Nigeria’s grand plan to upgrade its paper money has hit a roadblock, causing a cash shortage and leaving both citizens and businesses struggling to make ends meet. The Central Bank of Nigeria has introduced new and improved 200, 500, and 1,000 naira notes in a bid to curb money laundering and promote digital payments. But the bank’s attempt to make the transition has been criticized for being too hasty, with commercial banks unable to keep up with the demand for new cash.
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Ayokunle Olubunmi, with Nigeria’s leading ratings agency, Agusto and Co, called the process “rushed” and criticized the central bank for not understanding the importance of cash in people’s daily lives. The government’s goal of a cashless economy may be noble, but as Chima Ekwueme, a car parts seller in Abuja, pointed out, “digital payments run by banks are often unreliable in Nigeria, leaving businesses struggling as growing numbers of customers have been unable to find the cash to pay for goods and services.”
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The situation has led to a parallel market for the illegal sale of new banknotes and has forced a number of businesses to close. Muda Yusuf, head of the Nigeria Center for Promotion of Private Enterprise, said, “The two critical sectors of the economy – trade and commerce as well as agriculture – have been very badly affected because they do a lot of transactions in cash, especially in rural areas.” He added that authorities should allow more time for the old notes to be replaced by the new ones.
Despite the central bank’s efforts to prevent money from influencing the upcoming presidential election, most Nigerians are paying the price for these currency changes. The country is already facing an inflation rate of 21.3%, a 37% increase from the previous year, and Tunde Ajileye, a partner at Lagos-based SBM Intelligence firm, referred to the hardship as “collateral damage to the political class
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