Nigeria’s central bank has postponed phasing out old, high-value banknotes for 10 days amid criticism that millions of people have been unable to obtain replacements, putting business activity and livelihoods at risk weeks before presidential elections.
After a meeting with President Muhammadu Buhari on Sunday, central bank governor Godwin Emefiele said the 1,000, 500 and 200 naira banknotes, which were due to be pulled from circulation on January 31 and replaced by more secure designs, would remain legal tender until February 10.
The last-minute move comes as politicians intensify campaigning ahead of presidential elections on February 25. Buhari is standing down after two terms, and the candidate for the ruling All Progressives Congress, Bola Tinubu, has alleged that unnamed opponents are trying to use controversy over the rollout to sabotage his campaign.
The central bank announced a redesign of the three highest-value denominations last October to tackle counterfeiting and reduce the use of cash in Africa’s largest economy — although analysts say it is unclear how issuing new notes would encourage alternative means of payment.
The bank’s handling of the scheme has been criticised by politicians from across the spectrum as well as citizens in a country whose largely informal economy remains heavily dependent on cash.
The central bank only began supplying new notes to commercial lenders last month, leading to a shortage as the deadline approached. People complained banks were still issuing the old notes but that businesses, including shops, were rejecting them.
Many of the 210mn-strong population live in rural areas with no access to banks where they can exchange the old notes. A scheme to help them do so via banking agents in their communities was announced a week before the initial deadline.
Last week the central bank signalled it had no plans to adjust the schedule. “I don’t have good news for those who feel we should shift the deadline; my apologies,” Emefiele said on Tuesday.
Political pressure mounted over the weekend. Former vice-president Atiku Abubakar, presidential candidate for the opposition People’s Democratic party, asked for an extension to reduce the “financial consequences” for citizens, while parliament made a request for a six-month extension.
Speaker Femi Gbajabiamila threatened to arrest the central bank chief if he continued to decline an invitation to parliament to address the issue. Emefiele had been scheduled to address a parliamentary committee last Wednesday but did not attend or send a representative.
A spokesman for Abdullahi Ganduje, governor of the north-western state of Kano and an ally of the president, said a visit to the state by Buhari, scheduled for January 30 and 31, had been postponed because the governor was “deeply concerned with the hardship caused by the limited time given for halting the use of old naira notes . . . and security reasons”.
Rafiq Raji, a senior associate with the Africa programme at the Center for Strategic and International Studies think-tank, said the currency redesign had disrupted some politicians’ “vote-buying” plans ahead of the election. Politicians in Nigeria are frequently accused of providing financial incentives in exchange for support.
“The new currency voids old banknotes stored by politicians to buy votes in the upcoming general elections,” he said. They would be reluctant to deposit their old currency with banks for fear of raising questions about the origin of the funds, he added, and could be worried about being unable to obtain enough new notes because of cash withdrawal limits.
