- By Simi Jolaoso
- BBC News, Lagos
People in Nigeria have taken to sleeping outside of banks. They want to be among the first to get banknotes from the ATM in the morning after they have been topped up.
A shortage of redesigned naira notes has led to a shortage of cash and a growing sense of anxiety among those desperate to get their money’s worth in a country where 40% of the population is unbanked.
The Supreme Court even stepped in and ordered the deadline for turning in old grades to be extended, but little has changed.
People here have long been accustomed to the periodic bouts of fuel shortages, leading to long lines of cars snaking their way out of gas stations. But now long lines of frustrated, confused and angry people outside banks have become a common sight as the country braces for presidential elections later this month.
“I didn’t eat anything today,” said Abraham Osundiran, 36, while standing in one of two queues outside a bank in Ikoyi, a district in the country’s main commercial hub, Lagos.
He has to miss a second day at a construction company because he has no money to pay for the taxi. Some Nigerians have accepted digital payments, but many still rely heavily on cash.
“I don’t have any cash. I had to skip breakfast to come here and I don’t know what I’m going to eat for the rest of the day.”
Many others feel the same way.
“It’s painful. I can’t go to the market because they want cash. Buses want cash – now I have to walk everywhere,” hairstylist Lilian Ineh, 26, told the BBC from her salon.
“There’s no money to buy stock, so I have less product to sell. There are even fewer customers. I usually have at least five on a Saturday.”
Last Saturday she only had two.
Nigerians were told last October that the old banknotes would be replaced with new banknotes and were encouraged to deposit any cash savings in the bank.
“They forced us to put all our money into our accounts and now we can’t access it. It’s unbearable,” says Osarenoma Kolawole, 40. She works in telesales but hasn’t had access to her salary since the payout last week.
“The last time I went to the shops I had to buy eggs instead of fish – it really hurt me – not the food but having to buy what I didn’t want just because the banks wouldn’t let me get my money. ”
The Central Bank of Nigeria (CBN) said it had redesigned the higher-denomination banknotes – 200, 500 and 1,000 naira – to replace the dirty cash in circulation, fight inflation, curb counterfeiting and promote a cashless society .
She hoped the redesign would bring some of the money hoarded by individuals and companies back into the financial system.
The reform created something of a cashless society — but not in the way CBN envisioned.
People find it difficult to make online payments and transfers. Analysts say the infrastructure to support a digital system isn’t robust enough.
“The whole idea was to limit access to cash to encourage them to make digital payments so they (CBN) can monitor where the money is going,” says Paul Alaje, senior economist at consultancy SPM Professionals.
“But Nigerian banks don’t have the capacity or structure to make digital payments work smoothly.”
CBN has not said whether the shortages are intentional.
“The government has been trying to move the country to a cashless economy for ages,” argues political analyst and economist Yemi Makinde.
“His intention is good but it’s just not feasible, the banking systems weren’t ready and Nigeria is only used to cash.”
In announcing the redesign, CBN said the new notes would be in circulation from December 15 and the old notes would cease to be legal tender by the end of January.
The bank then extended the deadline until last Friday. But the Supreme Court intervened and suspended that deadline, but queues at banks remain.
“The only way this ruling would work is to release old notes back into the system to fix the shortage, (but) if we do that we’ll just go back to zero,” says economist Mr Alaje .
allegations of hoarding
Many have also blamed individual bank branches.
First, they kept issuing the old notes rather than the new ones up to the week of the original due date, thus keeping them in circulation.
Second, agents from the country’s anti-fraud agency, the Economic and Financial Crimes Commission, raided some bank branches and arrested managers accused of hoarding the new notes in safes instead of putting them in ATMs and giving them to customers.
“The banks are not doing a good job distributing the money. Bank managers have withheld much of the money for the well-connected and for the wealthy, abusing central bank policy,” says Dr. Makinde.
As a result, the shortage of new naira banknotes has hit those who primarily deal with cash on a daily basis, such as market vendors and street vendors.
Iya Ruka, 52, sells plantains at a market in Ojodu Berger, Lagos. She’s had to adapt by accepting bank transfers – but that hasn’t helped her when she needed money.
“All my customers say they don’t have cash, they pay by bank transfer, but I go to the bank and there is no cash to collect. So what should I do?”
A little further down the street, Kingsley, who gave only his first name, sells cell phone accessories.
The 27-year-old told me he had hardly sold anything in the past few days.
“People only pay (by) bank transfer. If I want to go home, I have to go to a point of sale (POS) to get money and they charge a lot now.”
POS vendors are people who stand on street corners, have a card machine, and can make transfers for people, but often charge a commission.
They were accused of spurning ordinary people by charging extortionate amounts for cash withdrawals.
‘Everything will be better’
One provider, who spoke on condition of anonymity, defended the need to charge additional fees.
“I stood in line at a bank for a whole day to get new bills and old bills. That’s why they have to pay because we’re queuing,” says the 25-year-old, who runs a kiosk in Lekki.
She adds that she’s not sure how much longer she can keep the business going as the banks are drying up.
“Some customers can get angry and almost violent – I just avoid looking up to them. They forget I’m suffering too, like now, I have to hike an hour home and I’ve only eaten garri (cassava flakes). .”
CBN Governor Godwin Emefiele said he has taken steps to get more of the new notes into the system to ease the situation.
The chaos has become a major campaign issue, urging President Muhammadu Buhari to take action to avoid losing votes for the ruling All Progressives Congress.
Despite the crisis, there are a few people, especially those who have managed to plan well in advance, who have not yet felt the crisis.
Ruth Okeke, 35, runs a grocery store in Omole. She says although her client count has dropped, she’s not worried.
“I know things are getting better. The bankers are the ones who are making money from all this panic, but there will be new banknotes soon, everyone should relax.”