Nigeria expands use of old currency due to shortage of banknotes

The Central Bank of Nigeria has extended the deadline for switching from the old currency to the new one after a shortage of cash in circulation caused by the transition, which forced businesses to close and prevented millions of people from fundraising.

The Central Bank of Nigeria announced late Monday that the old 200, 500 and 1,000 naira (national muzzle) banknotes will remain in circulation until December 31.

Bank spokeswoman Isa Abdulmumin said the extension was in line with a directive from the country’s Supreme Court, which ruled that the implementation of the exchange program violated the law.

The shortage of money in circulation began in early February due to the fact that not enough new banknotes were printed to replace the old ones.

This morning the situation continued and neither the old nor the new banknotes were available to thousands of people queuing at banks in the Nigerian capital Abuja.

In October, the Central Bank announced without prior notice a change in banknotes (including their color) and decided that the old banknotes would cease to be valid at the end of January, having already pushed back the date to February 10 under pressure. popular after protests and riots in a number of major cities across the country.

According to the World Bank, analysts blame authorities for the poor implementation of the currency exchange program in a country where digital payment services are generally unreliable and only 45% of adults have a bank account.

The cash crisis has cost the Nigerian economy about $43 billion (more than €40 billion) due to “commercial paralysis, the suffocation of the informal economy and the contraction of the agricultural sector,” according to the Lagos-based Private Enterprise Facilitation Center.

The organization said the situation has further aggravated the situation of families and companies in a country where 63% of the population is poor and 33% are unemployed.

The loss of an important payment method “affects commercial transactions. You can neither buy nor sell, especially for those segments of the economy that are largely driven by money,” said Muda Yusuf, director of the center.

The change in currency, according to those responsible for developing this measure, will reduce inflation, fight money laundering and limit the use of money to buy votes in Nigeria’s general elections, which began last month.

“The political goal of trying to cut off cash flow to make it harder to buy votes has been achieved,” but much of the program’s desired results were not achieved because of the way it was implemented, according to Tunde Adjileye, a partner at SBM Intelligence. , headquartered in Lagos.