There was much frustration and queuing for the withdrawal and currency limits changes in Abuja. Credit: Abdullahi Jimoh/IPS
  • by Abdullahi Jimoh (abuja)
  • Monday, March 6, 2023
  • Inter Press Service

On Friday, March 3, 2023, the country’s Supreme Court temporarily suspended the March 10, 2023, deadline for use of the redesigned naira and said the imposition of such a tight deadline was an affront to the 1999 constitution.

People were forced to give up their lives in an attempt to withdraw money from ATMs at commercial banks that are accredited. Teachers, artisans, and other professionals couldn’t get to work. Schoolchildren were left alone, traders were trapped, and families were starving. violent protests Because they were unable to access their money.

Experts warned The situation could lead to a cash-induced depression because the economy of the country is primarily cash-based.

In October Last year the Central Bank of Nigeria Godwin Emefiele the Governor announced that three major denominations would undergo a redesign on Federal government orders.

Emefiele stated that Nigeria’s most recent redesign occurred in 2014. The N100 note was redesigned in celebration of the country’s centenary.

He stated that the CBN management sought President Muhammad Buhari’s approval to design, produce, and circulate new series banknotes at N200 and N500 levels, in accordance with section 19 subsection a and clause b of its 2007 CBN Act 2007.

Buhari unveiled the new Nigerian naira notes last November. He stated that they would be available starting December 15, while the date for the swapping of old notes for DMBs in Deposit Money Banks (DMBs), was January 31. The deadline was extended to February 10, 2023 due to widespread objections and inability of banks to swap the money. The old notes were no longer legal tender on February 17.

In an effort to promote a cashless economy on December 6, the apex banking instituted a cash withdrawal limit. It also directed lower banks to limit the amount of cash that individuals can withdraw from their banks to N100,000. This is approximately USD 207 and USD 1085. 5) per week. This order was to go into effect on January 9, 2023. ATMs and PoS terminals would only be able to dispense a maximum amount of (N20,000) (USD43.4) per week.

The cashless policy’s In April 2012, the first phase of the policy was implemented in Lagos. It was designed to promote electronic transactions and improve the efficiency of Nigeria’s payments system. The policy was successful in Lagos, so it was extended to five additional states in July 2013. CBN announced the full implementation of the policy in September 2019, before it was officially launched nationwide on January 9, 2019.

The Russian/Ukraine conflict had a devastating impact on Nigeria’s economy, as it was for many other countries in Africa. The country was in recession in 2016 due to the fall in oil prices.

Its economy also plunged into recession in the third quarter 2020 due to the negative effects of COVID-19, which has a global impact on travel and the supply chain for goods,

Inflation rates have also increased to 21.82 % in January 2023

CBN justifies cashless banking policy, stating that it could prevent kidnapping for ransom or armed robbery as well as graft terror financing and extortion. The compulsory withdrawal limit, however, will deflate the country’s economic economy.

Inflation is when there is too many dollars in circulation. According to the central banks findings, currency in circulation was N3.23 billion naira as of October 2013. However, only 500 billion were in custody by different banks and 2.7 trillion naira remained undeposited. Inflation would be reduced, according to experts.

There is not enough money in circulation

News analysts questioned if the Nigerian Security Printing and Minting was able to print the money. It was established in 1963 and has the authority to issue currencies and security documents to ministries, agencies, and companies.

Außerdem können Sie a World Bank survey revealed that there were 16.15 ATMs per 100,000 adults in Nigeria in 2021 – which means that for a population of over 200 million people in Nigeria, there are only 32,000 ATMs across the federation. Each ATM must be able to dispense a minimum amount of 1 million Nigerian naira per day.

However, the problem was exacerbated by the fact the commercial banks ran out of cash and could not get the newly printed naira at the central bank. The NSPM could only print four billion banknotes per annum.

Aisha Ahmad (central bank deputy governor) stated in December that 500,000,000 new notes had been ordered. This is what a financial analyst calls insufficient.

“The intention of the naira redesign is to reduce vote-buying and terrorism in Nigeria, but the CBN must release more cash into circulation,” Babatunde Babajide, a Lagos-based analyst at KPMG Babajide, told IPS in an interview.

Vote Buying

The CBN was aware that the practice of entice voters with cash has been used in Nigerian elections in the past. Therefore, they insisted on keeping the bank notes and fighting any extension of the exchange of the old currency. This was to prevent vote buying in February.

However, members of All Progressive Congress (APC), which is the ruling party, claim that the cash crunch is a plot to stop Bola Ahmed Tinubu. Last week Tinubu was declared the winner of the election – despite allegations that the poll was flawed, And is now contested by both the main opposition leaders Peoples Democratic Party (PDP), Atiku Abubakar and Labour Party’s Peter Obi.

Adilieje Chukwuma a University of Nigeria political scientist, stated that while the redesign of the naira was primarily for economic gain, it may have also had political undertones.

“It could have a political undertone if you look at the timing. He said that he preferred to view the situation primarily in terms of an economic recovery.

Babajide, a financial analyst, believes that the programme to replace naira is intended to affect the poor.

“Nigerians only need to use electronic transactions. Babajide explains that the CBN’s actions are intended to curb inflation and reduce cash supply.

However, the analyst said that things could return to normal after the country’s general elections.

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© Inter Press Service (2023) — All Rights ReservedOriginal source: Inter Press Service

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