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It has been quite depressing seeing the many sad faces on ATM queues in the last few weeks, desperately scouring for cash. Its equally saddening reading of the pain and anguish of people who have either lost relations and friends or have gone through hell in seeking healthcare for loved ones, as a result of the cash crunch. As we are told, this is because some medical facilities refused to offer emergency treatment to patients unless cash payment was made, even when they must have been in the know of how dire the situation is, or perhaps it is because of it.

Yet, as I had stated weeks back, this might yet turn out as much ado about nothing, a crisis without genuine basis, as this was supposed to be a routine change of notes, even though piggybacked by an attempt to deepen an already existing drive for a cash-less regime. One characterised by less cash transactions, while at the same time short-changing the nefarious deployment of cash by parasitic actors, who are taking advantage of different elements of the system to wreak havoc.

Yet, this was an avoidable fiasco, as it has now turned out to be. The CBN is a kabiyesi of sorts in currency management. Section 17 of the CBN Act provides that “the Bank shall have the sole right of issuing currency notes and coins throughout Nigeria, to the exclusion of the federal, state or local governments or any person or authority.”

Section 18 (a & b) of the Act states that “the Bank shall arrange for the printing of currency notes and the minting of coins; and issue, re-issue and exchange currency notes and coins at the bank’s offices and at such agencies as it may, from time to time, establish or appoint.”

It was in line with this exclusive mandate that the CBN, in October, announced a redesign of some of the naira notes and a tinkering with the cash withdrawal policy, with a view to further entrenching a cash-less regime.


According to the CBN, “although global best practice is for central banks to redesign, produce and circulate new local legal tender every 5–8 years, our existing series of the Naira has not been redesigned in the last 20 years.”

The introduction of new naira notes was thus with the mind of addressing the following challenges, among others: “Significant hoarding of banknotes by members of the public, with statistics showing that over 85 percent of currency in circulation are outside the vaults of commercial banks. To be more specific, as at the end of September 2022, available data at the CBN indicate that N2.73 trillion out of the N3.23 trillion currency in circulation, was outside the vaults of Commercial Banks across the country; and supposedly held by the public… Worsening shortage of clean and fit banknotes with attendant negative perception of the CBN and increased risk to financial stability; increasing ease and risk of counterfeiting evidenced by several security reports.”

However, little had that announcement been made that all sorts of knives digging at the heart of what one would ordinarily assume everyone will see as a good policy emerged. Cynics started from the design of the new note to everything else. Some subjected the notes to wash-test. But all of these activities pale into insignificance in comparison with strenuous efforts by politicians, using the media, to tear down a policy deemed unfavourable to their plans for the forthcoming elections.

Unfortunately, even the CBN appears to have not properly factored in the peculiar socio-psychological dynamics of the environment it operates in, taking lightly the determination of the antagonists of the policy to make it fail. It does appear that the CBN might have seen this project as a linear one, adopting a waterfall approach in its management, rather than a flexible and agile approach that this would require. On the most important leg of communication, made more complicated by the challenges that come with disinformation and misinformation, its performance has been abysmal. Poor.

In early days of December, it was supposed to be a brief stopover at the mechanic’s. But it didn’t turn out as planned. It was as if the men gathered under the tree had made a resolution that the questions they had piled up for Godwin Emefiele had to be answered by me, there and then. Looks like they must have had their daily dose from Berekete.


They sought to know how they, as bit players in the economy, operating in the informal sector, are supposed to cope with the cashless regime which restricts cash withdrawal to a weekly limit of N500,000 for individuals and N5,000,000 for corporate entities.

At the time, the concern they expressed was quite rife. People wondered how they were to conduct regular everyday activities with the limit. The first thing I did was to ask these men if anyone had as much as N10,000 cash with him. None had. N5,000? None had. Yet here they were, getting worried about a N100,000 cash withdrawal limit. I also asked the mechanic if in the three years he has worked with me, it has not been largely one of cashless transactions between us. He confirmed it has been so. We all then concluded, I think, that the hue and cry about the cash withdrawal restrictions policy, following up on a cashless policy that had been in place since 2012, was largely misdirected. It was a case of people not adversely affected, taking up a fight on behalf of those not for them, against what is actually in their interest.

Indeed, data presented by the CBN has it that 94% of cash transactions fall within the new limit of N500,000 for individuals, while 82% of corporate cash transactions also fall below the new limit indicated for corporate bodies, meaning that about 84% of individuals in all would not be affected by the cash withdrawal limit.

