The Central Bank of Nigeria’s naira redesign policy has exposed the weakness of the country’s banking system, according to top bank officials who spoke to THE WHISTLER.
They believe the weaknesses in the banking industry will frustrate the cashless policy aspect of the naira redesign as evidenced by the long queues in banks and the difficulties experienced by bank customers in doing online transfers.
In October 2022, the CBN announced plans to pursue its cashless policy alongside its naira redesign programme.
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The bank said N3.2trn is in circulation, while N2.7trn out of the money in circulation are hoarded by individuals.
President Muhammadu Buhari unveiled the new N1,000, N500 and N200 bills in November, while banks began dispensing the notes on December 15, 2022.
But the CBN insisted that it will not print much of the withdrawn notes especially the N1,000 and N500 bills.
It also introduced a cash limit that allows individuals to withdraw only N500,000 per week, while corporate bodies can withdraw N5m.
A withdrawal amount above the limit will be charged.
Since the policy was initiated, the Nigerian apex bank has mopped up 59.4 per cent (N1.9trn) of the N3.2trn in circulation.
With the cash crunch in the country, a lot of bank users have resorted to mobile transactions for payments leading to severe pressure on banks’ digital resources.
Zenith Bank Plc, for instance, has received heavy criticism from customers who cannot access their bank apps or are been debited for transactions they did not initiate.
A source at Zenith Bank told THE WHISTLER that most Nigerian banks are not prepared yet for a cashless policy.
“Nigerian banks are not even ready for this cashless policy as it stands. The bandwidth is still so low, which is why most customers find online transactions difficult during this period.
“Banks need time to increase their bandwidth so that their apps can accommodate transactions. This policy has made more people resort to online banking, and the traffic is too much for the resources of banks.”
A high-profile staff member of Ecobank Plc (name withheld) said in an interview with THE WHISTLER that banks’ resources have been under pressure in the last two months.
In reference to the capacity of banks, he said, “It is not that banks are not willing but they are under severe pressure. In the last two months, electronic transactions have more than doubled and it is putting pressure on bank resources. It is an industry-wide issue and not limited to any bank.
“If you check, even the big banks are facing pressure. It is either that transfers are not going through, people are debited, transactions are reversed and sometimes the apps are down. It will take a little time for things to normalize. But banks need to improve on their resources because at this point the capacity is low. That is why when there are a lot of people doing transactions at a time, customers start experiencing glitches like apps going down.”
He identified the mass exodus of IT personnel in the banking sector to countries overseas for juicy job offers as one of the major obstacles .
The bank staff said, “Another factor is the japa factor (mass emigration) which is a very big threat to the banking industry. The banking sector is experiencing a mass exodus of IT experts. A lot of them have left and this is causing serious issues in the industry. Brain drain has hit banks. All this is adding up to the issue. Only a few IT experts are left and the pressure is on the few ones available.
“This is the reason why when you go to the bank to resolve an issue that should not ideally take three hours, it now takes up to three days to get resolved. There is very high pressure on the few IT personnel left in Nigerian banks. If the issue of brain drain is curtailed, I think there will be normalcy.”
Besides the technical challenges, the senior banker also said that there may be a conspiracy between top bank staff and politicians to frustrate the policy.
Although the CBN also targets to curb vote buying in the 2023 general election, some political actors, believe the policy is targeted at their candidate.
“Another issue why the policy is not working is sabotage in my opinion. Some stakeholders in the bank are being used by politicians to prove a point. A lot of them are compromising the system to make it look like banks are not ready or willing to adopt a cashless society,” he said.