New naira scarcity forces businesses to opt for e-payment
Businesses in Nigeria are facing a double whammy as new naira notes remain scarce, even as the deadline for the expiration of the old ones draws nearer.
The situation has forced many businesses to opt for electronic channels to carry out transactions in a bid to reduce the volume of old notes coming from their customers.
Following the redesign of N200, N500 and N1,000 notes, the Central Bank of Nigeria (CBN) commenced the distribution of the new notes on December 15, saying the old ones would cease to be legal tender on January 31, 2023.
But nearly one month after the redesigned banknotes entered circulation, they are still hard to get from banks. Many Automated Teller Machines and Point of Service (PoS) agents are still dispensing only the old naira notes.
BusinessDay gathered that some business owners in some parts of the country were not accepting the new notes because of its scarcity.
“I have not seen the new naira notes, even when I go to the bank or use the PoS machine, but they are saying the deadline for the usage of the old notes is soon,” Ezinne Gabriel, a boutique owner at Fadeyi, Lagos, said.
“But these days I prefer my customers to pay by transfer in order for me to reduce the volume of old notes with me.”
A trader in Apapa told BusinessDay: “Customers that come to my shop no longer pay in cash; they prefer making transfers to me. I always make sure I get an alert before releasing my goods to them.”
The CBN has said repeatedly on its verified Twitter page that the current series of N200, N500 and N1,000 notes remain legal tender until the deadline of January 31, 2023.
“Customers should be encouraged to use alternative channels (internet banking, mobile banking apps, USSD, cards/POS, eNaira, etc.) to conduct their banking transactions,” it added.
In 2012, the apex bank introduced the cashless policy, which was meant to curb excessive handling of cash and to curtail the volume of cash in circulation.
The policy was introduced to drive development and modernisation of payment systems capable of placing Nigeria among the top 20 economies in the world.
The Nigeria Inter-Bank Settlement Scheme (NIBSS) said in a recent report that the COVID-19 pandemic had changed the e-payments landscape, and hastened the adoption of instant payments as people switched to electronic channels for funds exchange.
According to NIBSS, instant payment transactions from January to November 2022 stood at N311.81 trillion and PoS transactions amounted to N6.85 trillion, indicating a solid uptake in digital payments in the country.
In September 2022, the instant payment transactions value rose to N32.8 trillion, a 39.5 percent increase compared with the N23.5 trillion recorded in September 2021.
October’s figure stood at 34.5 trillion, a 42 percent growth over the N24.3 trillion recorded in the same month of 2021.
Instant payment transactions increased to N38.9 trillion, up 50 percent from N25.9 trillion in November 2021, according to NIBSS data.
Some business owners in the parts of the South East are not accepting the new naira notes, many of which were brought in by travellers from the Federal Capital Territory and other parts of the country who came back home for the festive season.
When one of our correspondents visited a store in Agwuata area of Anambra State to purchase some items with the new naira notes, the owner of the store refused to accept the new N500 note.
A 45-year Adaku Okafor who is into cassava processing in Ihie area of Abia State, said she had not seen the new notes in her business transactions since the launch of the notes.
“I haven’t seen the money yet; throughout this village and neighbouring communities where I carry out my business, we still use the old notes; you can’t see the new notes anywhere. I won’t even accept the money when I am offered because it’s not popular here and it could tie my cash down. I don’t know how long it will take for the notes to begin circulating here,” she said.
A resident of the community, Emmanuel Chikeziri said he is eager to see the new notes but won’t accept it as it may be useless for a while.
“Nobody in this village knows what the new notes look like; we are still buying and selling with the old notes which are still very valuable to us here, even though government has set a deadline for the money to be removed from the streets,” he said.
“I won’t accept the money, except you give it to me for free,” said another trader and farmer who simply identified herself as Chinyere. “I can’t accept it because nobody will accept it here,” she added.
Beatrice Ezennaya, a petty trader in Bwari, Abuja, said she had yet to receive the new notes. “We are still transacting with the old notes; the new notes are very scarce here. My customers still bring the old notes to purchase things.”
The Senate has urged the CBN to extend the withdrawal date of old currency notes from Jan. 31, 2023 to June 31 in order to forestall imminent hardship on Nigerians especially for citizens who live in rural areas and may face extreme difficulty in accessing the new notes.
The CBN aims to solidify the growth of electronic payments, by continuously offering competitive services to consumers and imbibing industry innovation, while contributing to the economic growth of Nigeria.
“By 2025, the country aspired to have a cashless and efficient electronic payment system infrastructure that would facilitate financial services in all sectors of the economy,” the apex bank said in its Payment System Vision (PSC) 2025 document.
There have been sharp increases in the volume and value of electronic payments. PSV 2025, which defines the industry’s roadmap for the next two years, focuses on initiatives such as contactless payments, big data and open banking, and artificial intelligence, among others, which will further drive digital innovations and electronic payments in Nigeria.
“By 2025, agent banking initiative and other industry solutions will further aid the improvement of financial inclusion in Nigeria,” it said.