Nigerians who believed that cash crunch had ended following the directive from the Central Bank of Nigeria (CBN) were disappointed on Tuesday as commercial banks rationed banknotes, waiting for more supply from the apex bank.
The CBN had on Monday said the old naira notes remain legal tender until December 31, 2023. This came after the presidency issued a statement on the same day, saying the apex bank had no reason not to obey the Supreme Court ruling on naira redesign.
Our correspondents visited some banks in Lagos and found that most of them had exhausted their cash.
“We have been paying the cash we had in our vault before and it is exhausted. We are going to get more cash from the CBN,” a bank official told a customer at Mushin.
At Boma Road, Apapa, Clifford Ogu, a clearing agent, said he stood for hours at a bank branch waiting to withdraw cash but was disappointed as there was no cash in the bank.
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On Tuesday, many Nigerians rushed to the banks to withdraw their money after the CBN ordered banks to dispense the old notes, in compliance with the Supreme Court’s ruling.
“I am so glad people are now accepting the old N500 and N1,000 notes. The problem now is availability,” Anthony Okiria, an analyst at a consultancy firm in Ikeja, Lagos, said.
“The president told us then that the Central Bank has destroyed the old N500 and N1,000 notes. This means the apex bank can’t supply the banks additional old notes,” he said.
According to him, the masses will still not get enough cash they need for their transaction and scarcity will still persist.
Bamidele Adeniyi, a mechanic at Owode Market in Mile 12, Lagos, said the directive by the apex bank has brought relief to the people, adding that scarcity would still persist owing to shortfall in the supply of the old N500 and N1,000 notes.
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“My worry now is where would CBN get the old notes to supply banks since they have destroyed the ones in their possession?” he asked.
Uche Uwaleke, professor of Capital Market at the Nasarawa State University Keffi, said that as a result of the cash scarcity and low demand, many traders who deal in perishable items were forced to sell them at below the purchase price or cost of production due to lack of storage facilities.
“In my opinion, the use of cash scarcity to stifle demand is not a sustainable way to tackle inflation as it hurts economic growth and could lead to loss of jobs thereby fuelling unemployment,” Uwaleke said.
He said the CBN should ensure that measures are put in place to ease the cash crunch while gradually implementing its cashless policy.
“The CBN needs to be specific regarding the level of compliance including the total quantity and value of old and new notes it has released into circulation relative to the current demand and an indication of how and when the currency supply gap will be covered to ease the pain on Nigerians and the strain on the economy,” Taiwo Oyedele, head of tax and corporate advisory services at PwC Nigeria, said.