Abuja – The Nigerian Central Bank has extended the deadline to exchange its legacy currency for newly designed banknotes after the amendment caused a liquidity squeezeforcing businesses to shut down and leaving millions unable to withdraw their money.
The Central Bank of Nigeria announced late Monday that the old notes of 200 naira (US$43 cents), 500 naira (US$1.08) and 1,000 naira (US$2.16) would remain legal tender until December 31. Bank spokesman Isa Abdulmumin said the extension was meant to meet a Directive of the country’s Supreme Courtwhich ruled that the implementation of the program was against the law.
As of Tuesday, both old and newly designed sheet music were not yet available Thousands queued at banks in Nigeria’s capital Abuja. Cash shortages have been raging since early February because insufficient redesigned notes were printed to replace the old ones in the cash-dependent country.
Analysts have accused authorities of poorly executing policies in Africa’s largest economy, where digital payment services are typically unreliable and only 45% of adults have bank accounts, according to the World Bank.
The cash crisis has cost the Nigerian economy an estimated 20 trillion naira ($43 billion) because of “the paralysis of trade activity, the stifling of the informal economy and the shrinking of the agricultural sector,” the Lagos-based Center for the Promotion of Private Enterprises said in a statement.
The organization said the situation has further squeezed people and companies in the country where 63% of the population is poor and 33% is unemployed.
The loss of an important means of payment “impairs business transactions; you can’t buy and you can’t sell, especially for those segments of the economy that are largely cash-driven,” said Muda Yusuf, director of the center.
However, according to Tunde Ajileye, a partner at the Lagos-based SBM Intelligence firm, most of the program’s desired results were not achieved because it was implemented so poorly.
“The political goal is to stop the flow of money to make it more difficult to buy votes. That has been achieved. However, the political class went from buying voters to influencing INEC (electoral body) officials,” Ajileye said. “The aftermath was bad … so it’s a lose-lose situation.”
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https://www.local10.com/business/2023/03/14/nigerias-old-currency-can-be-used-longer-amid-cash-crisis/ Nigeria’s legacy currency can be used longer amid financial crisis