The Central Bank of Nigeria (CBN)’s push to replace its paper money with newly designed currency notes has created a shortage of cash, leaving people unable to buy what they need and forcing businesses to close across the West African nation, experts and business groups said.
The CBN says the redesigned denominations of N200 (43 U.S. cents), N500 ($1.08) and N1,000 ($2.17) notes and new limits on large cash withdrawals would help curb money laundering and make digital payments the norm in Africa’s biggest economy.
But the process to replace the old currency notes is “rushed,” and commercial banks don’t have enough new cash to give to customers, pushing demand higher than supply, said Ayokunle Olubunmi with Nigeria’s main ratings agency, Agusto and Co.
The central bank “doesn’t want us to be spending cash; they want us to be doing transactions electronically, but you can’t legislate a change in behavior,” Olubunmi said. “You have to make people see reasons and ensure those channels are reliable.”
The government is pushing for a cashless economy that is more inclusive and says the changes will drive economic growth. Critics are skeptical, pointing to decades of chronic corruption in which government officials are known to loot public funds and create more hardship for the many struggling with poverty.
