The massive withdrawal of cash from Deposit Money Banks by politicians and their associates in preparation for the general elections has led to shortage of cash across bank branches in the country.

It was gathered on Thursday that several billions of naira had left the banking system between December last year and this month as different political parties spent huge amounts on their campaigns.

“Many banks are having it rough in terms of liquidity. Huge deposits running into several billions of naira have been withdrawn for election campaigns by politicians. This has affected some of the banks. So, liquidity issue is of utmost concern right now,” a top official of a tier one bank told our correspondent.

According to other sources close to the situation, some lenders have had to postpone some obligations due to liquidity problems.

“Banks have been calling and pleading with some investors not to terminate maturing fixed-income debts as a result of liquidity problems; some bankers are also not lending not necessarily because of uncertainties in the economy, but due to lack of liquidity,” a banker added.

A number of politicians, he said, had also sold their properties below the real values in a bid to raising funds for campaigns.

Our correspondent, who visited some bank branches in Lagos and Ogun states on Wednesday and Thursday, observed that hundreds of customers came to withdraw money from their accounts more in anticipation of problems during and after the presidential election on Saturday.

However, many of the customers were disappointed because they could not get the amounts they requested across the counter and Automated Teller Machines.

Bank officials said some customers were making panicky cash withdrawals to make provision for their families in case of security problems after the elections.

A bank official told our correspondent that it was a sign of liquidity problem for banks to keep giving excuses of network breakdown and employ delay tactics to force some of their customers to leave in frustration without being unable to make withdrawals.

The Managing Director, Afrinvest Asset Management Company Limited, the research and investment arm of Afrinvest West Africa Limited, Mr. Ola Belgore, said political spending in the run up to elections usually affected the banking system and the economy in general, citing the examples of what happened in previous polls.

Belgore is of the opinion that some banks are currently experiencing liquidity problems because a significant part of the huge funds leaving the banking system for election campaigns is currently held in the informal sector.

This, he said, was so because a major part of the population was still unbanked.

“Even though there is a lot of outflow out of the banking system, the bulk of it is being stored in the informal sector at the moment because a large number of Nigerians are still unbanked,” he noted.

The Managing Director, Dunn Loren Merrifield Asset Management Limited, Mr. Tola Odukoya, who stated that the relationship between political spending and the banking system was usually an inverse one, noted that the onset of the general elections had had serious adverse effects on the financial system.

According to him, beyond the political spending, the increased risks occasioned by the general elections have also made several foreign portfolio investors to hold back from investing in the country.

This, he said, had led to major drawbacks in economic activities, adding that “the effect of the onset of the general elections on the financial system has not been palatable.”

Outlining other factors that had compounded the banks’ liquidity problems, the investment expert said, “The effects of monetary and fiscal policies in the last several months have also impacted negatively on banks’ liquidity. The effects of the lower crude oil prices on the economy means the federal and state governments now have less money to share.

“We also see the increase in the Cash Reserve Ratio of public sector deposits to 75 per cent as a factor. On the back of this, we also see the implementation of the Treasury Single Account; this means banks do not have access to funds belonging to the Ministries, Departments and Agencies of government. From these, a lot of liquidity has been sucked out of the banking system.

“The adverse effect of the not-too-favourable economic conditions in the last six months and the inflationary effects of the devaluation of the naira have reduced the income of the average household; this has also led to reduction in household savings. So, it will be difficult for banks to be very liquid in the face of all these factors. Some banks may be more liquid that the others.”

http://www.punchng.com/business/business-economy/election-spending-fuels-cash-shortage-in-banks/

CC: Seun, lalasticlala

Hmmmm, see queue for bank ehnnnn

Say no to election violence

You come to a bank where there are about six ATMs and only two are working; the queue will b extending to the gate at one end, and to the plant house at the other. Even d banking halls will be filled with frustrated customers because, just like at the ATM, only two out of six attendants are paying.

Bro, all the ATMs are good; it is all a ploy to restrict withdrawals. Money don dey finish. I just pity some banks in the coming months.

My His grace no trouble will spring up before,during and after the election.

There goes our money.......

And meanwhile.....we have no light, no water and an oil dependent economy.

Whoever wins in March 2015....is going to be running austerity government by 2016.

Tighten your seat-belts Nigerians.....the final call for the time machine flight to the late 1980's is here. Gertscham jump......!


PDP....managing to ruin Nigeria's economy over 16 years.

Everything in Nigeria is always done differently...
Nigeria approach

This is effect of desperation of the so called leaders,who will stop at nothing to get what they want,irrespective of the effect..

Imagine a senatorial candidate-Segun Adewale(PDP) sharing LG television,dvd,phone,#500,etc to people when he came to Alaba international market. I wonder how he intends to recoup the money spent..

..

Na wah ooo

am done talking politics

people need to have some money at hand cos of fear of the unknown

you can only imagine the amout spent during this election.

No thanks to the dollars that was shared by mr president. I got my share but vo

And rubbery in this same bank, it a pity

we don hear

[size=28pt]


Thanks to Mr President's dollar rain[/size]

If you see queue for Ecobank and First bank yesterday. Thank God I manage to withdraw at last. The ATM queue was like a kerosene queue at NNPC Mega station.

Meanwhile, remember Sai Buhari

Hmmmm, mr desperate don share share money tire.. Anyway which way we voting cluelessness out of our nation


APC change!!!!

This is worrisome. Thank God I have collected cash for next month.

Ok

Nor be dia money ni? D way those yeye cashier dey form self na him dey mk me vex.

Bwt vote nt fight.one love.

Wait o we dey flez light here almost a week nw o.anyway all tanks 2 Gej

It's not a surprise!

INEC's Voter Education - Election Accreditation And Voting Procedure
www.nairaland.com/2219758/inecs-voter-education-election-accreditation

not the bank that I am using

Na wa oh


This is GMB, Tinubu, Lai Mohammed and Amaechi's fault put together.

Nigerians can't wait to send Buhari back to Daura.

The names Buhari and Daura match in pronunciation sef!!

#GEJAllTheWay!!

Sanitation day is a day of "clean up" and it falls on the last Saturday of the month. March 28 is a sanitation day, get your BROOMS and P.V.C'S and let's clean up Nigeria for Buhari/Osinbajo for President

PDP have only enriched themselves and their loyalists.


one word for GEJ.............

tweetobyte:
As expected

Meanwhile, I still have a Twitter account with 57k active Nigerian followers for sale. Interested buyers should contact 081-867-999-22

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