The citizens of Nigeria, hit by a dramatic cash shortage after a failed reform, will be allowed to pay with their old notes until the end of the year. The Supreme Court of the country did so on Friday in the capital Abuja.
16 of the 36 states of Africa’s largest economy have complained that new banknotes are scarcely available, while the old banknotes of the national currency Naira should have been invalid since early February.
A large part of the approximately 220 million inhabitants could not afford food, medicine or the way to work. There were bank riots, deadly protests and a thriving black market.
Counterfeiting should be made more difficult
The central bank announced in the autumn that it would replace the notes in the highest denominations of 1000 (equivalent to about two euros), 500 and 200 naira. The stated aim of the reform was to make counterfeiting and money laundering more difficult and to give the central bank more control over the money in circulation.
Most old notes are privately hoarded outside of the banking system. The reform shortly before last weekend’s presidential election was also seen as a way to make voter buying, which is widespread in Nigeria, more difficult.
ATMs in Nigeria are empty
But the banks have been unable to keep up with the demand for new banknotes for weeks. For fear of being left with the money, many dealers stopped accepting old notes before the redemption period had expired. Those who had old cash credited to their account now often stand in line for empty ATMs with an empty wallet.
Neither the government nor the Central Bank of Nigeria initially responded to the verdict. On Wednesday, after an election marred by mishaps and allegations of fraud, election authorities declared the candidate of the ruling APC party, Bola Tinubu, the winner and successor to incumbent President Muhammadu Buhari. The opposition considers the election results invalid and wants to go to court.
Source: Krone
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