Naira Scarcity Weakening Confidence, Hurting Economy – Odunzeh Urges Urgent Reforms
Former governorship candidate and trained economist, Odunzeh, has raised alarm over the increasing difficulty of accessing Nigerian naira in banks, a situation he describes as both economically damaging and socially destabilizing. According to him, it is now easier to withdraw U.S. dollars than the local currency in many Nigerian banks, a trend that is gradually eroding public confidence in the naira and weakening the country’s economic stability.
Odunzeh emphasized that for Nigeria’s economy to grow sustainably, the naira must remain competitive and widely circulated. He cautioned the government against overly aggressive anti-inflation strategies that rely on strengthening the naira artificially, arguing that such policies could backfire and deepen the economic crisis.
He noted that the Central Bank of Nigeria (CBN) introduced strict limits on weekly cash withdrawals—initially ₦100,000 for individuals and ₦500,000 for corporations. Though revised due to public backlash, these limits remain controversial and, in Odunzeh’s view, are ill-suited for an economy already grappling with instability.
Following the naira redesign policy, there was a significant shortage of new currency notes in circulation. This made cash difficult to access, especially in rural and informal sectors, disrupting economic activities and reducing consumer spending.
With limited availability of cash at banks, Nigerians increasingly relied on Point of Sale (POS) operators, who often charged exorbitant fees—up to 2.5% or more per transaction. This added financial strain on individuals and small businesses.
Cash-dependent small businesses were hit hardest. Restricted cash flow and rising operational costs led to reduced productivity, shrinking profit margins, and lower investor confidence.
The push by the CBN for a cashless economy has also triggered unintended consequences. The scarcity of physical naira has led to a rise in cyber fraud, including fake transfers and online scams, making everyday business transactions less secure and more prone to losses—especially for small traders.
The limited circulation of the naira and the rising demand for dollars have weakened the naira, making imports more expensive in a country that depends heavily on foreign goods. This has driven inflation, reduced the purchasing power of citizens, and worsened the cost-of-living crisis.
Many businesses, especially SMEs, now struggle to obtain foreign exchange for importing raw materials and equipment. As a result, operating costs have increased while profit margins have eroded. Inflation and scarcity of cash are diminishing the real value of naira earnings, making it harder for Nigerians to afford basic goods and services.
The inflation crisis has disproportionately affected marginalized groups, worsening poverty and deepening socio-economic inequality. While the government may gain more local currency from dollar-based revenues like oil exports, these short-term fiscal gains are often offset by broader economic instability and a weakened private sector.
Low levels of currency in circulation discourage spending and reduce production, which can trigger an economic slowdown or recession. As businesses scale down and incomes shrink, consumer confidence drops. This leads to even more saving and less spending, further stalling economic momentum.
The decline in business activity also results in reduced tax revenues for the government, making it more difficult to fund critical public services. In severe cases, the economy could face deflation, where falling prices lead consumers to delay purchases, further reducing demand.
Odunzeh called on the Federal Government and the Central Bank of Nigeria to urgently address the scarcity of the naira and take concrete steps to improve currency circulation. He emphasized that restoring the flow of physical cash will boost consumer and investor confidence, reduce inflationary pressure, support businesses, and curb cybercrime linked to overdependence on digital transactions.
He stressed that a healthy economy relies on the steady flow of money. Circulating currency supports investment, consumer spending, and business growth. Physical cash is still essential in many parts of Nigeria, where digital infrastructure remains underdeveloped. Ensuring easy access to cash not only stabilizes commerce but also enhances national economic security.
Odunzeh concluded by urging monetary authorities to implement practical, people-focused financial reforms that reflect the economic realities on the ground. He warned that without decisive action to ease naira scarcity, Nigeria risks deeper economic hardship, falling productivity, and growing public discontent.
