Brawls at banks, police patrols, and ATM lineups that snake the streets before daybreak demonstrate Nigeria’s profound financial crisis, with the government rushing to quell tensions and the populace starving for money. A government moves to force individuals to exchange their old cash for newly issued banknotes triggered turmoil in the country’s banking sector, which has filtered down to every Nigerian, rich or poor.
The goal was to reduce corruption and inflation, which were both out of control, but a shortage of fresh naira notes converted a prudent plan into a countrywide calamity.
Ahead of Friday’s deadline to swap old money – or lose it – urban Nigerians have started to wake up at night to queue for whichever banks dare to open their doors to irate clients, or to wait in the hope of locating an ATM with money in it.
As debilitating cash shortages bite deep into daily life, many city inhabitants report they have entirely run out of cash and are unable to feed their families or fill their cars.
In rural areas where banking is limited and poverty is prevalent, terrified Nigerians fear their little savings may soon be worth less than the fragile paper on which they are written.
“I haven’t gone to a bank in a year. And I keep the little money I have at home to buy and sell food. I won’t throw old money away,” said food vendor Funmilayo Akanbi, who lives in Patigi, a remote farming settlement in western Kwara State.
A cashless society aims to curb inflation
Nigerians have till Friday to turn in their old 1,000, 500, and 200 naira banknotes as part of a central bank drive to reduce the massive amounts of cash in circulation and control double-digit inflation.
However, because the new notes were excruciatingly short, chaotic situations ensued at banks. On Wednesday, Nigeria’s Supreme Court issued an order suspending the deadline, and the International Monetary Fund asked the central bank to consider an extension to avoid further panic.
The central bank did not respond immediately to the court decision or demands for comment.
The bank claims that its proposal will reduce fraud since the new notes are more difficult to counterfeit and that it will promote the transition to a cashless economy.
However, in Nigeria, where cash is king and fury is increasing against the authorities, banks, urban elite, and politicians of all parties, that goal is anathema.
“I have to queue for hours at the ATM to withdraw money, and then I will use the money to queue for petrol at a fuel station,” said shop owner Omolara Mohammed, who undertakes daily pilgrimages around Lagos’ ATMs in search of cash.
“In this country, nothing makes sense.”
Being attacked
Following an incident, certain commercial banks in the country’s southwest have closed their doors.
According to authorities in the southwestern city of Ibadan, one man was killed in a conflict between demonstrators and local police, causing the state governor to ban all campaigning ahead of elections on Feb. 25, with many candidates relying on cash to canvas voter support.
Ada Okafor, a bank teller at Zenith Bank in Lagos, Nigeria’s commercial capital, said her boss had told her to work from home after demonstrators vandalized one of the bank’s offices in the city.
“Even though police were outside our bank, customers were shouting at us. The situation is distressing,” Okafor said by phone.
In a show of force in Nigeria’s economic nerve center, police vans patrolled the streets and banks of Lagos on Thursday.
Deadline looms to swap old currency notes for new
The central bank had set a Jan. 31 deadline for citizens to return all of their old notes, but subsequently extended the deadline by 10 days. It also imposed daily limitations on over-the-counter and ATM withdrawals, citing fears that the hurried implementation might disrupt the country’s equilibrium.
Godwin Emefiele, governor of the Central Bank of Nigeria, reiterated on Saturday that there was no turning back, saying the policy will propel Nigeria into the contemporary era, collect trillions of nairas kept in people’s houses, and discourage rampant kidnapping. However, fear quickly arose for individuals who were locked out of the banking system or who lived on the economic outskirts.
According to the World Bank Global Findex database, more than half of Nigeria’s 216 million citizens do not have bank accounts.
Millions of individuals in rural areas lack access to financial services because banks are few, and people pay for utilities, commodities, and services in cash.
Bongo Adi, professor of economics at Lagos Business School, said the policy was pushed out too quickly to inspire trust in the millions who are shut out of banks and give people time to acclimate to the “psychological of not having to pay for everything with cash”.
“Nigeria has no choice but to embrace mobile payments … but is this the right way? I don’t think so,” he told the Thomson Reuters Foundation.
Crisis hits rich and poor
Mohammed, a Lagos business owner, said she had deposited roughly 150,000 nairas ($326) with her bank from sales at her garment store in the hopes of withdrawing new bills from the ATM. She now regrets her decision.
“They deceived us into bringing all our old money. Now I have to queue here (at the ATM) at 6 a.m., and they will say they have no money to dispense. I can’t buy foodstuff, eggs, or bread for my children,” the mother of three said.
Sodiq Salawu left his house before daybreak, before banks opened at 8 a.m., to camp out in search of cash.
The Lagos generator mechanic stated that he had visited four banks and none of them had cash. He was number 146 in a line that had extended all the way to another street in front of a commercial bank.