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Naira scarcity, as Christmas shoppers condemn ATMs’ dry up

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About a week to Christmas Day, shoppers have condemned the worsening naira scarcity, with many of them expressing frustration over their inability to make vital purchases for the Yuletide celebration. On Friday, it was revealed that banks were still rationing cash over-the-counter, while several Automated Teller Machines did not dispense cash. Many bank customers could not get access to cash over the counter in many baking halls across the country. This was despite assurances from the banking regulator, the Central Bank of Nigeria, that more cash had been released for economic activities.

Some bank customers, who were around the ATMs, expressed frustrations for their inability to get cash. Most ATM galleries belonging to most major banks in Nigeria, have not been able to dispense cash to it’s customers; while most bank customers receive a limited amount of cash over the counter. Nigerians seem to be facing a lot of economic crisis for the past few months. This have diverse effect on the economy and the general populace at large.

Scarcity of money in circulation can have several economic and social effects, to mention a few:

  • Reduced Economic Activity: When there is a scarcity of money, people and businesses may experience a decline in spending. This can lead to a slowdown in economic activity as businesses produce less and consumers cut back on purchases.
  • Unemployment: Reduced economic activity can contribute to job losses as businesses may not need as much labor when demand for goods and services decreases. This can lead to higher unemployment rates within a given economy.
  • Increased Borrowing Costs: With less money available, lenders may increase interest rates to compensate for the perceived risk of lending in a tight-money environment. This can make borrowing more expensive for businesses and individuals.
  • Financial Distress: Individuals and businesses facing a shortage of money may experience financial difficulties, including the inability to meet debt obligations, leading to increased default rates and financial instability.
  • Impact on Investments: Investors may become more risk-averse in a situation of money scarcity, leading to a decline in investment activities. This can affect the growth and development of businesses and industries.
  • Social Discontent: Economic hardships resulting from a scarcity of money can lead to social discontent and dissatisfaction. This may manifest in protests, strikes, or other forms of civil unrest as people express frustration with their economic conditions.
  • Impact on Government Finances: Governments may face challenges in collecting sufficient revenue through taxes when economic activity is low. This can affect their ability to fund essential services and infrastructure projects.
  • Currency Depreciation: In some cases, scarcity of money may lead to currency depreciation. This occurs when there is a lack of confidence in the value of the currency, and people may seek alternative stores of value, such as foreign currencies or commodities.
  • Deflationary Pressures: Scarcity of money can contribute to deflation, a sustained decrease in the general price level of goods and services. When people expect prices to fall, they may delay spending, leading to further reductions in economic activity.
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It’s important to note that the effects of money scarcity can vary based on the specific circumstances of each economy and the underlying causes of the shortage. Governments and central banks often employ monetary and fiscal policies to address such issues and stabilize economic conditions.

 


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