By Ezinwanne Onwuka
IT was in October 2022 that the Central Bank of Nigeria, CBN, announced its intention to redesign the currency, which it said was in the best interest of Nigerians to check terrorism financing, counterfeiting and imbalances in the fiscal space, and to enable the apex bank to take control of the currency in circulation.
As a result of the currency redesign, the CBN also set the maximum cash withdrawal limit via the Automated Teller Machines and point of sale, PoS, agents at N20,000 per day for individuals subject to N100,000 per week, instructing commercial banks to load only denominations of N200 and below into the ATMs.
Over-the-counter weekly cash withdrawals by individuals and corporate organisations were equally pegged at N100,000 and N500,000, respectively.
The mutually dependent currency redesign and revised cash withdrawal policy were aimed at steering the country into a full-fledged cashless economy by January 9, 2023.
Despite the policy’s prominent goals, it remains a hot topic of debate in the country weeks after its implementation. The new notes are insufficient, and there is a paucity of cash, causing debates about the supposed benefits of the policy.
Long queues at banks’ ATM galleries have become commonplace. The agent bankers or PoS merchants, who are one of the major channels for distributing the new notes to the public, charge exorbitantly. Hence, dissuading the public from using the channel, Nigerians flood the ATMs, the only available avenue to get the new notes, to beat the short deadline.
Despite the CBN governor, Godwin Emefiele, announcing a ten-day extension to the deadline for Nigerians to say goodbye to the existing currency notes in circulation, the cash crunch persists.
Many Nigerians, like myself, had thought that shifting the deadline from January 31 to February 10 would make smooth the transition to a cashless economy and enable sweeping circulation of the new notes, but the reverse is the case.
The situation is getting worse every day. While the apex bank continues to claim it allocates more than enough banknotes to deposit money banks daily and has authorised over-the-counter payment of the new notes to salvage the situation, the banks are saying the new notes are not available for disbursement.
Nigerians queue for long hours at the ATMs, struggling to get their hands on the new notes with little or no success accessing cash to meet their daily expenses as the machines are loaded with a limited amount of the new banknotes and customers can only withdraw a specified sum from the cash machines.
This fuels anger from individuals, some of whom have vandalised bank property or stripped to their underwear in rage in banking halls during working hours, according to videos shared on social media.
Reacting to the plight of Nigerians, President Muhammadu Buhari assured that before the new February 10 deadline elapses, there will be ‘significant improvements’. However, positive impacts of the President’s promise on resolving the cash shortage have yet to be felt nationwide, and the deadline for the mopping up of old naira notes has been halted by the Supreme Court.
The shift in the deadline and suspension would have been needless if such a good policy had not been erected on a hasty implementation procedure or done without inflicting distress on Nigerians.
It is disturbing that despite the billions of new naira notes purportedly printed by the CBN and the diverse channels the apex bank listed for the distribution of the new notes, the transition to their usage is causing untold suffering to Nigerians. This is supposed to be the prelude to a cashless economy, but the reality on the ground says we are not yet ready for the transition. There are lamentations from all corners.
Many Nigerians who would have supported the cashless policy and the redesign of the naira are outraged by the unreliability and ineffectiveness of the various electronic and digital banking channels.This period would have been a major driver for the cashless policy, but the pressure on the banking infrastructure, which has caused many servers to fail, has exposed the lack of investment in technological infrastructure by banks for digital payments and electronic banking.
Going cashless is not supposed to be controversial in a fast-growing economy such as ours, but there are doubts about whether the Emefiele-led CBN considered the unintended challenges of implementing the cashless policy before embarking on the laudable mission.
Funny enough, the apex bank reportedly admitted that the disruptions in the economy caused by its cashless policy measures were not anticipated and that it lacks the capacity to print more new notes. Although it has since denied making this admission, suffice it to say that the CBN’s transition to new currency notes, though well-intentioned, seem to have landed us in a bottomless pit.
Regardless, I refuse to reckon that little or nothing can be done to strategically arrest the crisis. Whether the government deliberately introduced the policy as a political witch-hunt targeted at some individuals to thwart their chances ahead of the forthcoming general election, as has been alleged, is a matter for another day.
Ezinwanne, a public policy analyst, wrote via: [email protected]