Commercial Banks Hemmed, Central Bank Tight-Lipped

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Stranded customers at the International Bank Liberia Limited who could not access their savings and or their international money transfers

– As liquidity crunch squeezes

“Whenever government is owing commercial banks, we’ll have this problem.” -Anonymous Ecobank Staffer

As Liberians set to celebrate the festive season, the Daily Observer business desk reporter has observed that many customers visiting banks are failing to access their remittances (money sent from abroad) at Western Union and Money Gram outlets. From the current outlook, reports suggesting that the Central Bank is broke appears to have a strong element of truth – to which the Central Bank has remained tight-lipped and has so far failed to respond.

Several people who spoke to our business reporter on Wednesday, December 20, said they are being turned away or told to wait for a couple of hours to access cash at banks, saying they don’t have sufficient money on hand to meet the demand.

Musu Kiazolu A resident of Paynesville who went to an outlet at the ELWA Junction said most outlets, including their head offices on in central Monrovia, that disburse cash to Money Gram and Western Union clients are failing to give out money.

“They were claiming that you should wait two, three hours before they could give you the money you wanted to collect from Money Gram or Western Union because they had to wait for people who were depositing money into the bank,” she said.

Asked what the outlets said to people, Kiazolu said, “It was like they had run out of cash…It could have been a shortage of cash and I am not sure whether it was those hoping to collect money coming from outside or those doing withdrawals locally who were facing problems.”

According to her, money supply is now a challenge for some business people due to the inability of banks to payout certain amounts to clients.

“It is true that the commercial banks may not be able to give out huge sums of money because there is pressure on the system.

“We are in the festive season. The bank should provide cash for its clients so that even these Money Gram and Western Union outlets will be able to disburse cash to us.

“The situation appears normal in some areas with reports that some clients are receiving money sent by Liberians living outside the country,” she said.

Mary Mulbah, head of a yearly ‘susu’ club in Duala, told this paper that she had gone to Ecobank to withdraw some money, but was told that because of the amount she was requesting, she should have written the bank and made a request for the amount three days prior to the date she expected to receive the money.

According to her, the experience was new for her at Ecobank, where she has been banking for the past few years.

“I needed to withdraw the people’s susu money but the bank is saying that it can’t give me all that amount today. They told me I should have informed them three days ago; and even if they will give it to me, they won’t give me all in one day,” she said.

Mulbah is just one of many experiencing similar challenges getting monies out of banks.

Morris Gaye, a local businessman, explained a similar ordeal to this paper. For him, he saves money with the United Bank for Africa (UBA ), but said he was turned down when he went to withdraw some money to purchase goods for the festive season.

“I only come to town to buy and then take them to Cape Mount. I sell used clothes.

“When I came to the bank to withdraw some money to buy my goods, the teller told me that the available money was not sufficient at the time. I needed US$600; that’s all I wanted,” he said.

In a statement released earlier this month on the alleged scarcity of Liberian dollars, UBA Managing Director, Lekan Balogun, said, “No Bank will have cash shortage to meet withdrawals and at the same time be evacuating cash to the CBL. We have been evacuating excess cash to CBL on regular basis. We don’t have such challenge in our bank and the records are there in CBL to confirmed.”

He then assured customers that “UBA Liberia will continue to ensure their cash needs are met at all times especially during this festive season.” According to him, UBA Liberia has been the only bank issuing Liberia Dollar denominated VISA Cards and ATMs dispensing Liberia Dollars in the market. “Our ATMs are 24/7 and strategies have been put in place to ensure uninterrupted services. We will continue to encourage our customers – especially the individuals and salary account holders to obtain their L$ VISA cards to enable them have access to cash at our ATMs at their own convenient time.”

A teller at Ecobank who requested anonymity told this paper, “Whenever government is owing commercial banks, we’ll have this problem.”

“We cannot be paying out huge sums to government employees and other big clients and at the same time pay regular customers. So, sometimes we have to collect from certain customers to be able to payout to other customers,” she said.

When confronted with the issue, the Communications Director at the Central Bank of Liberia, Cyrus Badio, failed to respond to several text messages from the Daily Observer requesting answers to questions about what appears to be a critical liquidity problem facing the baking sector.

Meanwhile, as the banks struggle to payout U.S. dollar remittances as well as handing out Liberian dollars on demand, the local currency continues to depreciate against the U.S. dollar.

The situation is causing embarrassment for local business owners and small income earners, who use Liberian dollars everyday.

Currently, the exchange rate stands at L$126-127 to US$1; something that is causing serious consternation from the public, especially business owners.

Some observers hold the view that the current liquidity crunch is only seasonal and things will return to normal after the Christmas and New Year holidays. Whether or not this assumption will prove to be true remains to be seen.

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