The banking system came almost to a halt after banks in Ivory Coast failed to deliver cash to hundreds who have lined up outside to withdraw cash. The banks have cited liquidity and security problems which arose after the disputed No. 28 elections, last year.
People had to return empty handed after waiting for hours when the banks told them that they just don’t have the cash.
Liquidity problem in Banks
The banks in Ivory Coast have been facing a liquidity problem since the central bank of the region severed its ties with the government of Laurent Gbagbo.
The problem of shortage of cash could snowball into a larger issue, especially with the February payday for the civilian and army Officers approaches near
Laurent Gbagbo lost the elections held in Nov. (10) but refused to step down even after facing a defeat in those elections.
A peculiar example is of Honorat Traore, a businessman from Ivory Coast who went to his bank to withdraw 20 million CFA (41,000) from his account but was instead told that the bank could only give him 2 million CFA as they don’t have more cash. After waiting for six hours, he was told to come again some other day when some more deposits have been made in the bank.
Impact of international sanctions
The international community has imposed sanctions against the Gbagbo government after it failed to leave the position for the Alassane Ouattara, Internationally acclaimed winner of the last year elections.
The European Union, which has also imposed sanctions in recent weeks in hope of forcing the banks to cooperate with the parallel government of Alassane Ouattara.
The parallel government of Alassane Ouattara is hopeful of forcing his opponent out of power by blocking his government’s access to cash. It is reported that those who have been opposing their plans are being threatened.
The success of this strategy depends on the amount of cash available to the government of Mr. Gbagbo.
Liquidity shortage can have wider ramifications
The problem of shortage of cash could snowball into a larger issue, especially with the Feb. payday for the civilian and army Officers approaches near.
According to an estimate the present government has to pay $150 million a month as salaries and other expenses to the army and civilian officers.
Some observers have warned that even though Mr. Gbagbo could have enough cash to pay to his officers, the closure of banks could hamper the payments.
Patrick Achi, the economics minister and spokesman of the parallel government said: “He won’t be able to pay them [the civil servants] not because he doesn’t have money but because he doesn’t have a banking system.”
The income of the Gbagbo government has already been reduced as a result of the sanctions and it is not clear what the government earns from the oil sector.