Nigeria’s switchover to new paper currency has grown more chaotic.
ATMs in Africa’s largest economy have run out of new notes, Bloomberg News reported Saturday (Feb. 4), ahead of a deadline that will ban high-value currency.
According to the report, hundreds of people were left stranded at a busy marketplace in Lagos, the largest city in Nigeria, as ATMs ran dry. Nigerians were limited to withdrawals of 20,000 naira ($43) but many machines were out of money.
“I do not know how I will get home tonight because I do not have cash,” David Aghamelum, a 25-year-old computer technician, told Bloomberg.
The report noted that in addition to hurting commuters like Aghamelum, the shortage has also overwhelmed Nigeria’s digital payments system. Consumers are turning to online transfers, leading to transactions that take hours to go through and some that don’t go through at all.
As PYMNTS noted last week, the problem began when Nigeria’s government tried to to replace three high-denomination bills with new designs that are thought to be harder to counterfeit. However, authorities apparently failed to print enough new bills, leading to chaos as people tried to withdraw their own money before the Feb. 10 deadline.
When the head of the Central Bank of Nigeria (CBN), Godwin Emefiele, announced the decision, he made it clear that allowing the central bank to control the supply of cash in the economy was the chief aim of the project.
“The integrity of a local legal tender, the efficiency of its supply, as well as its efficacy in the conduct of monetary policy are some of the hallmarks of a great central bank,” Emefiele told reporters in October.
Emefiele added that “significant hoarding of banknotes by members of the public,” was having an adverse effect on the CBN’s ability to carry out its objectives, with more than 85% of all Nigerian currency outside the vaults of commercial banks.
The changeover is happening as Nigeria is getting tougher on its cash-heavy economy. Earlier this year, the Nigerian Financial Intelligence Unit (NFIU) announced a ban on cash withdrawals from government accounts as part of a bid to stamp out money laundering.
“On March 1, if there is a cash withdrawal from a government account, even if it is one naira, we are going to trigger off money laundering and corruption investigations,” Modibbo Tukur, chief executive of the NFIU, said in January.
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