Underpriced goods, stranded traders: How Naira notes scarcity is threatening livelihood of small business owners
A worrying scarcity of Naira notes is threatening the survival of businesses across Nigeria as small-scale businesses struggle to survive the aftermath of the redesigned Naira policy by the Central Bank of Nigeria (CBN).
Small business owners are facing challenging times due to the unavailability of cash for transactions. The effects of naira scarcity are exacerbated by reports of online banking services experiencing technical issues since the last week in January when the rush to beat the CBN deadline for Naira notes swap started.
In October 2022, CBN announced that the country’s higher denominations, ₦200, ₦500, and ₦1000, would be redesigned. On December 26, 2022, President Muhammadu Buhari launched the new notes with January 31, 2023, set as the deadline for the use of old notes. However, as the deadline approached, many people flocked to banking halls to exchange their old money for new notes, but there was a scarcity of the redesigned currencies as many ATMs continued to dispense old notes close to January 31.
While CBN Governor Godwin Emefele announced on January 29, 2023, the extension of the deadline by 10 days, ordinary Nigerians still struggle to access the new notes, resulting in small businesses experiencing a drop in their daily sales.
Ezenwayi, a trader in Ntigha Market, Abia State, told Neusroom that she was unable to sell her goods as few people who priced her goods at Orie Ntigha did so below her cost price.
“I couldn’t sell the plantains I went to market with today. I took them back home. It’s better if we eat them,” she said.
Ezenwayi said she refused to accept transfers as people were sending “fake alerts.”
The Orie Ntigha is an eight-day market in Isiala Ngwa North, Abia State, and the biggest market in both Isiala Ngwa North and South Local Government Areas, attracting traders from Aba, Umuahia, and beyond.
It appears that the naira scarcity is causing a drop in the prices of goods in the market as marketers are forced to sell below cost price.
“Today in the market, 25 litres of palm oil sold for ₦15,000. Less than a month ago, it sold for ₦22,000,” said Ezinwayi.
In addition to the hardships business owners face due to a decrease in sales, many also face the stress of exchanging their old notes. 62% of Nigerians are not close to financial access points or financial service providers.
According to Enhancing Financial Innovation and Access (EFInA), a financial sector development organization, 11.7 million business owners and 38.1 million Nigerians 18 years and older are financially excluded.
‘Financially excluded’ are the number of people who do not have or use any financial products or services, either formal or informal.
Various bank ATMs in Umuahia examined by a Neusroom correspondent on February 1, 2023, were not loaded with cash as customers formed long queues waiting for the ATMs to be loaded. A customer at one of the banks, who spoke to Neusroom on the condition of anonymity, said he spent two hours inside the bank to withdraw ₦3600.
“The ATMs were not working, so I went inside the bank to withdraw. I was told that the maximum I could withdraw over the counter was ₦5000. After nearly two hours, when it was my turn, the cashier told me they had run out of cash.”
Frustrated and desperate, he told the bank cashier that he was headed to Owerri and needed cash for his transport fare.
“I begged him, and he asked me to sort a wad of ₦50 damaged notes at the counter to see if I could get good notes. That’s how I got ₦3600.”
As Nigerians struggle to access cash for their daily transactions, many are turning to POS operators. However, this is proving to be difficult as operators do not have easy access to the new currency notes.
“The recent process is stressful, getting cash is a problem, and meeting customer demand is another problem,” Babatunde Balogun, a POS operator in Lagos, told Neusroom.
“Before now, getting cash from the bank for our business was seamless. We had access to ₦150,000 from ATMs and up to a million naira and more over the counter,” he added.
Due to naira scarcity, many POS operators have increased their charges, putting a strain on customers.
Neusroom found that some operators have raised their fees by more than 10 percent.
“Some operators are charging as high as 20% per thousand naira withdrawal just to make a substantial profit for themselves,” Balogun said.
Obinna, a student at the Federal University of Technology, Owerri, said he was charged ₦400 for a withdrawal of ₦4,000.
There are reports of people selling their new naira for old notes at exorbitant prices. As the situation continues to worsen, some Nigerians have taken their frustrations into banking halls, with fights and verbal abuse reported in various banks across the country by people who accuse banks of hoarding the new notes.
Three days after Emefiele blamed Nigerian banks for the scarcity of the notes, the Independent Corrupt Practices and Other Related Offences Commission (ICPC) on February 3, 2023, arrested the Branch Service Head of Stanbic IBTC Bank, Deidei Branch, Abuja, for “either willfully or maliciously refusing to feed ATMs with cash” after receiving cash around 11:58 AM.
Nigeria’s President Muhammadu Buhari, in a statement made via his official Twitter account on January 3, 2023, said that his administration is doing everything to resolve the issues before the February 10 deadline.
“All the complaints about the execution of the currency change are being seriously looked into. I will ensure that everything is resolved in a lasting manner, and we will all enjoy the long-term benefits of the decision,” he said.
