touchaheart Nigeria reports that The excitement around the Supreme Court’s ruling that the old N500 and N1,000 notes should continue to be used until December 31, 2023 has subsided as broad opposition to the old notes among bank clients, carriers, and other businesses has taken over the financial and economic landscape.
The Central Bank of Nigeria, CBN, and the Federal Government have remained silent over the court’s ruling, which has led to the rejection of the older notes.
Banks implement cash withdrawal limits
Banks have begun implementing weekly cash withdrawal caps for individual clients of N100,000.
The money is given out, nevertheless, in outdated banknotes that the majority of clients declined to accept.
Customers are demanding a formal declaration certifying the old N500 and N1,000 notes as legal cash before they will take them, a top bank official claims.
Under the condition of anonymity, the branch manager of a Tier 1 bank stated: “Everyone (clients) that came to my branch today refused it” (old N500, N1,000 notes). I attempted it even though they claimed no one was collecting it. I offered a person a note for N1,000 to go to a well-known restaurant in Lagos and get me rice, but the eatery refused it. To see if transporters would accept N500, I offered it to someone else to use to board a commercial bus. When they returned, they said that commercial buses had also declined to pick it up.
In the case of the previous N200 currency, the president gave a statement, and everyone followed it. Why then do they not speak at this time? Customers stated that the Supreme Court decision should be approved by President Muhammadu Buhari or the governor of the Central Bank of Nigeria.
Sadly, it is what they are even bringing here for us. They said at a meeting that other notes, including the N1,000 and N500, were even coming.
The beginning of the cash withdrawal limit was also confirmed by the banker. “Yeah, they even stated we should do N20,000 each customer per day,” he replied. The circular that our banks gave us today stated as much.
When asked about the aforementioned situation, Dr. AbdulMumin Issa, acting director of the CBN’s corporate communication department, responded, “There is no official comment on the old N500 and N1,000 notes.
The same thing happened in Oyo State’s capital of Ibadan yesterday, where bank clients declared they would not accept their banks’ old banknotes since the banks had earlier on Monday claimed they needed to wait for the CBN or the President before they could do so.
They questioned why, in the absence of statements from the two authorities, the banks were now disbursing it.
One of the tier-one banks’ employees informed Vanguard that her institution began dispensing the old banknotes since the CBN returned the old Naira banknotes it had earlier deposited at the apex bank on Monday.
She intimated that she had also taken out N30,000 for personal use, but regretted that neither shopkeepers nor commercial motorcycle riders would accept it for use in transactions.
I also withdrew N30,000 in old notes, but I was unfortunate to be left stuck when I attempted to pay an okada rider and he refused it. I had to call someone who brought N500 so I could pay the bike man because it was the only money I had on me and because the shortage of new naira notes also affected me.
Notwithstanding the Central Bank of Nigeria’s (CBN) lack of an official declaration regarding the acceptability of old naira notes, the speaker claimed that after the Supreme Court’s ruling, there was optimism that things will improve in the coming days.
According to Tajudeen Olayinka, CEO of Wyoming Capital & Partners, the cash shortage might have been avoided or lessened if banks and the CBN had complied with the cash withdrawal cap set by the CBN between January and February 2023, when the old notes ceased to be accepted as legal tender.
The problem was made worse by the CBN’s failure to issue enough new banknotes to replace the old ones and its inability to provide a close substitute for cash in the event that it was not available in sufficient amounts.
Use of ATM or PoS machines cannot be taken as a near-cash alternative
Mallam, Garba Kurfi, Chief Executive Officer, APT Securities & Funds Limited, spoke in response to the Court decision and the banks’ compliance, saying: “It’s an excellent development and will bring relief over the cash crisis but much better if CBN can issue the old notes with it. Additionally, since many individuals are refusing to use it in transactions, the FG should issue a proclamation to ensure that it is broadly recognized as legal cash.
The Association of Capital Market Academic of Nigeria’s (ACMAN) President, Prof. Uche Uwaleke, said: “It’s a positive move.
In accordance with the Supreme Court’s ruling, the CBN has instructed banks to accept the N500 and N1000 notes, presenting itself as a law-abiding organization. Also, it will assist in removing any doubt or ambiguity regarding the legitimacy of those old naira bills.
The cash crunch may last for some time considering that the CBN has not stated that it will recirculate the about N2 trillion of old currencies already mopped up, which explains why it has retained the cash withdrawal limit.
The best course of action, in my opinion, is to make sure that banks have enough lower denominations of the old and new notes in stock to load their ATMs as well as to dispense over the counter.
In response, Mr. David Adonri, Vice Chairman of Highcap Securities, stated that since the CBN was unable to create and provide new currency notes to replace the ones that were pulled, it is proper to reinstate the old notes in order to alleviate the current, acute cash shortage.
Hopefully, when more new notes are issued, the old ones will be gradually withdrawn. The economy would not be facing the level of disruption it is now if CBN had implemented the program correctly by supplying the equivalent amount of new notes to replace the withdrawn old notes.