Nigerians are great at adapting, easily, to any situation. Just like thinking on one’s feet in a newsroom pitch meeting, Nigerians are notable for innovating their way out of difficult situations- by every means possible. And spending the CFA Franc- another country’s banknotes- within the country is just one of those ways.
There has been a scarcity of the naira notes since January 31. The CBN in October introduced a new cash swap policy and rolled out printed N1000, N500, and N200 notes. It placed January 31 as the end of the old banknotes and residents were advised according.
But Nigerians- being Nigerians- waited till the dying minutes before taking their monies to the banks for swap. This caused hysteria across the country as people raced to bank halls, even on unofficial days of Saturday and Sunday. Residents in rural communities were gravely affected, leading to a call for a deadline extension which the CBN conceded to.
By February 1, there was a scarcity of banknotes in circulation. This should have helped Nigeria transition smoothly into its long-awaited cashless economy. However, most banking apps stopped transferring monies leaving many stranded. That pushed some Nigerians in border communities of Sokoto, Zamfara, Katsina, Adamawa and Kwara to trade in CFA Franc, the legal tender of most Francophone countries. Some of these countries including Benin, Cameroon, Chad, and Niger border Nigeria.
According to local reports, residents, including traders and commercial drivers have rejected old banknotes despite deadline extensions. They now insist that customers must make payments with the newly redesigned currency or pay with CFA Franc. The development begs the question; why is there no cash in the banks, and are Nigerians ready for a cashless economy?
“As to why money is not available in banks, there are many factors responsible. Rich men and politicians have been able to get plenty of the new notes from banks and what the banks have left is not enough,” said an anonymous top commercial bank executive. “Also, the government is intentionally not returning plenty of cash into the system to curb corruption and vote buying. The CBN said N2.7 trillion worth of new banknotes are in circulation but not in the banking sector. The banks want to recoup those funds because it is not allowing monetary policy to have an effect and causing inflation.”
When the new cash policy was rolled out in October 2022, the Federal government said it hoped to prevent counterfeit banknotes, corruption, and terrorist funding, while stabilising and strengthening the Nigerian economy. In three months Nigeria recovered over N1.3 trillion (over $4 billion) in old notes. Most of it was hidden in people’s private safes.
“Elections are coming and President Muhamadu Buhari believes that money will be used to influence politics. Typical of him, just like he did in 1984, he changed the currency to catch thieves,” he said. “Again, Nigeria is broke. It takes almost N5 naira to print a new N5. So, we don’t have enough money to print so plenty. Just like we do not have enough money to import enough fuel into the country.”
Many people have no business queuing to collect cash. Some go to the banks to collect monies they can hoard. “It is now clear to us that we are our own problems. People are not ready to go cashless. No doubt, our transfer, POS and other electronic platforms need to improve but we have always had that problem with us,” he pointed out.