When a widespread rejection of the old notes by bank clients, transporters, and other enterprises took over the financial and economic landscape, the excitement that had greeted the Supreme Court’s ruling that the old N500 and N1,000 notes should be in use until December 31st, 2023 has subsided.
The Federal Government and the Central Bank of Nigeria, CBN, have remained silent over the court’s ruling, which has led to the rejection of the old notes. Banks have begun imposing weekly cash withdrawal caps of N100,000 for individual customers.
However, the payment was made in outdated banknotes, which the majority of customers declined to accept. A senior bank official claims that clients are insistent that a formal declaration certifying the old N500 and N1,000 notes as legal money be made before the notes can be accepted.
The branch manager of a Tier 1 bank remarked, under the condition of anonymity, that “everyone (clients) that came to my branch today refused it” (old N500, N1,000 notes). I tested it, and they claimed that nobody was collecting it. I gave someone N1,000 cash to purchase rice at a well-known restaurant in Lagos, but the establishment turned it down. I offered someone else N500 so they could use it to board a bus for a business trip to check if transporters would accept it. The guy reported that the commercial buses also declined to pick it up when they returned.
Also, the banker confirmed the beginning of the cash withdrawal cap. Well, they even suggested that we should charge N20,000 per consumer every day, the man replied. That was stated in the circular that our banks gave us today.
Dr. AbdulMumin Issa, acting director of the CBN’s corporate communication department, responded when asked about the aforementioned development, “There is no official announcement on the old N500 and N1,000 notes.”
The Lagos development was also observed yesterday in Ibadan, the capital of Oyo State, where bank customers declared they would not accept their banks’ old banknotes because the banks had earlier on Monday claimed they were awaiting CBN or the President before they could do so.
They questioned why the banks were suddenly dispersing it without the two agencies’ announcements.
Wyoming Capital and Partners CEO Tajudeen Olayinka commented on the cash shortage, saying: “Cash scarcity might have been avoided or lessened if banks and the CBN met the cash withdrawal limit imposed by the CBN between January and February 2023, when the old notes ceased to be legal tender.
“The fact that CBN did not release a sufficient amount of fresh banknotes to replace the old ones, and could not additionally supply close cash alternative instead of the paucity of cash, compounded the situation.
Conclusion
Hopefully, the old notes will be gradually phased out as more new notes are issued. The economy would not have undergone the kind of disruption it is currently going through if CBN had effectively implemented the policy by supplying the equivalent quantity of new notes to replace the removed old notes.
Source: Vanguard
