The crisis surrounding the naira redesign worsened on Tuesday as the Central Bank of Nigeria failed to clarify the legal tender status of the old notes. The development created more confusion across the country amid the refusal by banks, filling stations, and traders to accept the old currencies.
This happened as a shortage of new notes persisted in states and the Federal Capital Territory.
However, the CBN Governor, Godwin Emefiele, on Tuesday ruled out further extension of the deadline stipulated for the phasing out of the old N1,000, N500 and N200 notes.
Emefiele made the disclosure during a meeting with members of the diplomatic community in Abuja.
He spoke against the backdrop of concerns generated by a Supreme Court order suspending the February 10 deadline pending the determination of a suit by some state governors slated for hearing on February 15 (today).
Amid Nigerians’ belief that the old notes would remain legal tender until the determination of the Supreme Court suit, the CBN governor told members of the diplomatic community that the apex bank would not extend the deadline.
Emefiele was however silent on the legal tender status of the old naira notes.
He said, “No doubt there are pockets of pressure in some areas. The CBN is working hard to shift pressure, and resources to those areas in order to ease the tension. The situation is substantially calming down since the commencement of over-the-counter payments to complement ATM disbursements and the use of super-agents. There is, therefore, no need to consider any shift from the deadline of February 10.”
Massive demonstrations broke out on Tuesday as consumers’ old notes were turned away by commercial banks, gas stations, and retailers in several regions of the nation.
Hundreds of incensed residents who participated in the demonstrations in Abeokuta, Sango-Ota, Ogun State, and Akure in Ondo State kicked against the CBN’s decision to scrap the old notes despite not having enough new notes available.
A group, however, protested on the streets of Abuja in favor of the CBN stance. The protesters, however, incurred the anger of street urchins, who attacked.
The demonstrations started as soon as Emefiele revealed during a meeting with the diplomatic corps on Tuesday in Abuja that the extension of the February 10 deadline for the currency swap was no longer necessary.
Less than 24 hours before the hearing of the lawsuit brought against the CBN’s demonetisation policy by Kaduna, Kogi, Zamfara, Ondo, and other states, he refused to extend the deadline.
As the Supreme Court began hearing the matter on Wednesday, the Attorneys-General of the applicant states were anticipated to storm Abuja (today).
But feeling the pain of the cash crunch, Ondo citizens rushed the state CBN branch in the Alagbaka neighborhood of Akure to vent their rage at not being able to exchange their old naira notes for fresh ones.
One of the protesters, who identified himself as Adeyemi said, “I collected old N1000 notes from my bank’s ATM in Alagbaka this morning but sadly the bank officials refused to collect old notes in the banking hall. In fact, I am confused. This is a bad situation in our country.”
Another protester said they were directed to the CBN to exchange their old notes by the commercial banks.
But contrary to an earlier directive by the apex bank, its officials in Akure refused to collect old naira notes from residents.
A CBN official explained that the apex bank could not help them. “I don’t know why the people are coming to the CBN. They should rather direct their grievances to their commercial banks, not to us here. We don’t have any directives to attend to customers. But I know very soon this issue will be resolved,” he stated.
But as the number of protesters grew, the policemen drafted to the scene ordered them to leave the vicinity.
In Abeokuta, the Ogun State capital, scores of retail fish sellers under the aegis of the Association of Fish Sellers, also protested the rejection of the old naira notes which had affected their business.
Some demonstrators also shut down the busy Lagos-Abeokuta Expressway in the Sango-Ota area.
The fish sellers lamented their inability to carry out transactions with the old naira notes due to the CBN cashless policy, stating that many businesses had shut down.
They added that both the banks and the wholesalers had refused to accept the old notes for transactions.
Speaking on behalf of the fish traders, Mrs Rasheedat Oyebola noted that their business might collapse due to the rejection of the old notes by the banks and cold room operators.
Meanwhile, Emefiele blamed those mopping up cash, hoarders and racketeers for the queues at the ATM points.
“We have also noticed that some Nigerians are capitalising on the time transition to charging exorbitant fees. These selfish actions for personal monetary gains are causes of hardship for Nigerians and come at the expense of lives and livelihood,’’ he said, assuring that the bank would provide the optimal amount of cash to support economic activities.
“The CBN will create the availability of an appropriate optimal amount of currency of N500, N200, N1000 denomination and even the existing 100-naira notes, 50 and 20 naira to support economic activities. We will continue to issue and circulate new notes but once we get to our optimal level, or slightly above, we will seek to put in place a policy that people must not keep monies in their homes,” Emefiele said.
He noted that Nigeria had one of the best payment infrastructures in the world, which would help in the full implementation of the cashless policy.
He also said that the economic shock triggered by the naira scarcity was temporary and necessary to encourage a more cashless economy.
To effectively drive a cashless economy, the governor submitted that the money in circulation should be around N700bn to N1tn.
He appealed to members of the diplomatic community for support in ensuring the success of the cashless policy.
The CBN governor strangely blamed the Economic and Financial Crimes Commission for encouraging people to hoard cash and do transactions outside the banks.
“What happens is that when suspicious transactions are reported by the bank to the NFIU, the EFCC and ICPC are obligated to pick those suspicious transactions and investigate them. But of course, what we found in the course of investigating them, those who thought that they were being investigated for those suspicious transactions began to abandon the banks and began to build vaults in their homes.
“That is the reason we’ve seen currency outside the banking industry at N2.72tn out of N3.32tn. This is unacceptable, we want a situation where the CBN is in firm control of the money supply and like I keep saying we have our data,’’ Emefiele added.
The CBN governor also said that Point of Sale agents who charged above N200 for the CBN cash swap programme would be arrested and jailed when caught.
He further said that the PoS operators could come to the CBN to be compensated for any extra cost incurred in getting the new notes rather than levying a higher fee on customers.
