Protests over cash shortage as Nigeria banknote switch looms

Feb 7, 2023, 1:07 PM | Updated: 1:40 pm

ABUJA, Nigeria (AP) — New clashes Tuesday between protesters and security forces in southern Nigeria left at least one person injured, amid demonstrations against a cash shortage caused by the West African nation’s push to rapidly phase out its old currency notes.

Protesters targeted facilities of some banks accused of withholding the new banknotes ahead of the Feb. 10 deadline for people to deposit their old paper currency and use the redesigned version instead. The exchange program started in late November.

Nigeria’s antigraft agency, meanwhile, arrested a bank manager that it said refused to dispense the new banknotes despite having 29 million naira ($63,000) in the vaults.

Other bank officials have been arrested in similar circumstances this week. The situation “indicates sabotage of the government’s monetary policy by some banks,” Nigeria’s Economic and Financial Crimes Commission said in a statement.

The Central Bank of Nigeria introduced the redesigned notes and new limits on large cash withdrawals to help recover about 85% of the total currency in circulation outside the banking system. It said this would also help curb money laundering and make digital payments the norm in Africa’s biggest economy, that’s currently largely driven by cash transactions.

But the push to replace the old banknotes with new ones has left very limited cash in circulation, causing frustration and anger for many people who spend hours at the banks attempting to withdraw their money.

The cash shortage, financial analysts say, has affected some critical sectors of Nigeria’s economy, has caused “significant hardship in both rural and urban areas” and has led to many business closures.

Small protests over the limited cash in circulation started during the weekend but escalated on Tuesday as people attacked bank facilities and workers while also blocking some roads. One of the protesters was shot as demonstrators clashed with police in southwestern Ogun state. The injured person’s condition was not immediately known.

“Some people were attacking banks. In the process, somebody was shot and we are yet to know whether the shot is from the police,” Abimbola Oyeyemi, the police spokesman in Ogun, told The Associated Press. Officers have been deployed to restore peace in volatile areas, he said.

The economic crisis in Africa’s most populous country comes less than a month before a key election that would see an unprecedented 93 million voters choose a successor for incumbent President Muhammadu Buhari.

At a meeting with the central bank authorities on Tuesday, Mahmood Yakubu, Nigeria’s election chief, expressed concerns the recent monetary policy could affect preparations for the election but authorities promised to ensure there is enough cash for the election commission’s use.

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Protests over cash shortage as Nigeria banknote switch looms