In Nigeria, cash rules supreme.
According to the Central Bank of Nigeria (CBN), less than 20% of the local currency in circulation is held by the banks.
CBN Governor Godwin Emefiele explained that of the 3.2 trillion naira ($7bn; £5.8bn) in circulation, up to 2.7 trillion was outside the vaults of commercial banks.
This is one of the reasons why he made a shock announcement in October that three of the country’s higher denominations were going to be replaced.
The challenge typical of Nigeria however, is that the switch has gone far from expectations, there has been unprecedented levels of hoarding with the new notes nowhere to be found, even in banks. As a result, many Nigerians currently have no access to cash from the banking halls, the ATM centers, and the POS spots.
Mr Emefiele, the Central Bank Governor has blamed this situation of the currency crunch on hoarding by certain quarters. This reason in itself has nothing to do with the average Nigerian, whose lives have been completely disrupted by the current challenge.
Analysts say this tends to become an issue before elections, when politicians are accused of using cash to buy favors.
The practice of giving voters money to cast their ballot for a particular candidate is not uncommon here.
The currency change may be well-intentioned, to level the political playing field before the 25 February vote, yet the timing of it all is causing unimaginable hardship for Nigerians.
While we are all in favor of ensuring a free and fair election, we are hopeful that the CBN will find ways to achieve their objective without further disrupting the daily lives of average Nigerians.
So far, the CBN has extended the deadline for changing the old naira notes to February 10th from January 31st, although experts suspect their will be at least one more extension.
So, what can we do?
- Try to spend as little cash as possible if you do get the new currency.
- If you can open a tab (a line of credit) with trusted vendors and clients to allow business proceed as usual till the cash crunch is over.
- When you do have to pay for purchases immediately, as much as possible use electronic means.
Wishing you the very best in these unprecedented times!
We’re in this together.
