How Nigerians are forced to adopt CFA as means of exchange over Naira scarcity
In November 2022, when President Muhammadu Buhari unveiled the newly-redesigned N200, N500, and N1,000 notes, the move, according to the Central Bank of Nigeria, was necessary to mop up excess cash in circulation and also combat banditry and kidnapping.
The CBN had set January 31 as the last day the old notes will be regarded as legal tenders. In order not to be stuck with these notes, many Nigerians whose businesses involved the constant exchange of cash rushed to deposit them in banks hoping to withdraw the new notes at the banks and ATMs. Unfortunately, the limited new notes made this difficult as many ATMs dispensed a maximum of N10,000, affecting business transactions. This has led to the adoption of Franc CFA in border communities.
Monsurat Okewale, a trader who buys farm produce from Iseyin and its neighbouring markets in Oyo state and sells to other traders in Ibadan told Neusroom that her business was strictly cash because many of the farmers were unbanked and only come to the market after harvest. When the news of the deadline for the old naira note circulated, she rushed to deposit her money in the bank hoping to get the new notes. Due to the limited new notes in circulation, she could not get enough cash to buy the farm produce and meet the demand of her customers.
“The farmers said they did not want the old notes since it had been announced that it would become illegal by the end of January. Being a border town and market, people came from Benin Republic to buy and sell too. In the past, only a few people collected CFA but now, that is what everyone is accepting for now. You either pay with the new naira note or pay in CFA”
The CFA franc is the legal tender in eight West African countries of Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo, colonised by France.
Okewale told Neusroom that she found a dealer at the market who accepted cash transfers in exchange for CFA to pay the farmers.
Her friends and co-trader, who simply identified herself as Funke told Neusroom that she lost out on a good farm deal because she did not have enough cash to pay for the goods.
“I needed N400,000 in cash but I had less than N200,000. These people don’t accept bank transfers and we all know that. I was supposed to get a very good yam deal but since I did not have cash, someone else bought it. You don’t expect them to bring all those goods from the farms to the market and take them all the way back because one person did not have cash.”
Although the CBN has extended the cash swap by another ten days, Nigerians are still finding it difficult to get the new note. Although the government has encouraged alternative means of banking, with more than 42 million Nigerians living in rural areas with no access to banking services, cash still remains the priority means of exchange.
The situation is also being reported in border states in the northern part of Nigeria where CFA is rapidly being adopted as the primary means of financial exchange.
A report by Punch revealed that residents of border communities in states including Sokoto, Zamfara, Katsina, Adamawa and Kwara have opted for the CFA franc following the scarcity of the new naira notes across the country.
“The residents, including traders and commercial drivers, are also rejecting the old naira notes, insisting that customers who do not have the new redesigned currency must pay for goods and services with CFAs.”
On Friday, February 3, President Muhammadu Buhari received governors on the platform of the All Progressives Congress who came to see him to discuss the hardship caused by the currency swap.
The president blamed banks for the problem describing some of them as being greedy and that if the deadline is extended by a year, some problems will still not be solved.
He asked Nigerians to give him seven days to come up with a solution.
As Nigerians await the next direction of the president and the CBN, some are already rapidly adopting another country’s currency as a stable means of exchange so that their businesses which suffered a dip can continue to run smoothly.
