It’s a Sunday, and 24-year-old Esther is standing in a queue at one of Lagos’s most popular retail stores when an announcement comes over the speakers. “We are sorry but we will be accepting only cash. Our servers are down, and we can’t take credit transfers.” Esther drops the bread she was holding and leaves the store. The announcement causes pandemonium. On her way out, she hears the security telling people they can’t enter unless they have cash. People grumble. Many of them have not had access to physical naira notes in weeks. Like Esther, most people turn to leave in disappointment.

Cash is a vital component of daily life for many Nigerians. According to the World Bank Global Findex Database, it is the most preferred means of payment for Nigerians. It is how they pay for transportation, food, and other basic necessities. However, after the Central Bank of Nigeria made a sloppy attempt to change its legal tender in November of last year, many Nigerians have found themselves waking up to the shocking reality of not being able to easily access cash. They are faced with long queues at the few banks that have cash, as they can no longer withdraw money over the counter or at ATMs. In the last few weeks, amidst several subsequent changes by the government on what denominations of the currency are to be considered legal tender, Nigerians have had to adapt to the new reality of a cash shortage in different ways, including how they spend their money.

Some people have had to reduce their spending due to the high cost of acquiring cash. “I had to cut down on some things,” says Esther, who earns 80,000 naira while working and living in Lagos, Nigeria. “First, I have to pay exorbitant prices to get the cash. That alone cuts down the money left for me to spend,” she adds. For low-income households, this can be particularly challenging, as they may already be living paycheck to paycheck. Only one out of three Nigerians lives above multidimensional poverty. These times have also led people like Mrs. Nurudeen, a 37-year-old teacher, into debt. “It is easy to say you’re cutting down on some things. But the prices of things in the market keep going up. At the end of the day, I am spending more than I normally would, trying to keep up with bills on the same income,” she says. As of 2015, Lagos, Nigeria was one of the top five sub-Saharan African cities with the biggest market size in terms of consumer spending. And was projected by Euromonitor to remain the largest consumer market in 2030.

Many Nigerians have resorted to using digital payment options, such as mobile money, online transfers, and credit and debit cards, to make transactions. However, these options are not accessible to everyone, and technical failures have made it difficult to access financial services. And people are unable to make necessary transactions. “It would be easier if I could do transfers everywhere, at any time. But the bank apps have been ineffective. I have been embarrassed and stranded severally when I needed to get something quickly,” says Esther.

Meanwhile, the lack of cash is forcing some people to save more money as they try to prepare for an uncertain future. 24-year-old Boluwatife has more money than she normally would in her account mid-month, yet she is not ecstatic about it. “It is not voluntary,” she says. “I find myself skipping meals on some days because I can’t get cash or use digital payment to buy food. In some kind of twisted way, it is assisting my diet plans though.”

Unfortunately, the ripple effect of these consumer changes land on businesses and small retailers. Food vendors and small retailers who rely on cash transactions are finding it difficult to make sales, while the ones that have adjusted to accepting digital payments remain skeptical due to bank glitches. “Sometimes, people would make a transfer, but the money will not enter my account till the next day. Sometimes the money does not go through at all. Some people even take advantage of this to dupe you,” says ride-hailing driver, Samuel K. Such discrepancies can lead to a decline in revenues, and potential business closures.

According to news reports, Nigerian Breweries experienced its worst February in 15 years. The company’s revenue dropped by 15.6% compared to last year, all because of the cash scarcity crisis in the Nigerian economy. Due to a scarcity of foreign exchange, people are finding it difficult to make purchases and there has also been a shortage of raw materials for production.

As Nigerians adjust to the new reality of limited cash, businesses and policymakers will need to adapt to the new normal with new policies to ensure that the economy remains stable. One potential solution is to increase investment in digital payment infrastructure and improve the reliability of these systems. Another solution might be to increase access to credit for small and medium-sized enterprises, which have been hit particularly hard by the shortage of cash.

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