Commercial banks in Nigeria have begun to ration the newly designed naira notes as the 31 January deadline approaches. The Central Bank of Nigeria (CBN) had last October announced the redesign of the N200, N500 and N1,000 notes.
The new notes were officially launched in November while Nigerians were given until 31 January to deposit all old notes which will cease to be legal tender.
The CBN said the rationale behind this was to curb counterfeiting and reduce the huge amount of money outside the banking system which was about 80%. This means politicians who have stockpiled money in their homes ahead of the 25 February election will have to return the money to the banks.
Scarce new notes
However, The Africa Report correspondents report that the newly redesigned notes have remained scarce even as banks are give customers the old notes over the counter and claim the new notes are being dispensed at ATM machines.
A leaked internal memo from First Bank which was seen by The Africa Report stated that ATM withdrawals have now been limited to N20,000 per day from the initial N120,000. Also, customers holding ATM cards of other banks would only be allowed to withdraw N5,000 from First Bank ATM machines.
“N20,000 is the maximum daily limit on-us withdrawal that is [for customers] using First Bank card on First Bank ATMs. N5,000 per transaction for not on-us transactions that is [customers] using other bank cards on First Bank ATMs,” the memo read in part.
At the United Bank for Africa (UBA), the ATM withdrawal limit was set at N40,000 per day for its own customers while at Sterling Bank, the limit was put at N20,000.
“Banks don’t have enough of the new notes so each bank is setting ATM withdrawal limits based on their liquidity. This is what we are facing,” says one bank employee who asked to remain anonymous.
Extend the deadline?
Speaking to The Africa Report, the Chairman, Board of Trustees, Bank Customers Association, Uju Ogubunka, says the CBN would need to extend the 31 January deadline as it had brought hardship to Nigerians.
“If I go to an ATM and can’t even get the new notes and I go into the banking hall and I am still getting old notes and I take it to the market and people are rejecting, then there is a problem.
“I think the authorities should be sensitive to know that the policy needs to be looked at as well as the deadline,” Ogunbuka says.
However, President Muhammadu Buhari as well the CBN Governor, Godwin Emefiele, have been adamant. Buhari said a few weeks ago that the deadline would not be extended because he wanted to ensure that politicians do not use stolen funds to buy votes.
Emefiele on his part said earlier in the week that he would not extend the deadline. Last week he vowed to sanction banks that were hoarding the new notes.
Nigeria’s parliament has called on both the President and Emefiele to extend the deadline but this has been ignored. Emefiele also refused to honour an invitation by a committee set up by the House of Representatives.
But Ogunbuka adds that the government cannot put Nigerians through hardship just because it wants to tackle vote buying.
Understand Africa's tomorrow... today
We believe that Africa is poorly represented, and badly under-estimated. Beyond the vast opportunity manifest in African markets, we highlight people who make a difference; leaders turning the tide, youth driving change, and an indefatigable business community. That is what we believe will change the continent, and that is what we report on. With hard-hitting investigations, innovative analysis and deep dives into countries and sectors, The Africa Report delivers the insight you need.