Cash Scarcity Returns to Kano, Borno as Deadline Looms for Old Banknotes

As the December 31st deadline for the use of the old N200, N500, and N1000 banknotes approaches, a shortage of cash has reemerged in Kano and Borno states, according to a report by Daily Trust.

The Central Bank of Nigeria (CBN) had previously announced, in compliance with a Supreme Court order, that the old banknotes would remain legal tender alongside the redesigned notes until December 31st.

Former CBN Governor, Godwin Emefiele, had unveiled plans in October of the previous year to redesign the N200, N500, and N1,000 notes, advising citizens to deposit their old notes before January 31, 2023, as they would cease to be legal tender afterward. This led to a nationwide cash shortage in February, causing public distress, protests, and attacks on banks in some cities.

However, the Supreme Court extended the legal tender status of the old N200, N500, and N1,000 notes to December 31, effectively offering temporary relief.

But, two months ahead of the deadline, businesses in Kano and Borno states are grappling with a cash scarcity. A CBN official revealed that there were no immediate plans to phase out the old notes, but practical issues have resulted in reduced cash availability.

Point of Sales (PoS) operators, such as Abdullahi Usman and Bello Shehu, reported limitations on cash withdrawals from banks and have resorted to obtaining cash from alternative sources. They expressed concerns about the declining availability of cash in their centers.

Even though there were no long queues at most ATMs, it was observed that many of them were not dispensing cash. This cash shortage has forced many individuals and businesses to turn to online transactions.

In Borno State, residents, traders, and banks are feeling the impact of the cash crunch, with most transactions now reliant on limited cash. Even ATMs and PoS services had cash limits, and banks reported challenges in accessing cash from the CBN.

Bureau de Change operators in Abuja also confirmed the scarcity of the naira in recent days, with the issue getting more pronounced this week. They speculated that banks were mopping up cash in preparation for the December deadline.

However, the situation is different in southern states like Lagos, where there is no apparent cash scarcity, and business transactions continue without disruption.

The CBN has emphasized that both old and new banknotes remain legal tender, assuring Nigerians that there is no need to worry about the December 31 deadline. Phasing out the old notes will be gradual to avoid a repeat of earlier cash shortages.