NIGERIA: In Nigeria, people have taken to sleeping in front of banks. They want to be among the first in line to get notes from the cash machine when it loads up in the morning.
Naira shortages in Nigeria
Nigeria, where 40% of the population doesn’t have bank accounts, a scarcity of newly designed naira notes has caused a cash crunch and increased concern among individuals who are scrambling to get their hands on their money.
Even the Supreme Court got involved and ordered an extension of the deadline for turning in old notes, but it didn’t seem to make much of a difference.
Long lines of cars snaking out of the gas stations due to occasional gasoline shortages are nothing new to the locals. But as the nation prepares for a presidential election at the end of the month, huge lines of disgruntled, bewildered, and furious people have now become a common sight outside banks.
Abraham Osundiran, 36, who is in one of two lines at a bank in Ikoyi, a district in the nation’s main commercial hub, Lagos, says, “I have not eaten today.”
Because he lacks the funds to cover the taxi fee, he has been forced to skip a second day of work at a construction company. While some Nigerians now accept digital payments, many still primarily rely on cash.
“I don’t have any money. I had to forego breakfast in order to get here, and I’m not sure what I’ll eat for the rest of the day,” he added. It is a similar condition to many others.
Last October, it was announced to Nigerians that the old notes would be replaced by new ones, and they were urged to deposit any cash they had saved in the bank.
“They forced us to deposit all of our money into our accounts, which we now cannot access. It’s intolerable,” says 40-year-old Osarenoma Kolawole, who works in telesales and got paid last week but hasn’t been able to access her pay.
The 200, 500, and 1,000 naira notes were redesigned, according to the Central Bank of Nigeria (CBN), to replace the dirty money already in use and to combat inflation, stop counterfeiting, and advance a cashless society.
It was hoped that the redesign would bring some of the money that had been hoarded by people and businesses back into the financial system. In certain ways, the reform has led to the creation of a cashless society, but not in the way that the CBN had envisioned.
People have been having trouble sending and receiving money online. The infrastructure needed to support a digital system, according to analysts, is not strong enough.
A senior economist at management consultants SPM Professionals, Paul Alaje, says, “The goal was to reduce people’s access to cash and encourage them to use digital payments so that the Central Bank of Nigeria (CBN) could track where money is going.”
The CBN has not stated if the shortages are deliberate. Yemi Makinde, a policy analyst and economist, claims that the government has long tried to transition the nation to a cashless economy.
“The banking systems were not prepared, and Nigeria is simply accustomed to cash, so despite its good intentions, it is simply not practical,” said Makinde.
Numerous others have also accused individual bank branches. First, they continued to distribute outdated notes rather than new ones, even up until a week before the initial deadline, keeping them in circulation.
Second, agents from the Economic and Financial Crimes Commission, the nation’s anti-fraud agency, stormed several bank branches and detained managers who were allegedly storing the new notes in vaults rather than dispensing them to clients through cash machines.
The CBN stated while announcing the redesign that the new notes would go into circulation starting on December 15 and that the old notes would no longer be accepted as legal tender at the end of January.
To ease the situation
“The only option for this decision to be implemented is to reintroduce old notes into the system to make up for the deficit, but doing so will just result in a repeat of the previous situation,” said economist Alaje.
Godwin Emefiele, the governor of the Central Bank of Nigeria, has said that in an effort to ease the situation, he has taken steps to introduce more of the new notes into the system.
With demands for President Muhammadu Buhari to intercede to prevent votes from the All Progressives Congress from being lost, the chaos has grown into a significant electoral issue.
Despite the crisis, some people, especially those who were able to make extensive plans in advance, have not yet felt the crunch. 35-year-old Ruth Okeke, who runs a convenience shop in Omole, says despite the decline in her customer base, she remains unconcerned.
“Things will improve, I’m confident. The only people profiting from this hysteria are the bankers, but everyone should calm down since new notes will soon be issued,” Okeke said.
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