The Old/New Naira Notes Problem
By: Deji Yesufu
In the midst of a biting fuel scarcity situation, Nigerians are having to face another major problem: the unavailability of legal tenders for transaction. It is bad enough that the economy of the country is not healthy; it is equally troubling that the little money available in people’s accounts cannot be translated to bank-tenders to make transactions with. Last year, the country’s apex bank, the Central Bank of Nigeria (CBN), led by Godwin Emefiele, said that the country’s three highest notes: the N200, N500 and N1000 will be changed to new notes. CBN also stipulated January 31 as the deadline for the exchange of old notes among Nigerians. All old notes must be been sent into CBN and exchanged for new notes. Today is a little less than a week to that deadline. There are no old notes in the market – because CBN insists they must be mopped up and removed from circulation. There are no new notes in the market because they are simply not available.
This morning I was in the bank to carry out some transactions. After I was done, I approached a senior bank official there and asked him why there are simply no bank notes for customers to use. The ATMs are not dispensing cash; CBN’s deadline is breathing down our neck; and we must buy stuffs at the market so we can eat. The gentleman did not appear perturbed at all. He allowed me to finish ventilating and he returned the accusation back to me. He said he does not understand why despite all the call by the CBN for Nigerians to utilize electronic banking, Nigerians still love the idea of holding up cash in their hands. He then gave me this example: the bank he works in is within the premises of a major government institution in Ibadan. When workers receive salaries in this institution, the ATM of the bank becomes bombarded with customers. You see workers come to the bank on the very day salaries are paid and they withdraw every kobo from their account. They fold up the money and take it home, to store away under their pillows. Three days after salaries have been paid, the ATMs dry up. So, even before this old/new note palaver, banks have always been stressed out with the trouble of meeting customers’ demands – especially when salaries are paid. This man, who is also a friend, told me that it is only in Nigeria that he sees people cramp around ATMs. He said in foreign countries, ATMs are hardly used because everybody is transacting electronically.
When he was done, I just kept quiet. I also have never understood the idea of a people collecting their salaries and withdrawing every of it that very day. It creates two problems: it burdens the banks with the problem of loading the ATMs with money. Secondly, it withdraws the money within the banks that could be used for what banks exist for: loans. The loan system is what runs the banks and it is what makes a nation’s economy grow. When money is within the bank, the banks can easily lend money to investors. The investors will build businesses and return interest to the bank. The bank will make a profit, while at the same time returning a healthy interest to customers. And then society will have a working environment where investors can have businesses that will employ people – providing a healthy economic circle that benefits everyone. Customers are not earning good interest on their monies in Nigerian banks because of this very mentality of hoarding monies at home. But the tragedy has not ended; there is still more.
The CBN instituted the currency change in Nigeria to checkmate a greater evil within our society. That evil is the tendency of Nigerians to take money and just hoard them away at home. Now, this phenomenon is a lot worse than collecting monthly salary in one day and taking it home. It is the situation where some individuals just collect large sums of money; they pack them up in boxes and store them away. There have been videos of monies found stored on trailers and rotting away in Nigeria. These monies could have been kept in the bank and they would have been available for transactions among Nigerians. The bank will do business with the money and customers will earn good interest. But Nigerians will be Nigerians: we prefer to see our money live; we prefer to revel in cash; and the result is a cash trapped society in spite of government’s effort to make money available to the people.
Worse still: when the CBN made it clear that there is a deadline for exchange of old notes for the new, these same people, who have monies stored away in safety tanks, under their beds and on trailers, are now in a rush to have them changed into new notes. In their desperation, they are ready to part ways with their old rotten notes for as much as 50% of the value of the money. I am saying that these people will not mind taking a million naira of new notes for N1.5M of old notes. This is the reason there are no monies in the ATMs in town today. There are middle men between the Central Bank and the banks themselves who must exchange the old notes stored away for new notes and earn a profit in the process. Until all those old notes stored away are replaced, there will be no legal tender for Nigerians to use. And then the country returns to status quo.
There is no doubt that Nigeria is bereft of leadership. There is no doubt that the government has failed on many aspects of our civil life. But the fact is this: Nigerians are there are own worst enemies. We are the architect of our own woes. We can begin to fix this country by doing things the way things ought to be done; or our problems will fix us. We could either decide to allow our monies to sit in the bank and allow the banks to run well; or, we could fall into the situation that we are in right now, and begin to learn to use legal tender the way it is supposed to be used. When there is no physical money to spend, we will bring out our phones and we will carry out electronic transactions. By the time we have done this for a few months, we would have discovered the reason why government is trying to encourage all of us to use the electronic money.
One day I stood by the ATM of the institution I mentioned above, trying to withdraw a little sum for some quick business. In front of the line was a lady, a very junior worker in the institution. She kept collecting wads of twenty thousand naira – one after the other. When she noticed people were complaining, she turned and addressed all of us in thick Ibadan Yoruba: I will collect every bit that I have inside here. We got her point and we simply waited our turn. The impression that it is some rich individual, or some high official somewhere in government, is the one at the root of the Nigerian problem should be discouraged: the average Nigerian simply does not know how to function within a modern space. Years of distrust, our own inherent selfishness and greed, have turned all of us into a new kind of human specie that the world is yet to know.