Abuja small businesses struggle amidst naira notes scarcity; but what of cashless?


As the scarcity of new naira notes bites harder, residents and operators of small businesses are concerned about the day-to-day running of activities with limited funds. In Abuja, entrepreneurs, especially those heavily reliant on cash, recount the adverse effects of the scarcity on their businesses, Ijeoma Opara reports.

FOR John Anyaso, a cab driver who plies the Wuse-Life Camp axis of Abuja, the naira scarcity has led to a significant decline in his daily income.

In an interview with The ICIR, Anyaso spoke on the adverse effect of the scarcity on his business.

“These days, you see people offering N100 for a journey of N150. I collect it sometimes because there is no cash. But it affects me; my money is short at the end of the day.

“I had the experience even yesterday. A girl entered my cab, she didn’t have cash and she didn’t say anything. After wasting my time, she asked for my account details. How can I collect transfer of N200? I had to let her go. That is what we are facing. There is no cash. It is only those who sell food that are getting by; people must eat,” Anyaso said.

But a food vendor who identified herself as Maria Kennedy and owns a stall in the Life Camp area of the city insisted that the situation was no different.

Maria told The ICIR that it has been taking longer than usual to sell her food recently due to low customer turnout.

“It is affecting us, too, as we sell food. If you don’t have cash, how can you eat? I can’t sell food on credit. And I won’t accept transfers because where will I get the cash to go to the market? It is only a person with cash that can pay for food. If I sell all the food on credit, what will I sell tomorrow?” she asked.

In October 2022, the Central Bank of Nigeria (CBN) announced that it would be redesigning the N200, N500 and N1000 notes.

The CBN governor, Godwin Emefiele, said the redesign was part of efforts to control the currency in circulation.

Emefiele said N2.7 trillion out of N3.3 trillion of the country’s currency in circulation was outside commercial banks’ vaults and described this as a worrisome trend.

He noted that new notes would be in circulation by December 15, 2022, and a deadline of January 31 was fixed for old notes to be returned to banks.

However, as the January 31 deadline inched closer, Nigerians found it more challenging to access the new notes.

Long queues surfaced at ATM points, and The ICIR reported that new naira notes were being sold in some areas of the FCT.

n Nigeria, point-of-sale (POS) machines serve business purposes, acting as a time-saving substitute for banks.

However, the recent scarcity has led to a drastic increase in POS charges. In Abuja, residents paid as much as N1000 as charges to get N10,000 from POS agents as of January 30, 2023.

Two days before the deadline, Emefiele issued a statement extending the deadline for the use of old naira notes to February 10, 2023.

Scarcity lingers despite extension

Regardless of the extension, the scarcity has persisted. Many ATMs have remained empty, and POS charges are even higher.

A POS operator in the Life Camp area of Abuja, Nafisat Aliyu, now charges N700 to pay customers the sum of N5000 and N1500 for N10,000.

She, however, does not give out more than N10,000 at a time due to the scarcity.

Speaking to The ICIR, Nafisat explained that she now charges at least six times the usual amount due to the extra effort she puts into getting cash.

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“The funniest part of it is that it is only one ATM you can use to withdraw just N20,000 a day at the machine. And if you do not have many ATMs, you can’t get money. And sometimes, you’ll be in the queue for almost three to four hours. Before it gets to your turn, there will be no more money in the machine. All the time spent there, wasted.

“That is how you will be spending money on transportation from one place to another just to get money. Sometimes, you waste transport fare to some places, and you cannot even get money from there. I left my house around 6am in the morning and got back round 3pm. But it was only N20,000 I could get,” she said.

Aliyu pointed out that old notes had become scarce as well. She said the cost of transportation and the difficulty in getting notes were factored into the POS charges.

Is cashless policy feasible?

Beyond controlling the amount of cash in circulation, the CBN also announced its attempt to steer the country towards a cashless economy.

In December 2022, the CBN announced cash withdrawal limits which allow residents only withdraw a maximum of N20,000 daily.

The maximum over-the-counter cash withdrawal limit by individuals and corporate organisations per week was placed at N100,000 and N500,000, respectively. Withdrawals above these limits would attract processing fees of five and 10 per cent, respectively.

After meeting with a lot of resistance, the CBN reviewed the weekly limits to N500,000 and N5 million for individuals and organisations.

The apex bank noted that the limits were aimed at a cashless economy to combat terrorism and kidnapping for ransom, a challenge which has witnessed a steady rise in Nigeria.

However, the goal of a cashless economy seems unattainable, as unstable bank networks seem to be limiting its success.

Many Nigerians who now depend on transfers and payments with POS machines get debit alerts without being paid.

A resident of Gwarimpa, Jennifer Adah, shared her experience with The ICIR.

“I went into a shop on Monday and decided to pay through POS, since cash is hard to get now. I was debited the sum of N4,500, but the POS machine was showing ‘declined’. Till now, the money hasn’t been reversed,” she said.

This also discourages small business owners, including Helen Chimezie, who sells food in the Wuse area of the city, from receiving online payments.

“People come here and ask to make transfers, but you running a business know that there are network issues. So you ask yourself: what if the person makes a transfer and I don’t see the money due to the network? How do you get your money after the person has left? That is another problem. That is what we are going through. I do not accept transfers because of this,” Helen told The ICIR.

Way out

The ICIR contacted the CBN spokesperson, Osita Nwanisobi, on the naira note scarcity. He was yet to respond to text messages at the time of filing this report.

However, a professor of Economics at the Lagos Business School, Adi Bongo, described the scarcity as artificial and called for the arrest of those responsible for it.

“Some people have created artificial scarcity so that they can exploit people and make life difficult for fellow citizens. I strongly suggest to the central bank that they go after the bank CEOs. Any bank that has received a cache of these funds and is hoarding it, the CEO of that bank should be answerable for it. They should be arrested and removed from that position,” Bongo noted.

He added that the Nigerian president, Muhammadu Buhari, should order an investigation into the scarcity and punish whoever is found guilty, including the CBN.

“Currency note replacement is something that happens seamlessly without any brouhaha everywhere in the world. I can understand that there is a political undertone to this. There are suspicions that some people have hoarded currency that they want to use in influencing elections and to destroy their plans, this thing is being enforced now. That is fine.

“But that shouldn’t be an excuse to impose undue hardship on people who are already pressed by high inflation and others. It is uncharitable. The president needs to give an executive order mandating a joint security sting operation against the banks, including the CBN or anybody who is culpable,” Bongo said.

While uncertainty and hardship continue to result from the shortage of naira notes in circulation, residents and business owners remain unsure of how long the scarcity will persist.

Ijeoma Opara is a journalist with The ICIR. Reach her via [email protected] or @ije_le on Twitter.

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