Brawls at banks, police patrols and ATM queues that snake the streets before dawn show the deep financial crisis that is crippling Nigeria, with the government scrambling to douse tensions and the people desperate for money. Turmoil in the country’s banking sector –which has trickled down to every Nigerian of wealth or of none – was sparked by a government decision to make people swap out their old currency for newly minted banknotes.
The aim was to cut corruption and inflation, both spiralling out of control, but a scarcity of the new naira notes turned a sober plan into a countrywide crisis.
Ahead of Friday’s deadline to exchange old money – or lose it –urban Nigerians have taken to rising at night to get in line for whatever banks dare open their doors to angry customers or wait in thin hope of finding an ATM with money in it.
Many city dwellers say they have run out of cash completely and cannot feed the family or fill the car as the crippling cash shortages bite deep into daily life.
In rural areas, where banking is scarce and poverty widespread, panicked Nigerians worry their meagre savings will soon be worth less the flimsy paper it is printed on.
“I haven’t gone to a bank in a year. I keep the little money I have at home to buy and sell food. I won’t throw old money away,” said food vendor Funmilayo Akanbi, who lives in Patigi, a remote farming settlement in western Kwara State.
Cashless society aims to curb inflation
Friday is the last day that Nigerians can turn in their old 1,000, 500 and 200 naira banknotes, part of a central bank initiative to curb the vast wads of cash in circulation and control double-digit inflation.
But with the new notes painfully short, chaotic scenes erupted at banks. Nigeria’s top court gave an order on Wednesday to suspend the deadline and the International Monetary Fund urged the central bank to consider an extension to stem the chaos.
The central bank did not immediately respond to the court ruling or requests for comment.
The bank has said that its plan will reduce fraud as the new notes are harder to counterfeit, and says it will foster a move towards a cashless economy.
But that goal is anathema to most people in Nigeria, where cash is king and anger is rising against the authorities, banks, urban elite and politicians of all parties.
“I have to queue for hours to withdraw money at the ATM, and then I will use the money to line up to get petrol at a fuel station,” said shop owner Omolara Mohammed, who makes daily pilgrimages round the ATMs of Lagos in pursuit of cash.
“Nothing makes sense in this country.”
Some commercial banks in the southwest of the country have shut their doors after coming under attack.
One man was killed in a clash between protesters and the local police, according to the police in the southwestern city of Ibadan, prompting the state governor to suspend all campaigning ahead of elections on Feb. 25, with many candidates reliant on cash to canvas voter support.
Ada Okafor, a bank teller at Zenith bank in Lagos, Nigeria’s commercial hub, said her supervisor had advised staff to work from home after protesters vandalised one of its branches in the city.
“Even though police were outside our bank, customers were shouting at us. The situation is distressing,” Okafor said by phone.
On Thursday, police vans patrolled the streets and banks of Lagos in a show of force in Nigeria’s economic nerve centre.
Deadline looms to swap old currency notes for new
The central bank had initially fixed a Jan. 31 deadline – then gave people an extra 10 days – to return all their old notes. It also placed daily limits on over-the-counter and ATM withdrawals amid concerns that the rushed rollout could upset the country’s equilibrium.
Central bank governor Godwin Emefiele insisted on Saturday that there was no going back, saying the policy would power Nigeria into a modern era, mop up trillions of nairas stashed in people’s homes and discourage widespread kidnapping.
But for those locked out of the banking system or living on the economic margins, panic swiftly ensued.
More than half of Nigeria’s 216 million people have no bank accounts, according to the World Bank Global Findex database.
Access to financial services eludes millions in rural areas where banks are rare, and people pay for utilities, goods and services in cash.
Bongo Adi, professor of economics at Lagos Business School, said the policy was rolled out too abruptly to instill confidence in the millions who are shut out of banking and give them time to adjust to the “psychology of not having to pay for everything with cash”.
“Nigeria has no choice but to embrace mobile payments … but is this the right way? I don’t think so,” he told the Thomson Reuters Foundation.
Crisis hits rich and poor
Lagos shop owner Mohammed said she had deposited about 150,000 naira ($326) with her bank from sales at her clothing store, hoping to withdraw new bills from the ATM. It is a decision she now regrets.
“They deceived us into bringing all our old money. Now I have to queue here (at the ATM) at 6 a.m., and they will say they have no money to dispense. I can’t buy foodstuff, eggs, or bread for my children,” the mother of three said.
Sodiq Salawu left home before dawn – banks open at 8 a.m. – to camp out in search of cash.
The Lagos generator technician said he had been to four banks, and none had cash. He was number 146 in a queue in front of a commercial bank that had snaked to another street entirely.
“My business has come to a standstill because of this cashless policy. I can’t withdraw money, and my vendors insist I pay cash because of naira scarcity,” he said.
Anger over that scarcity reached a boiling point when videos and photos circulated on social media of guests throwing large wads of new bills at parties.
A central bank spokesperson Osita Nwanisobi voiced concern about stockpiling and on-selling of notes by some within the banking sector, whom he accused of “abusing” the currency.
“Collusion is at work because we saw people spraying new notes at parties. How did they get it? A majority of Nigerians have no bank accounts. Where is the infrastructure to get people on digital banking?” said Yemi Adamolekun, executive director of political accountability group Enough is Enough Nigeria.