(Ecofin Agency) - Nigeria's Central Bank (CBN) has decided to take action to address the cash shortage at ATMs. Starting on December 1, commercial banks failing to supply their ATMs and branches with cash will face penalties, announced CBN Governor Olayemi Cardoso on November 29, 2024, during the annual bankers’ dinner in Lagos.

"To address this, we are conducting spot checks across deposit money banks, and we will impose penalties on underperforming institutions,” he said.

Authorities encourage citizens to report any difficulties withdrawing money directly to the CBN through dedicated communication channels. A large public awareness campaign will accompany these new measures.

Since 2023, Nigeria has faced a liquidity shortage worsened by a controversial naira reform. While the initiative has helped boost digital payments through platforms like Opay and Palmpay, it has also led to a scarcity of cash at ATMs and bank branches. This situation has been made worse by the Central Bank's weekly withdrawal limit of 500,000 nairas ($297).

To address the shortage, many businesses and individuals have turned to Point of Sale (POS) agents, who have become an important source of cash. However, this solution has raised concerns. In May 2024, the government ordered all 1.9 million POS operators to register with the Corporate Affairs Commission (CAC).

"We will also urge full regulatory compliance by all stakeholders, including mobile money operators and POS agents, to promote digital transaction channels and improve service delivery," Cardoso said, stressing that financial institutions involved in fraudulent practices or deliberate sabotage will face strict penalties.

Despite its push for a "cashless" economy, the CBN acknowledges that the transition must be supported by measures to meet immediate cash needs. “The CBN will continue to maintain a robust cash offering to meet the country’s needs, particularly during high-demand periods such as the festive season and year-end," Cardoso said.

Nigeria's foreign exchange reserves have seen significant fluctuations in recent years but have increased since the naira reform. In October 2024, the reserves reached $39.74 billion, a slight increase from $38.35 billion the previous month, though still far from the declines seen in July 2021.