Bank / Credit Union

Nigeria's cashless experiment leads to chaos

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February 14, 2023

Nigeria has attempted to get its citizens to replace old fiat currency with new notes and to deposit all old notes at the bank. Although the Central Bank of Nigeria did this to fight inflation, counterfeiting and promote a cashless society, it has led to chaos as citizens are unable to pay for basic goods, according to a BBC report.

Multiple residents told the BBC that they were unable to purchase food or take the bus because they cannot access their old bank notes, and the new bank notes are not available yet.

"They made us put all our money into our accounts, and now we can't access it. It's unbearable," Osarenoma Kolawole told the news outlet.

The Central Bank redesigned the higher denomination notes of 200, 500 and 1,000 naira to prevent hoarding and get the money back into the system. There have been long lines outside of banks as citizens attempt to get access to new fiat currency.

In the meantime, citizens have often been unable to make online payments and transfers due to the fact that the infrastructure isn't sufficient to sustain it.

"The whole idea was to limit how much cash people have access to, in order to encourage them to make digital payments, so they [CBN] can monitor where money goes," Paul Alaje, a senior economist at management consultants SPM Professionals, told the BBC. "But Nigerian banks don't have the capacity or structure to make digital payments work seamlessly."

In Nigeria, 40% of the population do not have bank accounts. Citizens are calling on President Muhammadu Buhari to take action.