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Nigeria’s move to replace its banknotes with new designs has caused cash shortages, preventing people from buying what they need and forcing businesses to close across the West African country, experts say. and business groups said.
The Central Bank of Nigeria has announced that redesigned banknotes of 200 (43 US cents), 500 ($1.08) and 1,000 Naira ($2.17) banknotes and new restrictions on large cash withdrawals will curb money laundering and digital It says it will help make payments the norm in Africa’s largest economy. .
But according to Ayokunle Orbummi of Agusto & Company, Nigeria’s main rating agency, the process of replacing old banknotes has been “rushed” and commercial banks have not had enough new cash to offer their customers. They don’t have it, and the demand is higher than the supply.
The central bank “doesn’t want us to use cash, it wants us to conduct transactions electronically, but we can’t legislate a change in behavior,” Orbunmi said. We need to see why and make sure those channels are trustworthy.”
The government is pushing for a more inclusive cashless economy and says this change will boost economic growth. Critics are skeptical, pointing to decades of chronic corruption where government officials are known to loot public funds and create additional hardships for many living in poverty. increase.
As of October, more than 80% of the 3.2 trillion naira ($7.2 billion) in circulation in Nigeria was in private hands, while 75% is now held in financial institutions. said Central Bank Governor Godwin Emefiele. weekend.
He extended the deadline for Nigerians to deposit old banknotes by 10 days to 10 February.
Despite more Nigerians depositing their old currency in banks, the Associated Press reported that as of Monday (January 31), some financial institutions were still issuing old banknotes to customers. Bank customers said they could barely withdraw cash and faced high bank fees for each transaction.
business closure
Bank-operated digital payments are often unreliable in Nigeria, and businesses are struggling as more and more customers are unable to find the cash they need to pay for goods and services. Nigeria’s secret police said on Monday that the situation had created a parallel market for people to illegally sell new banknotes.
Chima Ekwueme, who sells auto parts in the Nigerian capital of Abuja, said: “Someone may want to send you money, but due to this problem, they are unable to process the transfer and don’t have the cash. “Sometimes I put down the goods and ask them to go somewhere and find the money.”
Muda Yousuf, head of Nigeria’s Center for Promotion of Private Enterprises, said the cash supply crisis has disrupted such sales across the country and forced many businesses to close.
“Two key sectors of the economy, trade and commerce, and agriculture, have been hit very hard, especially in rural areas, as they carry out many transactions in cash,” Youssouf said. We stopped their economic activity.”
Authorities should give more time for old banknotes to be gradually replaced by new ones, he said.
“Worse yet, supplies are very limited. With some people locking their shops, economic activity is effectively crumbling,” Youssouf added.
Nigerian officials say a redesign of the banknote and new withdrawal limits could limit the use of funds to influence the Feb. 25 presidential election, but experts say the currency change will It claims it is done at the expense of most Nigerians. They already have him facing inflation of 21.3% and this is his rise of 37% in a year.
Tunde Ajileye, partner at SBM Intelligence, based in Lagos, said: “All this together causes significant hardships in both rural and urban areas. It’s just collateral damage to class.”
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