Nigeria is delaying plans to replace its banknotes after chaotic scenes at ATMs

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Abuja, Nigeria

Nigeria was forced on Wednesday to delay plans to replace its banknotes with redesigned currency after chaotic scenes at ATMs as millions of people struggled to get their hands on the new currency.

The country’s old notes were supposed to become legal tender from February 11 but the country’s Supreme Court blocked that date because banks were unable to pay enough of the new naira.

Nigerians has been spending hours in long lines at cashpoints since late last month after rushing to deposit the old banknotes before the original January 31 deadline. But they haven’t been able to withdraw enough of the new drafts to meet their daily expenses.

That shortage has led to broken tempers and unprecedented hardship for millions of Nigerians, especially those working in the informal cash-based economy and citizens living in rural areas.

Nigerians say they are struggling to pay for food and public transport as retailers refuse electronic payments. The strain on banking infrastructure has caused many servers to fail, multiple sources told CNN.

In November last year, President Muhammadu Buhari unveiled the redesigned currency with the aim of containing anti-money laundering and hoarding of large sums of money. outside the banking system.

The Governor of the Central Bank of Nigeria, Godwin Emefiel, said in January that out of 3.23 trillion Nigerian naira ($6.9 billion) in circulation since last October, “only 500 billion naira was within the banking industry” while ‘ in which there were 2.7 trillion naira ($5.8 billion). kept “permanently in the homes of men.”

Emefiele said that about 1.9 trillion naira (about $4 billion) has so far been returned to the banking system since the new notes were first introduced. in November.

Nigerians wait for new banknotes

The redesigned bills were meant to replace the older series of 200-, 500-, and 1,000-naira notes on January 31, but a 10-day extension was announced after widespread uproar over the timing.

The new notes look very similar to those in circulation with a color change being the only major difference. The new naira notes, however, are “fortified with security features that make them difficult to counterfeit,” President Buhari said last year.

Abulrahman Abdullahi, who lives in the Nigerian capital Abuja, told CNN that he needs money quickly because he is running out of food and cannot restock supplies. Across the country, banks have been the targets of growing anger over the frantic search for the new naira notes.

Nigeria’s largely informal economy relies heavily on cash, but the CBN trying to encourage people to make more use of electronic banking, a policy that analysts consider premature.

Nigerians are relying heavily on their banks to issue new bills after the February 10 deadline to exchange of the old currency saw many scrambling to deposit their old notes. The banks don’t have enough, though of the new notes to go around, provoking anger from individuals, some of whom have damage bank property or stripped to their underwear in a rage, according to videos shared on social media.

“I’ve been here for hours,” Abdullahi told CNN, as he struggled to keep a place in a strong queue that had formed at A bank ATM in the Nigerian capital Abuja.

“I have to shop for groceries. It has been very difficult for me. The number of times I eat in a day has reduced to two because if I run out of food items, I may not be able to restock,” he said.

At a nearby bank, customers were asked to withdraw no more than 10,000 naira ($22) per person from their ATM. Customers from other banks were asked to withdraw only 1,000 naira (less than $3) from the cash machine.

In one Lagos supermarket, cash from the machine was limited to just 1,000 naira (less than $2) despite the long wait times.

“What can we do with 1,000 naira!, this government doesn’t care about us,” security guard Joel Johnson told CNN.

The government and the CBN have come under pressure and the governors of three Nigerian states are challenging in court the short time given to exchange the old notes for new ones, which they warn could lead to a “breakdown of law and order” ahead of the crucial presidential vote later this month.

To make matters worse, Nigerians are also facing long lines for fuel across the country, leading to anger and frustration with protests emerging in parts of the country as citizens fight against their ‘hardship caused by the scarce money and increase in fuel prices.

One person was reportedly killed in clashes between protesters and the police in Nigeria’s third most populous city, Ibadan, according to local media.

Economist Bismarck Rewane told CNN Nigeria’s transition to new currency notes could be better handled, saying the lack of new bills would hurt the country’s economy.

“It can cause some disruption and contraction in economic activity,” Rewane says. “The GDP numbers for the first quarter of the year will be affected. ”

The CBN assures that “queues at ATMs will soon disappear” while directing commercial banks to pay the new notes over the counter, however, “subject to maximum daily payout limit of N20,000 ($43). ”

President Buhari said he was “aware of the cash crunch and the hardship people and businesses are facing, because of the naira redaction,” but sure Nigerians of “major developments between now and the February 10 deadline.”

The current cash crunch is not the only shortage that Nigerians are grappling with.

A year-long fuel shortage has worsened in recent weeks, leaving many cash-strapped Nigerians unable to buy gasoline, which has tripled in price in parts of the country.

The state oil company NNPC blames the shortage distribution problems. Analysts say fuel shortages could hamper the ruling party’s chances at the February polls.

Motorists wait in line to buy fuel at and next to a filling station, causing a traffic jam on the Lagos' Ibadan expressway, in Lagos on January 30, 2023.

“It has an impact on politics, in terms of the ruling party suffering some unhappiness from the voters because of the hardships they are facing,” said leading political analyst Sam Amadi.

“People register the government as a failure … and that can affect the fortunes of the ruling party,” Amadi told CNN.

President Buhari is serving a second term and the ruling party is hoping to be succeeded by candidate Bola Tinubu, the former governor of the country’s richest state, Lagos.

Amadi suggests that the shortage of the new naira could have a positive impact on the upcoming elections.

“It could reduce vote buying if managed well, and maybe (one of) the strategic objectives of the monetary policy around the new naira,” he says.

There has been vote buying feature of Nigeria elections, which were spoiled with violence and fraud in recent years.

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