CBN Deadline: Drama as Rural Communities Consider Trade by Barter as Currency Redesign Fuels Hunger
- The CBN's new naira policy and its deadline for us of old notes are really having their toll on some rural communities across Nigeria
- For instance, while citizens struggle to get new notes, a lot of businesses are suffering as some rural communities in Benue are now considering trade by barter to survive
- In some places, the prices of goods and services have doubled despite the CBN's extention of deadline
Benue - The initial deadline fixed for the return of old Niara notes and the commencement of the use of the new Naira caused serious tension in local communities across the country, particularly on Sunday, January 29.
As of Wednesday, January 25, 2023, local communities in Benue state and part of the southeast had stopped accepting the old Naira notes as legal tender. Majority of them had either taken their money to the bank or had purchased goods they could sell when the new notes are in full circulation.
Naira swap hindering lavish funeral
Monetary transactions during a burial ceremony in Ehuhu-Owkpa, in Ogbadibo Local Government Area of Benue state, proved very difficult. When Legit.ng visited the venue of the funeral, the deceased's relatives lamented that it was difficult to carry out the normal burial activities because of shortage of the new note.
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One of the relative identified as Dave said:
“There is absolutely nothing you can do right now with the old notes because our people here have already rejected the old notes. We are just struggling to finish the funeral of our late brother.
“You can’t buy anything here with the old notes and you can’t also transfer to them because the few POS operators cannot even access the new notes. Majority of the villagers don’t even have account numbers, so you can’t transfer to them. At this point, it’s a difficult situation. We are almost stranded, but that’s not to say that I do not appreciate the effort of the government in mopping up the old notes.”
Legit.ng observed that old men and women in the community were seen approaching individuals from towns for a Naira swap. But those from town only came with a handful of the new notes and were also careful to swap their notes. They were also not sure of an extension and may not be able to get to Abuja before the deadline elapses.
Recall that the CBN had after a series of interventions agreed to the shift of the deadline from 31st to February 10 to enable proper mop-up of the currency. This came on Sunday after the initial deadline had already generated tension across the country.
Palm wine tappers, sellers record poor sales, stranded
Palm wine tappers and sellers were also stranded in local communities of Owukpa and Orokam, in Ogbadibo LGA of Benue State following the scarcity of the new notes and the deadline fixed by the central bank.
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On Sunday, at the Orokom palm wine market, sellers and tappers were seen rejecting the old notes with no new notes in sight. When our correspondent approached the sellers with the old notes, they rejected and prefer to sell at lower rates with the new notes. A keg of palm wine that used to be N4000 was sold at N2500.
Most dealers of the product said they won’t buy it because they had no cash to pay.
But one Matthew Anthony told Legit.ng that the scarcity of the new Naira notes has crashed prices of items in the market, saying that it’s not only palm wine that was affected but other items in the market. He said:
“As you can see, we can’t see the new notes to buy anything and these villagers are no longer accepting the old notes. I have come to buy palm wine for a wedding ceremony, at least, I need 6o litres of it, but I don’t have the cash to pay.
Look at that POS there, the operator doesn’t even have the new notes. It’s a dangerous and precarious situation right now. This is not only affecting palm wine tappers and sellers, prices of other items have crashed with no one out to buy.”
We may go back to trade by barter - Forum President, Ojile
Also, speaking to Legit.ng at Ukwo Orokam, the National President of the Orokam United Forum, Hon. Ojile Onuh said the community was now weighing the option of ‘trade by barter’ as his people in the community are finding it very difficult to access cash.
Speaking exclusively to Legit.ng, Ojile said:
"We are here in Orokam, my own community. Actually, my people are finding it difficult having access to cash and they could not transact at the moment. We are home for burials, marriages, and all that, but we can't buy anything.
"It's now a difficult situation. The new currency is not in circulation and people are rejecting the old one because of the deadline."
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"We do not even have any bank in this community. Banking has been our major problem. Those who traveled all the way to Obollo Afor even returned without cash as the bank was yesterday dispensing the old notes.
"Banking is even one of our major problems in this community. We have been appealing to the government that e need a bank in this community, but nothing seems to have been done yet. Even if you go to the banks in Enugu State, the long queue won’t even allow you to deposit or to withdraw. Many people were as of yesterday taken to hospital over the tension generated by this development."
Responding to the question on the next available option for the community, Mr. Ojile said the community will resort to self-help of trade by barter, saying:
“We may have to return to the practice of trade by barter if this continues. Once it gets to the point where there is no money in circulation, then we have no choice of going back to what our forefathers practiced.
When they had no money, they survived through trade by barter where if you have palm wine, and I need palm wine, and I have pepper and you need pepper, we could transact. This is what the government is subjecting us to.”
Old notes flow in Otukpo around 9.pm of Sunday
But in Otukpo, Benue state, the situation was different as citizens were seen transacting with the old notes. A filling station along the Enugu Otukpo road was seen collecting old notes from customers. And because it was the only filling station transacting with the old notes, it jerked up the price of the product to N360 a litre against what it sold the previous day.
When our correspondent approached a POS operator, he paid with the old notes and was seen with a huge sum of the old notes. When this reporter probed further on what gave him the confidence to continue to transact with the old notes, he said he was optimistic that the deadline would be shifted.
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“In case they insist on the 31st deadline, we will surely storm the banks in protest,” he said.
At Nasarawa Egon, normal transactions were still ongoing with the old notes despite the fact that the government had not at this point announced the shift in the deadline.
Despite the announcement of the shift in deadline around 12pm, as at 2pm in Mararaba, near Abuja, long and intimidating queues were seen at many ATM points.
Legit.ng gathered that despite the shift in the deadline, some people have continued to reject the old notes.
Expert in national economy speaks about loopholes in CBN's policy
A chartered administrator and commentator on Nigeria's economy, Marcus Eze, who spoke with Legit.ng on the low circulation of cash, noted that there it will affect businesses which in turn negatively impacts the Gross Domestic Product (GDP).
"A decrease in the supply of money typically increases interest rates, which in turn, generates less investment and puts less money in the hands of consumers, thereby discouraging spending.
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"Businesses respond negatively by ordering fewer raw materials and which in turn decrease production scale. The decreased business activity reduces the demand for labour causes a reduction in the salaries of employees and also increases unemployment."
CBN threatens to penalise commercial banks that fail to load new notes in ATMs
Nigeria’s apex bank, the Central Bank of Nigeria had issued a warning to commercial banks which fail to comply with its directive to load new naira notes on ATMs.
The bank said it will penalise erring banks around the country for not complying with its directive on the new notes.
Why CBN wants the new notes on ATMs
CBN’s Director of Currency Operations, Ahmed Umar disclosed this in Abuja on Monday, January 9, 2023, at a training session for state directors of the National Orientation Agency (NOA).