The insufficiency of newly designed naira notes has led to a shortage of cash. It has also created anxiety among those who are desperately in need of their money in a country where most of the population does not have bank accounts.
People are now sleeping outside banks as they want to be among the first to get notes from the machines as soon as it is loaded in the morning. The Supreme Court has been involved and ordered that the deadline to hand in the old notes will be extended and this has not improved the situation.
People have long been accustomed to the periodic fuel shortages that result in long lines of cars at gas stations. However, now the long lines of angry, confused, and frustrated people outside banks have become a common sight. The country builds up to a presidential election soon at the end of the month.
While waiting in one of the two queues at a bank in Ikoyi, a district in the country’s commercial hub, Lagos, Abraham Osundiran, 36, mentioned that he had not eaten today due to the current situation. He missed his work for a second day at a construction company as he did not have the money to pay his taxi fare.
Although some Nigerians have embraced digital payments, there are some who rely solely on cash. "It's agonizing. I cannot visit the market because they only accept cash. Now that buses require payment, I must walk everywhere "26-year-old hairdresser Lilian Ineh informs sources
Nigerians were encouraged to deposit any cash savings in the bank last October. They were told that the old notes were being replaced with new ones. The Central Bank of Nigeria (CBN) stated that it redesigned the higher denomination notes (200, 500, and 1,000 nairas) to replace the dirty money in circulation to combat inflation, reduce counterfeiting, and promote a cashless society.
They hoped that with the redesign there would be more money that would be put back into the financial system by people and companies that were hoarding the cash. A cashless society has been created by the reform, but it is not in the way the CBN had planned. It has become difficult for people to do online transactions. Analysts mentioned that the infrastructure to support a digital system is not strong enough.
Paul Alaje, a senior economist at management consultants SPM Professionals, explains, "The entire concept was to restrict people's access to cash in order to encourage them to make digital payments so the CBN could track where the money went."
“However, Nigerian banks do not have the structure or capacity to run digital payments effortlessly.” When the redesign was announced by CBN, they mentioned that the new notes would begin circulating on 15 December. The old notes would cease to be legal tender by the end of January, yet the banks extended the deadline to last Friday.
They have not said if the shortages are on purpose yet. According to an economist Mr. Alaje, the judgment would work only if old notes were released back into the system to meet shortages, however, it would take them back to square one.