Nigeria's financial sector in turmoil as CBN's push for cashless economy fails to meet expectations - BUSINESS INSIDER
- Nigeria's transition to a cashless economy has faced challenges such as cash shortage in banks, inadequate technology infrastructure, and a large non-tech-savvy population
- CBN's redesign of old currency notes caused confusion and resulted in a 10-day extension for note swapping due to a scarcity of new naira notes
Nigeria's recent currency redesign and push towards a cashless economy has hit several roadblocks, indicating that the country is not yet ready for a full transition. Despite efforts by the Central Bank of Nigeria (CBN) to modernise the financial sector, challenges such as a shortage of cash in banks, insufficient technology infrastructure, and a large population of non-tech-savvy individuals continue to impede progress towards a cashless economy.
The CBN's redesign of old currency notes caused chaos and resulted in a deadline for note swapping, which was initially set for January 31, 2023. However, due to a scarcity of new naira notes, CBN Governor Godwin Emefiele obtained approval from President Muhammadu Buhari for a 10-day extension to February 10, 2023. Emefiele stated that this extension would allow for a more successful cash-swapping process in rural communities.
Many Nigerians deposited 99% of their money in banks ahead of the initial deadline but now face difficulties obtaining new currencies due to long lines at ATMs loaded with small amounts of money, leading to low patronage for businesses. Furthermore, the shortage of cash in banks and the failure of e-channels have led to increased rates charged by Point of Sale (POS) operators.
Nigerian journalist David Hundeyin predicted the outcome in December 2022, stating that the absence of ATMs and agency banking would lead to a black market for currency dealers.
In response to these challenges, the CBN recently directed deposit money banks (DMBs) to commence the payment of the redesigned Naira notes over the counter, subject to a maximum daily payout limit of N20,000. The apex bank added that it would collaborate with the Nigeria Police, Federal Inland Revenue Service (FIRS), the Economic and Financial Crimes Commission (EFCC) and the Nigerian Financial Intelligence Unit (NFIU) to prosecute abuses and sellers of the naira.
Social media has been filled with expressions of anger and dissatisfaction over the recent changes, with calls for a more organised and effective solution to the problems facing the country's financial sector. Here are some tweets from people expressing their anger on social media:
The recent struggles faced in Nigeria's push towards a cashless economy highlight the need for the government and the Central Bank of Nigeria to address the current challenges before fully transitioning to a cashless economy. With the upcoming presidential elections on February 25th, it remains to be seen how the situation will impact the polls and how the government will respond to the widespread frustration and dissatisfaction among the public.