With just 8 days left to phase out the old N200, N500, and N1000 notes as legal tender, Nigerians are left grappling with a scarcity of the new Naira notes. Across different cities in Nigeria, ATMs have seen a massive influx of people looking for Naira notes. The extensive queues and unavailability of cash are causing dissatisfaction among Nigerians, as POS operators have begun increasing their prices.
For instance, in Ile-Ife, an N10,000 withdrawal from a POS operator used to cost N200, but due to the shortage of Naira, it now comes at a cost of N1000. Some POS operators were charging a fee of 10% of the total withdrawal amount. A POS operator reported having to pay bank security for access to the ATM.
In Ilorin, the capital of Kwara State, the scenario is similar as POS operators in the Tanke area of Ilorin were charging a fee of 10% of the withdrawal amount. A university student claimed, “I got to the ATM around 9 am, and I was only able to withdraw after 2.30 pm.”
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In Lokoja, the situation is much direr as queues have been sighted across the ATMs, and POS operators have been charging 20% of the amount withdrawn. According to a teacher living in the town, “the queues are everywhere and the POS are charging N200 for every N1000 you withdraw.”
In some rural communities, the situation is particularly dire as traders in those communities have been declining old currency notes since early January. According to a report by Punch Newspaper, border communities in Katsina, Zamfara, and Sokoto have started accepting the CFA as legal tender. CFA is the legal tender in francophone West Africa which make up the West African Economic and Monetary Union. According to the news report, traders and drivers in those communities insist that those without the redesigned Naira notes should pay in CFA.
However, in some other rural communities, it was noted that the old Naira notes are still very much in circulation. In Obafemi Owode in Ogun State, it was observed that traders were still collecting the old Naira notes.
New Deadline Approaches, No Respite
The initial deadline for phasing out the old notes was January 31st, but on January 29th, the CBN extended the deadline to February 10th to provide enough time for Nigerians to exchange their old notes at the bank. Towards the end of the original deadline, ATMs and banks were still dispensing old Naira notes, raising doubts about the feasibility of the deadline. Now, with the approaching deadline of February 10th, most ATMs have ceased dispensing any currency and the CBN has prohibited banks from providing cash to customers over-the-counter (OTC).
Who is At Fault?
The causes of the Naira shortage have been widely debated. Surprisingly, the ruling party’s presidential candidate, Bola Ahmed Tinubu, and his associates have ripped into the government of President Buhari for the Naira redesign policy. Nasir El-Rufai, governor of Kaduna State and close associate of Bola Tinubu in an interview with Channels TV stated about the Naira redesign policy
“People are blaming the Governor of the Central Bank for the currency redesign, but No. You have to go back and look at the first outing of Buhari as (military head of state). He did this; the Buhari-Idiagbon regime changed our currency and did it in secrecy with a view to catching those that are stashing away illicit funds. It is a very good intention. The President has his right. But doing it at this time within the allotted time does not make any political or economic sense.”
USSD, Bank Apps Crashing
The absence of cash in circulation has led to most people switching to online transactions and mobile payment options. However, with the growing usage of mobile banking apps and USSD, these platforms are struggling to handle the increased demand. The issues with the mobile banking platforms have worsened the situation for many Nigerians, who now lack access to their funds.
Israel Adetunji, a software engineer, spoke on the cause of the breakdown with the mobile apps,
“The most evident issue is the absence of updated infrastructure. While setting up a backend system, there are various hosting options available for providing user access.
“In the past, you would specify the server resources like 2G RAM and disk space based on the expected number of user requests. As your user base expands and the need to scale arises, more resources would be obtained to accommodate the growing number of users (scalability).
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“Manually scaling resources is difficult, as a sudden surge in interest in your service could result in a crash if you are not proactive in obtaining additional resources in time. Consider the scenario where you have your data center and need to order new hardware components like hard drives and network adapters from Amazon. The time it takes for these resources to arrive can result in user inconvenience and frustration.”
“Due to the high volume of transactions per minute on their platforms as a result of the scarcity, their infrastructure was not designed to handle this level of activity. Imagine their initial resources were designed to handle only 100 requests per minute, but now they face x100 more, 10,000 requests per minute. Inevitably, their system will either crash or experience slowdowns.” He added.
The inability of mobile apps to step up to the situation spurs the question, is Nigeria truly ready to become cashless?
