Why Nigerians now prefer to keep money at home instead of at banks – Reports

Some Nigerians have identified greed, corruption and instability of the financial sector as reasons why people keep money at home.

They spoke in separate interviews in a survey conducted by the NAN.

In South-West, a financial analyst, Mr Rotimi Agboluaje, bemoaned the trend, saying this had impacted negatively on the economy.

Agboluaje cited illiteracy, lack of financial education and lack of confidence in the banking sector as reasons why many Nigerians keep money at home. He said that it would be difficult to manage the economy, especially the liquidity in the system, if the amount in circulation was not known.

The analyst advocated public enlightenment, financial inclusiveness and strict enforcement of the extant laws.

Prof Olajumoke Adeosun-Familoni of ICLED School of Business and Leadership, said that many keep money in their homes to ensure easy access while avoiding the stress of banking operations. Adeosun-Familoni, a lecturer in the Department of Management and Accounting, Lead City University, Ibadan, also said many keep foreign currencies at home in order to sell for profit at an auspicious time. In Abeokuta, Mrs Oluwatoyin Sanni, the Group Chief Executive Officer of the United Capital Group, identified corruption and ignorance as major reasons why Nigerians keep money at home.

“There are two categories of people in Nigeria who keep money at home, prominent Nigerians and the uninformed people,’’ Sanni said. An Abeokuta-based economist, Mr Sunday Adelani, said Nigerians keep money at home to avoid what they describe as “unnecessary and high charges not clear to them on their accounts’’.

Adelani added that many keep money at home because they were not properly motivated and informed. He urged banks to reward customers who were loyal and consistent in their saving habit with higher interest rate and also reduce bank charges on depositors’ accounts. Dr Onafowokan Oluyombo, an Associate Professor in the Department of Accounting, Pan Atlantic University, Lagos, said there could be no proper statistics of the nation’s money in circulation.

He linked the current economic downturn in Nigeria to the poor saving habits of the citizenry. Oluyombo said that the effect of keeping money at home meant the denial of more opportunities to give loans for productive purposes and destabilisation of the economic system.

He said that it had negative effect because such huge funds were not being made functional, adding that “definitely it’s one of the contributions to poor health of our economic system.

“The real solution to building Nigeria’s financial fortune is to holistically promote a sustainable culture of savings. “It is these savings that can fuel Nigeria’s passionate entrepreneurial spirits. Nigerians will have to be the one investing in Nigeria more than foreign investors.

“When people have substantial of funds in savings, they can easily plan, invest and lead a better life and the economy will then thrive again.’’ Dr Michael Oke, a senior lecturer in the Banking and Finance Department, Ekiti State University, Ado Ekiti, also said those keeping money at home were mostly politicians hiding embezzled funds He said many public officers, who had stolen public funds, need a safe haven for their loot which the conventional banks could not offer.

“The essence of keeping money in banks is good because saving is a factor for investment and those in need of money in banks could access it through loan for investment,” Oke stated. John Ajisafe, a banker with the United Bank for Africa, however, said the policies put in place by the present administration could solve the problem of keeping cash at home. Ajisafe said with the advent of Treasury Single Account (TSA), money was no longer being embezzled with impunity.

He explained that keeping of cash at home, especially foreign currencies, was the major cause of the current cash crunch, saying it is easier to move huge sums with foreign denominations. An economist, Mr Tosin Yusuf, said many Nigerians have lost confidence in the banking system, arguing that this might be responsible for the current trend of keeping money at home. Yusuf called on the CBN to sensitise Nigerians on savings culture through a sustained awareness campaign aimed at promoting banking consciousness in the people.

He also called for a liberal monetary policy by the CBN to make banking more accessible and IT-driven for accelerated transactions. But, Mrs Dorcas Wojuade, a banker, said customers have the right to either keep money in the bank or at their place of abode. She said that the statistics of currency in circulation had always been made available by the CBN. In his view, Mr Thomas Simeon, a financial expert, said most people keep money at home to avoid complicated bank procedures and unexpected bank charges. Simeon said people also keep money at home to have a sense of security, adding that this would help them to monitor its use and the balance at hand.

He said this sense of security might be understood, especially at a time when the global economy had witnessed bailout and collapses of banks. Prof. Gbolahan AbdulGafar, an economist at the University of llorin, said that those perpetrating the act were corrupt individuals determined to retard the growth of the economy. “Nigerians keeping money at homes do not have legitimate sources for the money and they are damaging our economy,” AbdulGafar said. Similarly, Mr Tolulope Abe, a banker with the Guaranty Trust Bank, llorin, told newsmen that keeping money at home is very risky, especially now that there is shortage of cash everywhere.

An economist, Dr Kunle Akinyemi , said it was unfortunate that the motive of keeping money at home , which was to have quick access to funds during an emergency, had been abused. He accused some public officers of burying money from proceeds of crime at home. Also, a popular Bureau de Change operator in Ado Ekiti, Malam Shehu Ibrahim, said apart from economic sabotage, those who keep huge sums of money in their private homes are doing so at their own peril In Jos, North-Central, Larai Bokkos, a bank customer, said that she had always opted to keep her money at home to escape banks’ ever increasing charges. “Besides, banking my money has become very insignificant because of dwindling interest rates,” she said.

She agreed that keeping money at home had an adverse effect on the economy because it reduces the banks’ ability to give loans, economic activities and lower the standard of living. She advised the CBN to increase the interest rates on savings to woo more customers and encourage people to deposit their money in the bank. She further advocated a reduction in banks’ charges on charges to minimise losses on the part of customers. Similarly, in Nassawara State, Mr Nicodemus Godswill and Mr Bulus John, both economists, said the act affect the economy negatively and reduces the cash in circulation. John attributed the emerging trend to fear of arrest.

In Lokoja, Mr Samuel Ogijo, a banker and a senior staff at Guarantee Trust Bank, said that some people keep money at home due to failure in banking operations, long queues and unnecessary delays that they often experience in banks. Ogijo added that illiteracy and lack of confidence in the banking systems could also discourage people from banking their cash. He advocated more friendly innovation, prompt banking service delivery, expansion of bank branches, minimum or no bank charges, higher interests, and user friendly bank applications.

He said that keeping money at home will hurt the need for a free flow of cash, reduction in tax remitted from banks, and poor economy control tools. He added that it would also lead to a reduction in employment, affects balance of trade and payments, and there would be no means for inflationary and deflation control. “It has had adverse effects on the country’s current economic recession because foreign currencies kept outside the banking system will lead to foreign exchange gap,’’ he added.

Ogijo said that the ongoing cash squeeze in the country had a lot to do with keeping money in private homes Another banker, Solomon Ibiyami, Head of Operations at FCMB, said that some banks instability had scared the citizens. An economist, Mr Siju Olabode, said the sources of the money of some Nigerians were illegitimate and questionable. “That is why most of them prefer keeping them in their private homes and reservoirs.

They want to avoid the processes involved in saving the monies in the banks.” But in Lafia, Mr Ali Ahmadu, explained that he gave up saving money in his bank account because of the bank’s poor services, especially the ATM. “Getting money from the ATMs can be frustrating. Aside the queues, you may not even get anything while your account will be debited,” he said.

[Nigeria Eye]