Written by Osetemega Iribiri
February 5, 2023
In November 2022, Nigeria’s outgoing President, Muhammadu Buhari, unveiled the newly designed naira denominations of N1000, N500, and N200 introduced by the Central Bank of Nigeria (CBN). The CBN Governor, Godwin Emefiele, said significant cash withdrawals from financial institutions would be monitored and scrutinized. He affirmed that the redesign was poised to make Nigeria a cashless economy. He added that the CBN must redesign currency every five to eight years as the policy demands. To effect this change, January 31, 2023, was given as the deadline for exchanging old notes for new notes.
Although the CBN has been able to collect N1.9 trillion of 3.23 trillion of the old notes in circulation and extended the deadline by ten days to February 10, this exercise has been chaotic. The new notes have been reportedly scarce, with lengthy queues visible at ATMs across the nation, brawls at banks and Nigerians struggling to access the new notes. These unbearable conditions led to protests in various parts of the country, which left one dead on Friday as security agents clashed with protesters.
This currency crisis is coming a few weeks before Nigeria’s parliamentary, state, and presidential elections – a season often characterized by money exchange. Analysts say this redesign has thwarted politicians’ plans who had stocked up the old currency. On the positive angle, some say it would reduce vote buying. However, despite how good this plan sounds, it has made life uncomfortable and stressful for many Nigerians; it has raised a shadow economy with banking agents charging exorbitant fees. Some mobile money agents charge a whopping 20% on cash withdrawals following the natural laws of demand and supply. This scenario is a classic example of a cart being put before the horse because many Nigerian banks do not have the infrastructure to scale up to the cashless economy frame the CBN desires.
Alongside this currency scarcity is a looming fuel distribution crisis categorized by long queues and exorbitant fuel prices of up to N600/liter (about $1.30 using official exchange rates). There are many intrigues leading to the Presidential and National Assembly on Saturday, February 25, 2023, and Governorship and State Houses of Assembly on Saturday, March 11, 2023. How would it all end? The answer lies in the wait.
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