In November, the Nigerian banks’ Standing Deposit Facility experienced an 18% decrease, dropping to N2.4 trillion from October’s N2.94 trillion, reflecting a scarcity of cash.
Conversely, the Standing Lending Facility (SLF) surged by 559% month-on-month, rising to N376.64 billion in November from N57.14 billion in October 2023. This steep increase raised concerns about liquidity within the country’s financial sector, according to the Central Bank of Nigeria’s financial data for November 2023.
While the CBN reassured the resilience of Nigerian banks in a statement on December 11, the significant drop in the banks’ Standing Deposit Facility and the spike in the Standing Lending Facility have sparked worries.
The decline in the banks’ SDF can be attributed to reduced cash deposits, largely influenced by the persistent scarcity of Naira.
As a measure to address this issue, the CBN suspended processing fees on substantial cash deposits.
This move followed the CBN’s acknowledgment of the cash shortage, mainly caused by substantial withdrawals from its branches by Deposit Money Banks and customers’ panic withdrawals from ATMs.
Dr. Uju Ogunbunka, President of the Bank Customers’ Association of Nigeria, emphasized in an interview with DAILY POST on Monday that despite the CBN’s reassurances, the cash scarcity persists.
“The problem is that people do not have the money to buy because Naira is scarce. There is still naira scarcity. What is paramount now is the availability of cash”, he said.
Elegede Segun, the secretary-elect of the Association of Mobile Money and Agent Banking Industry in Nigeria, corroborated Ogunbunka’s stance on Naira scarcity.
“Our members no longer rely on banks for cash; we’ve shifted our focus to alternative merchants. And this means we have to pay more to get cash”, he said.
