The sudden implementation of the “Naira Swap” policy by the Central Bank of Nigeria (CBN) has caused millions of Nigerians unprecedented suffering and deprivation, especially the low and middle-income earners. This is what happened when the apex bank mobbed almost two trillion naira from circulation, to promote a cashless economy.
The cashless policy requires that all transactions over a certain amount need to be conducted electronically, either through bank transfers, debit cards, or mobile money. This has caused a great deal of difficulty for those who are not familiar with digital banking, or who do not have access to the necessary technology.
A couple of weeks into cash scarcity in the county, the policy has had a significant impact on informal businesses — from low patronage to non-patronage. Many people spend long hours at the bank, yet return home with no cash. For several people, lack of access to new notes has made living unbearable, causing riots that have led to razing banks in some parts of the country.
Experts hope the policy could be implemented in a way that does not disproportionately affect those who are already struggling to survive. They also called for greater transparency and access to information about the policy, so that those affected can make informed decisions about how to manage their finances.
John Albert, a Lagos-based legal practitioner, decried the scarcity of the new notes. According to him, a large number of people, especially those who run micro enterprises, have been deliberately impoverished by the government due to lack of access to funds for their businesses.
With the scarcity of the new naira notes, Okechukwu Eze, an Abuja-based financial expert, said it is possible the politicians have mopped up the new notes for political purposes, leaving the vast majority of the people in limbo.
To make matters worse, Point of Sale (POS) operators charge hefty fees on every transaction. They charge as much as 20 percent on each withdrawal, equivalent to the supposed profits of poor people’s business.
“The situation is dire for rural dwellers who do not have commercial banks in their jurisdiction,” said Eze. “They depend solely on POS operators for their financial needs. Majority of them are not even familiar with knowledge of electronic transactions.”
Governors of some states such as Kaduna, Kogi, Zamfara, Kano and Jigawa have gone to the Supreme Court to challenge the Federal Government and the CBN’s deadline. Even though the court granted an interlocutory order mandating the continuance of the old naira notes as legal tender, CBN ignored this and declared that the notes cease to be legal tender.
Nigerians continue to grapple with the challenge of liquidity squeezed amidst other problems such as hyper-inflation, low purchasing power, unemployment, high debt profile, banditry and fuel scarcity. These problems may dampen the morale of the electorates, scaling up political apathy ahead of the general elections.
Afolabi Faramade is a Journalism for Liberty Fellow at the Liberalist Centre and Program Director at Journalists Against Poverty.