The International Monetary Fund (IMF) urged Nigeria’s Federal Government and Central Bank to extend the cutoff date for the use of the 200, 500, and 1000 naira notes as legal tender. IMF’s representative in Nigeria, Ari Aisen, on Wednesday said in a statement, “In light of hardships caused by disruptions to trade and payments due to the shortage of new bank notes available to the public, in spite of measures introduced by the CBN to mitigate the challenges in the banknote swap process, the IMF encourages the CBN to consider extending the deadline, should problems persist in the next few days leading up to the February 10, 2023 deadline.”
Meanwhile, the Supreme Court has temporarily stopped the Federal Government from banning the use of older 200, 500, and 1,000 naira denominations starting from February 10, 2023. This ruling was made by a seven-member panel led by Justice John Okoro, in response to a request filed by Kaduna, Kogi, and Zamfara States. On Wednesday, the three states requested a temporary injunction, which temporarily prohibits a party from taking a specific action until a full hearing can be held. As a result, the old naira notes will remain legal tender despite the February 10 deadline, until their request for an interlocutory injunction can be heard and decided. The main lawsuit hearing has been adjourned to February 15, 2023 by Justice Okoro.
Mr. A. I. Mustapha, the attorney for the applicants, successfully convinced the Supreme Court to grant the application to temporarily halt the implementation of the government policy. Mustapha argued that the policy has led to a dire situation close to anarchy in the country. He cited data from the Central Bank of Nigeria showing that over 60% of the population do not have a bank account and those who do have accounts cannot access their funds due to the policy. He warned that the situation, which is already severe and chaotic, will only worsen as more commercial banks are forced to close.
Banks close down as deadline inches closer
The cash shortage has worsened, with some banks in Akure shutting down due to worries about potential damage from demonstrations and confrontations with disgruntled customers. Protests have taken place in the capital cities of Ogun and Ondo, and in Sapon, according to reports, angry youths targeted First Bank, breaking windows and causing damage to the bank’s property.
There are also reports of people making a business from the long ATM queues. According to reports, people with no intentions to withdraw arrive at the ATM points as early as possible, pick numbers, join long queues and sell their slots to impatient customers in the same queue. They sell the slots for N500-N1,500 depending on their position on the queue.
As we earlier reported, POS agents continue to exploit the scarcity, charging withdrawing customers about 10-20% of withdrawn cash.
In other news, Sterling Bank has suspended transaction fees for all of its personal account holders and announced that it will be giving out free debit cards to its customers in its bid at encouraging e-banking and digital payment.
The CEO of Sterling Bank, Abubakar Suleiman, sent a personal email to Sterling’s clients, in which he acknowledged the challenges that many customers are facing. To support them, Suleiman announced that “From February 6th to 18th, 2023, our fund transfer services will be provided free of charge to all personal account customers. In addition, we are glad to inform you that we will provide free Debit Cards to all interested customers. This will provide you with a convenient and secure way to make purchases and carry out transactions.”
The announcement has been met with mixed reactions, with some individuals stating they will close their accounts in other banks that they perceive to be insensitive to the difficulties they have faced with the implementation of the new cash policies and the distribution of the new Naira notes.
Dante Martins, the CMO of Sterling, addressed the media regarding the program, stating that this is the first of its kind by a Nigerian commercial bank and encouraging other banks to follow suit. According to Martins, by removing transaction costs during this period and promoting the use of digital solutions, Sterling aims to provide its customers with a more convenient banking experience and reduce their dependence on physical cash.