Hundreds of Customers Troop to Banks as CBN Orders Recirculation of Old N200, N500, N1000 Notes
- The CBN's compliance with the Supreme Court's ruling has relieved many Nigerians who have been enduring the hardship caused by the naira scarcity
- Customers came out in large numbers to appeal to their respective banks to disburse the old banknotes
- They are optimistic that the return to the status quo in the use of old naira notes will reduce the current hardship
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Many banks across Lagos witnessed a massive turnout of customers who had come hoping to make cash withdrawals, over-the-counter or via Automated Teller Machines (ATM).
The heavy turnout followed the recent directive by the Central Bank of Nigeria (CBN) that the old N200, N500 and N1000 banknotes remain legal tender alongside the redesigned banknotes.
The CBN's move complies with the Supreme Court judgment of March 3, 2023, ordering the old notes to co-exist with the new ones until December 31, 2023.
Some banks visited by Legit.ng showed scores of customers waiting on the premises of banks, hoping they would dispense the old banknotes as the CBN has approved their status as legal tender.
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CBN's currency redesign and cash swap policy summersault
It would be recalled that the CBN had, in December 2022, effected a naira redesign policy that required Nigerians to return old N200, N500 and N1000 notes to banks in exchange for the newer versions of the denominations.
Unfortunately, as it turned out, the CBN did not print sufficient new notes, resulting in banks facing a colossal problem of efficiently disbursing the little available cash to millions of customers nationwide.
It resulted in a torturous scarcity of naira and untold hardship for many Nigerians who could not access cash over the counter and via Automated Teller Machines (ATMs).
Banks Say CBN issued more old notes as new naira notes dry up, disobey Supreme Court order on withdrawal limit
Point of Sale (PoS) operators capitalised on the scarcity to extort Nigerians by charging as much as 15% to 40% commission on withdrawals.
Protests and vandalism of bank properties were noted in some parts of the country due to to the naira scarcity. This led to some state governors initiating a lawsuit against the Federal Government and the CBN, resulting in the Supreme Court's judgment on the status of the old banknotes.
Customers throng banks to demand cash
The CBN's directive to banks to comply with the apex court's judgment came as a relief to many Nigerians who have been heavily affected by the policy. For weeks, many could not withdraw the cash needed to conduct their daily affairs, including transportation, petty trading, etc.
Many others relying on bank transfers as alternative options to sort their bills or trade their wares and commodities were confronted with challenges such as poor online bank application network and inefficient transfers.
4 days after CBN's order, Nigerians continue to queue for cash as banks complain of old notes’ shortage
At Guarantee Trust Bank on Okota Road in Lagos, scores of customers stood inside the bank premises waiting to see if the bank would dispense naira notes.
Adebayo Adekanji, a customer who spoke to Legit.ng, said he arrived at the bank as early as 9 am, hoping to request at least a withdrawal of the old banknotes.
"I was elated when I heard the CBN's directive last night. So, I came early this morning thinking the banks will dispense the old notes with them to customers. I need some amount of cash with me so that I can pay for transport fare as I go out everyday.
"I live in Okota and my carpentry shop is at Oshodi. I can't pay for my transport fare to and fro Oshodi using bank transfer, that's why I need money for transport fare."
The same crowd level could be seen at the Access Bank beside GT Bank. Customers seemed unhappy that the bank was yet to attend to them as of 10 am.
Bankers explain the reasons behind continued cash scarcity despite CBN's directive on old naira notes
Rukayat Adesola, a food vendor, said she was glad that the CBN obeyed the court's directive extending the deadline for the naira swap policy.
"To be honest, the last few months have not been easy for us selling foodstuffs. Patronage has been very low because many people do not have cash with them. You can understand why we are happy with the extension of the deadline. I was hoping the banks would start dispensing the old notes, but that has not yet happened."
In the past weeks, the number of customers going to banks reduced due to the unavailability of cash. But today, there was a surge in the number of customers who thronged to the banks to see if there was a possibility of withdrawing money, either old or new banknotes.
According to our source in Ikeja, the same was observed at most of the banks there. Chukwudi Eke, a trader at Ikeja Computer Village who was patiently waiting with other customers at Fidelity Bank, said that he didn't mind whatever denomination of cash he could get from the bank.
"Right now, I can accept any cash. Whether old or new notes, it doesn't matter any more, thanks to the CBN's reversal of the policy. It has been a very difficult two months of this policy.
"If the policy was to curb vote buying and money laundering, I doubt if that has worked. I'm just hoping I can get something from my bank before the end of the day."
In the last few months, the naira has become very scarce across the country. Bank app transfers have also become unreliable due to the recent heavy volume of electronic transactions.
A customer who gave her name as Arike said she had been trying for three days to make a simple money transfer via ATM but had not been successful.
"They wouldn't give us our money and at the same time, you can't even carry out a successful bank transfer using your bank app or the ATM.
"I'm glad the court has intervened in the matter by extending the deadline for the use of the old notes. I just hope the banks don't tell us that the old notes have been destroyed and are no longer available."
In February, in a nationwide broadcast, President Muhammadu Buhari directed the CBN to reintroduce the old N200 as legal tender in Nigeria until April 10, 2023.
However, a report by Dataphyte concluded that recirculating N200 notes was a scratch in the pan as the denomination only constituted about 9.19% of the total volume of currency in circulation in the last seven years.
A First Bank staff who spoke to Legit.ng on the condition of anonymity confirmed that the bank would commence payment of old notes to customers before the end of the day.
"We understand the difficulty that our customers have been going through in the last few weeks. Since the CBN has instructed that we release the old notes to customers, we have no choice but to obey.
"The reason for the delay right now is that we are trying to devise a system where we can distribute the cash to as many customers as possible."
At the time of filing this report, it was not clear if the customers eventually got paid any amount of cash over the counter, but it was confirmed that none of the ATMs of the banks visited dispensed cash, whether old or new banknotes.
5 Reasons CBN’s Naira Redesign Policy Has Been Unsuccessful
Legit.ng earlier reported that the Nigerian Economic Summit Group (NESG) had highlighted some reasons for the less-than-commendable success rate of the Naira redesign and swap policy recently initiated by the Central Bank of Nigeria.
The NESG noted this in its recent report titled, NAIRA REDESIGN POLICY: CAUGHT IN THE WEB, released in February 2023, where it analysed the Central Bank of Nigeria (CBN)'s intent for the policy, the issues that have emanated and the likely outcome of a prolonged cash crunch.
The private policy advocacy group stated that the CBN's plan to redesign the country's currency which is authorised by Section 18(a) and (b) of the CBN Act of 2007, could not have come at a worse time when Nigeria was already dealing with biting fuel scarcity, inflation and other economic woes.
It, however, put forward the possible reasons the policy has been clouded in controversies and likely lack of success, which included improper timing, high level of informality, low rate of financial inclusion, ineffective policy coordination and lack of public sensitisation.