFCC) and other security agencies to track down currency hawkers and prosecute offenders.

The Future of Cash Transactions in Nigeria

While the CBN’s efforts to regulate cash flow are commendable, the current situation highlights deep-rooted issues in Nigeria’s financial system. For cash scarcity and hawking to end, there must be:

• Transparent cash allocation systems within banks.

• Effective enforcement of CBN regulations to prevent hoarding.

• Improved banking infrastructure to support digital transactions.

• Strict penalties for POS agents and bank officials involved in illicit cash trading.

Conclusion

The rise of naira hawking amid cash scarcity underscores significant gaps in Nigeria’s financial system. While the CBN continues to issue warnings and promises strict enforcement, many Nigerians remain skeptical about whether real change will occur.

For meaningful progress, authorities must take decisive action to stop the illegal sale of naira notes and restore confidence in the banking system. Until then, the struggle for cash accessibility will remain a frustrating reality for millions of Nigerians.