But that was not the impression one would have listening to the pulse of the street within the three-month window initially given for the withdrawal of old notes and for the withdrawal limit to kick in.

So mischaracterised was the policy, deliberately so by many, the as cash withdrawal restrictions policy was labelled a cash-swap by a section of the media. Yet, the policy as announced by the CBN was not a cash swap or was it intended to be one. Bank customers were simply being encouraged to bank their cash and explore alternative payment platforms for future transactions. This is not to mistake the policy as a cash swap with the cash swap arrangement later carried out directly by the CBN in rural areas.


What the CBN sought to do was to pull in the excess cash from circulation, not to replace what was out there naira for naira in a swap. That, in part, explains the volume of new notes printed. Some, relying on what might be questionable sources, claim that the CBN did not print or release enough new notes.

Yet, experts claim that less than 2% of the cash in circulation should be able to adequately take care of cash-based transactions. Their argument is that the cash crunch being experienced has more to do with the fact that about 90% of what was released was mopped up by politicians, speculators and saboteurs seeking cash for reasons well known to us, that has made them desperate in their bid to have the policy. Having mopped up cash that might have otherwise been sufficient for the system and eagerly waiting to mop up more, contrary to the dictates of the policy, some of these actors have rechristened the policy as cash confiscation, while calling for a new life for old notes, which the CBN claims to have about 80% of already sitting in the CBN vault.

While some query the capacity of the system for the switch from old to new notes within what they see as a short window, I do not think that was as much a problem. There was not much of reports of people being caught out with old notes, unable to deposit them, even in December. It was more of people having already deposited what they had, wanting to access cash in new notes. With some actors mopping up, some banks not being helpful, panic reinforcing further surge in demand, it was a recipe for disaster, which could have only been arrested with oversupply, as NNPC would do, but this is cash, not petrol. The fear for CBN might have been about rolling back on the gains already made.

The CBN argue that the issue of capacity is not there. It claims that “between the bank and the micro-finance banks, we have 6,500 locations, 900,000 POS terminals, 14,000 ATMs across the country and 1.4 million agents nationwide and every single local government in Nigeria has agent represented.” It also claims a huge jump in the level of electronic transactions in the country. From N48 billion in POS transactions in 2012, there is a record of N6 trillion in POS transactions as at 2022, while electronic transfers have jumped from N3 trillion in 2012 to N300 trillion as at October, 2022. Financial inclusion has improved, the Nigerian payment system is now stronger, as Nigeria is judged sixth in the world for instant real payment.

Even with that, I am not sure CBN adequately prepared or truly saw the kind of pressure that panic and mischaracterisation of its policy could induce. The Emefielisation of a monetary policy, which many swear is a political tool, is as shocking as it is baffling to see the number of people who have pitched under that tent. But can you blame them? Given the way the CBN governor has found himself inserted in the political machinations and horse trading of partisan politics, it is difficult for anyone to put anything past him.


That notwithstanding, that it has become a high stakes game, with misinformation and disinformation actively being deployed is without doubt. Mischief was easy to smell from miles about the report claiming that the CBN governor has told the Council of State that the mint had run out of paper to print new notes. If indeed the report came from ‘sources’ who were at the meeting, it is easy to guess their motive for putting that out. Both the Bank and mint have denied the claim. The presentation slides by the governor does not also suggest that. But, who knows really? Who knows with all that has played out.

I stand by my position that once the window as set by the CBN closes, with the banks now compelled to only issue new notes, things will definitely begin to ease. Some of us are fortunate to have settled into this life of cashless transactions long before now, hardly making use of cash. I have not had to seek new notes and even when offered weeks back by a colleague, I turned it down as I hardly make use of cash anyway. Standard Chartered Bank also sent mails assuring us of cash from the counter and the ATM, but I never took the bank up.

But I see that it has indeed been quite rough for many. The earlier things normalise, the better. I do not agree that this was targeted at anyone. I see no evidence to corroborate that. All I see is a policy that is good on paper, even okay with the three-month window, but allowed to be misconstrued and mischaracterised, triggering mistrust and panic that has made many lose sight of the obvious inherent benefits.

Simbo Olorunfemi works for Hoofbeatdotcom, a Nigerian communications consultancy and publisher of Africa Enterprise. Twitter: @simboolorunfemi


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