Rejection of old notes worsens cash scarcity

By Tumininu Ojelabi Hassan

Commercial banks have resumed issuance of old N500 and N10000 notes to customers over the counter and through the Automated Teller Machines (ATMS) in compliance with the Supreme Court ruling on the naira redesign policy of the Central Bank of Nigeria (CBN) which insisted that N200, N500 and N1000 old notes remain legal tender till December 31st, 2023. But the hardship imposed on Nigerians by the cash scarcity has not abated, as the notes are being rejected, even though banks continue to disburse them to customers.

The CBN and Federal government deafening silence over the Supreme Court’s ruling has complicated an already chaotic situation, thereby causing confusion over the validity of the N500 and N1000 old notes. Amidst the uncertainty, the cash scarcity has worsened as business operators await CBN’s directive before accepting the N500 and N1000 old notes.

Traders have failed to accept old notes from people even as banks disburse the old notes leading to more hardship in the country. However, the N200 old note is the only old note business operators accept following President Buhari’s approval of its use until April 10, 2023.

The cash crisis has made life difficult for Nigerians, majority of workers currently work from home, businesses have experienced a significant loss owing to failed transactions. Some small scale businesses have shut down. For some families whose survival is dependent on daily income, the cash shortage has led to skipping of meals and lack of basic needs.

Many Nigerians thought the cash crisis would subside after the presidential election based on the belief that the naira redesign was motivated by political reasons. Barely two weeks after the presidential election, there is no improvement in the situation.

Aside political reasons, there were speculations that the naira redesign will control inflation, but the data from the National Bureau of Statistics on inflation rate contradicted this belief. In January 2023, the inflation rate accelerated to 21.82 percent, representing 0.47% increase from the 21.34% recorded in the previous month. Soaring food prices and a weaker naira currency were the main drivers of this.

Grace Idongesit, a 33 year old mother of three shared her experience with our correspondent.

“My family savings is stuck in the bank. My children, husband and I can barely feed. As I speak with you, I don’t know where our next meal will come from. I have visited more than seven POS merchants, they told me no cash.

“We were instructed to deposit the old notes in the bank, which I did. I can’t withdraw my money, I’m unable to transfer because the mobile app is acting up; traders are rejecting old notes, no new currency anywhere as well. How exactly does CBN expect us to survive? she bemoaned.

Our correspondent approached business operators across Lagos, who gave valid reasons for rejecting the old notes. Sulaimon Gbadamosi, a 45 year old bus driver shared his thoughts concerning the cash shortage with our correspondent.

“You can’t blame us for rejecting the old notes, no one will accept it. The filling stations have stopped accepting the old notes despite the Supreme Court ruling. POS agents are rejecting the old notes as well. We need to hear from President Buhari and the CBN governor before we can accept the old notes,” he said.

Adamu Usman, a 37 year old trader at the Mile 12 international market mentioned the effect of the unavailability of cash on his business.

“I can’t restock my products as my suppliers insist on collecting cash. I have been rejecting the old notes because everyone is rejecting it, banks are rejecting it from us, The CBN governor, Mr. Emefiele has kept mute so it will be unwise to accept the old note,” he stated.

Feyisayo Michael, a 29 year old lawyer residing in Lagos expressed his concerns regarding the cash crunch.

“No one is left out in this crisis, everyone is affected irrespective of your age, background, societal status and income. I have been working from home since the shortage of cash hit in February.

“As a lawyer, it’s embarrassing that the Supreme Court gave an order to the CBN, instead of complying , they kept mute. This is an indication of lack of respect for the rule of law. This policy has heaped suffering on Nigerians, especially people who survive on daily income. Shortage of cash coupled with countless failed transactions is frustrating Nigerians, a solution is needed promptly in order to restore normalcy,” he stated.

A POS merchant, who identified herself as Mary Onakoya, bewailed the worsening state of the crisis. “I’m a single parent of two, my business has been on hold for over two weeks due to this crisis. Banks aren’t disbursing the new naira notes and I can’t accept the old notes because my customers won’t accept it from me. It saddens my heart when customers want to withdraw and my response is no cash. This is a challenging period for my business as this is my only means of livelihood”.

An employee of Access bank, who spoke with our correspondent on the condition of anonymity, refuted the claim of disbursing the old naira notes. “We can’t disburse the old naira notes unless we receive directives from the CBN. No word from the Central Bank yet since the Supreme Court ruling,” he said.

Based on the situation report in locations across the nation, the crisis has deteriorated business activities as there seems to be no headway in this crisis. Nigerian Breweries, the local unit of Heineken NV, the world’s second-largest brewer, recorded its worst February sales in 15 years. The company like many other businesses depend on cash for about 80% of its retails sales and has been adversely affected after the central bank drained about N2.1 trillion ($4.6 billion) of cash from Africa’s biggest economy.

Anxiety is heightened as Nigerians anticipate the directive of CBN to determine the way forward. As at the time of this report, the stance of CBN and the Federal Government as regards the Supreme Court ruling is unknown.