The Central Bank of Nigeria (CBN) has once again brought to the forefront a persistent yet underappreciated challenge in the nation’s financial system — the security of cash cycle operations. At the CBN Security Workshop on March 11, 2025, Governor Olayemi Cardoso and Deputy Governor Bala Bello laid out critical concerns threatening the seamless flow of cash in the country. Their remarks were not mere observations; they were an urgent call for strategic reforms.
Cardoso and Bello underscored the fundamental issues in the country’s cash movement framework — disruptions in logistics, the monetization of cash by agents, inefficiencies in inter-agency security collaboration, and an inconsistent regulatory environment. These issues are not just operational setbacks; they pose serious risks to financial stability, economic confidence, and the integrity of Nigeria’s monetary policy.
What do these concerns really mean for Nigeria’s financial system? Why is the CBN so concerned about cash cycle inefficiencies, and what are the broader implications if these challenges remain unresolved?
The CBN is pushing for a structured engagement framework, where regulatory oversight is clear, and inter-agency cooperation is streamlined. If successful, this could enhance operational predictability and strengthen financial stability.
Speaking to the topic of the workshop themed ‘Security & Efficiency in Cash Cycle Operations’ the deputy governor said the goal is to refine security protocols, establish best practices, and develop a framework that fosters efficiency while ensuring that financial operations remain secure and undisrupted.
Governor Cardoso said the “CBN recognizes the invaluable contributions of the security agencies in maintaining financial stability and economic integrity.
However, he exclaimed that “recent experiences have highlighted pressing challenges that require urgent attention and closer collaboration. Disruptions in cash movements, disparate pricing for security escort services, and the commoditization of cash by POS merchants and bank agents are emerging concerns that impact financial system efficiency.”
For him, administrative issues such as End-User Certificate administration necessitate structured engagement between financial institutions and security agencies to ensure compliance without impeding essential banking operations.
According to Cardoso, beyond these cash cycle-related concerns, the banking sector continues to face broader security challenges that affect its operations.
Governor Cardoso’s major concern — the disruption of cash movement — strikes at the core of Nigeria’s economic stability. The security challenges in cash-in-transit (CIT) operations are not new, but their increasing severity has direct consequences for businesses, consumers, and the banking system.
The shortage of armed security escorts, especially in high-risk areas, has made it difficult for banks to move cash efficiently, leading to cash shortages in certain regions.
The consequences are far-reaching: ATM downtimes, cash withdrawal limits, and increased reliance on informal financial channels.
But at its core, financial experts agree that the issue reveals something more concerning — a regional disparity in financial security infrastructure.
Those who belong to that clique are of the view that if certain areas of the country are perpetually underserved due to security concerns, it reinforces economic inequality.
Cash shortages in rural and high-crime areas push people into alternative financial systems, many of which operate outside formal regulatory oversight.
The lack of structured security collaboration between banks and law enforcement further compounds the problem. The frequent delays in obtaining security clearances for moving cash expose systemic inefficiencies that make an already fragile system even more vulnerable.
A security expert who asked not to be named told this Correspondent that when banking personnel and CIT operators face unnecessary detentions or scrutiny while performing legitimate functions, “it signals a breakdown in regulatory coordination.”
The deeper question is: Is Nigeria’s financial security framework designed to support a functional cash economy, or does it unintentionally contribute to its own inefficiencies?
Mr Cardoso said “these issues underscore the urgent need for clearer operational frameworks, improved security protocols, and stronger inter-agency cooperation to enhance the effectiveness of the CBN’s regulatory and operational responsibilities.”
One of the most striking concerns raised by Cardoso was the increasing commoditization of cash by POS merchants and bank agents. This is more than a minor inconvenience—it represents a fundamental misalignment in Nigeria’s cash circulation policies.
POS operators, originally intended to expand financial inclusion, have morphed into an unintended secondary cash market. Instead of providing seamless financial services, many now charge exorbitant fees for withdrawals, effectively treating cash as a tradable commodity.
This development is particularly troubling because it undermines the CBN’s monetary policy objectives. When cash becomes a product to be bought at a premium, it disrupts the natural flow of money in the economy. Inflationary pressures emerge when businesses and individuals factor in these extra cash-handling costs into their pricing structures.
The broader issue at play here is a regulatory oversight gap. Why has the CBN allowed this trend to escalate to the point where merchants dictate the price of physical cash? The monetization of cash at the retail level suggests a weakening of regulatory enforcement—one that requires urgent intervention before financial distortions become normalized.
Another issue that emerged from Cardoso’s address was the disparate pricing of security services for cash movements. Different police commands charge different rates for escorting cash, creating an unpredictable cost structure for banks and CIT operators.
“At first glance, this may seem like a logistical or administrative issue, but its deeper implications are financial and systemic,” says the Lagos based expert. A non-uniform security pricing model introduces unnecessary cost variances in banking operations, leading to higher operational costs for banks, which may be transferred to customers in the form of increased fees.
Many agree that it is disincentive for financial institutions to operate in high-risk areas where security costs are highest. One of the major consequence is greater vulnerability to corruption, as unregulated pricing structures create loopholes for informal negotiations.
The lack of a centralized, standardized pricing framework for security services signals an absence of policy cohesion between financial regulators and law enforcement agencies. Without immediate intervention, these inconsistencies will continue to erode trust in the formal financial sector.
One of the more concerning revelations from the workshop was the unnecessary investigative scrutiny of officials for routine cash approvals. While oversight is necessary to prevent financial crimes, there are those who think that the current approach appears to undermine operational efficiency rather than enhance accountability.
Deputy Governor Bello’s emphasis on the role of security agencies in curbing illicit currency trading highlights another major financial risk. The black-market exchange of naira and foreign currencies undermines monetary policy, distorts exchange rates, and weakens investor confidence.
However, enforcement has been largely reactive rather than preventive. Security agencies often make arrests after the damage has been done, rather than proactively dismantling illegal trading networks.
Bello’s speech suggests that the CBN is seeking closer intelligence-sharing partnerships with law enforcement. But the success of such efforts depends on institutional willpower—and, critically, on the CBN’s ability to regulate forex liquidity transparently.
Mr Bello seems apt when he said that the financial industry just like other industries has its own challenges, which include cash cycle operations challenges, lack of uniformity in the provision of logistics services, and the commoditization of the Naira by POS merchants and bank agents. However, he believes that “addressing these concerns effectively demands enhanced collaboration, mutual understanding, and structured guidelines for an enhanced service delivery.”
From logistical breakdowns to regulatory inconsistencies, from market distortions to institutional conflicts, the challenges in securing Nigeria’s cash operations are both systemic and urgent. The CBN’s push for greater inter-agency collaboration, regulatory clarity, and structured security engagement is a necessary step forward.
We’ve got the edge. Get real-time reports, breaking scoops, and exclusive angles delivered straight to your phone. Don’t settle for stale news. Join LEADERSHIP NEWS on WhatsApp for 24/7 updates →
Join Our WhatsApp Channel
