Naira Redesign: Nigerians Grapple With Hardship As PoS Transaction Charges Jump 400%

As the scarcity of the new Naira notes stifle economic activities, PoS operators raised charges on transactions by 400 per cent.

As the Central Bank of Nigeria’s Naira redesign policy bites harder, the scarcity of new notes continues to disrupt business activities in markets, restaurants, banks, and major sales outlets across Nigeria.

In the midst of the operational challenges being faced by small businesses especially in rural areas, a PREMIUM TIMES’ survey showed that Point of Sale (PoS) transaction charges jumped 400 per cent in most cities across the country last week.

The impact of the CBN policy and its attendant chaos have frustrated efforts by many Nigerians operating in the nation’s cash-dependent informal economy to do business, make payments, and enjoy certain services.

PREMIUM TIMES’ findings showed that while the poor circulation of the new notes stifle economic activities, PoS operators have also had a hard time getting both the old and new notes from the banks in recent weeks. Some PoS agents who spoke with PREMIUM TIMES within the week said that their inability to access cash has stalled their operations, while operators who struggled to get cash blamed the hurdles they encountered at the banks for the increase in transaction charges.

Across some of the mobile money cash points visited in Lagos, Abuja, and other major cities, our reporters observed that charges on transactions have skyrocketed by over 400 per cent.

In other places, PoS outlets were shut as operators complained of scarcity of both the old and new notes.

Scarcity

The CBN on 26 October, 2022, announced the introduction of redesigned 200, 500 and 1,000 naira notes into the financial system. But since the notes were unveiled, Nigerians across different parts of the country have had a hard time accessing it from banks and ATM points.

Last week, amid the chaos caused by the scarcity of the new notes, the CBN extended the deadline for the phasing out of the old notes from 31 January deadline to 10 February. Despite the extension, many Nigerians working in the informal sector of the economy have had to scramble for the new notes while others lamented their inability to withdraw their hard earned money from their bank accounts.

There have equally been allegations of hoarding on the part of the Deposit Money Banks, while some mobile cash point vendors are said to be exploiting the situation by dispensing the new notes to customers at skyrocketed prices.

On Friday, the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, asked Nigerians to be “patient and join the bank queues” to access their money.

Meanwhile, President Muhammadu Buhari during a meeting with the Progressive Governors’ Forum also urged citizens to give him seven days to resolve the cash crunch that has stifled productive engagements across the country.

As Nigerians besieged commercial banks nationwide to access cash, several videos have surfaced online showing frustrated customers vandalising bank properties due to their inability to get cash from the banks’ ATMs.

In the midst of the melee, anti-graft agencies and the State Security Services ( SSS) have equally arrested a number of citizens caught hawking the naira notes.

Despite the government’s best efforts thus far, the chaos has worsened the hardship being faced by Nigerians in major cities and rural communities as the new deadline for the phasing out of old naira notes approaches.

Frustration

In Nigeria’s capital city, some of the PoS outlets visited within the week were under lock and key, while some that were open jerked up their charges for cash withdrawals and transfers.

At Lugbe Zone 6, Aina Wale, a PoS operator charged N800 for each N5000 cash withdrawal due to the scarcity of the naira notes.

“Banks are not dispensing enough naira and this makes it very difficult for us to access the notes,” he said. “We don’t plan for this, but it became necessary to do because we are now using money to collect money in banks.”

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Another operator in the area, who refused to have his name mentioned said that the banks are not giving out cash to customers despite the long queues in their branches.

“We don’t get the cash again,” the POS vendor lamented, adding that he had to offer a ‘bribe’ last Wednesday before a bank official offered to provide cash for him.

“I said to myself I can’t stay here. Could you believe that when I entered the bank there were queues also but I went straight to a bank official to help me out and the lady told me that she will collect some percentage which I agreed to and I was able to get just N20,000,” he said.

Another POS operator at Zone 5, Peace Okoye, complained that operations have been difficult because of the scarcity of new and old notes.

“Bank is not giving cash and today I went to that ATM in Lugbe Shoprite and it was the same thing. There was a long queue. Only one ATM was dispensing and it was dispensing just N2,000 and the highest you can withdraw there is N20,000 which means you have to withdraw 10 times before you can get the N20,000, people were much and I left,” Ms Okoye explained.

“No access to cash, so the thing just weakens me. If I have access to cash I would have made money this season.”

Kapwa, Apo

At the Kapwa axis of Lugbe along airport road, PREMIUM TIMES also observed that several POS vendors’ kiosks were shut.

A POS operator at Kapwa who identified himself simply as Lukman, said he has not been operating for the past five days.

“We don’t have cash. Withdrawals have been very difficult at banks and ATMs,” he said.

Most PoS outlets were also shut in the Apo resettlement area of Abuja as operators blamed scarcity of cash for their inability to meet customers’ needs.

They also alleged that bank officials give them both old and new naira notes at a fee, hence the reason behind the increase in charges on withdrawal.

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Daniel Atuluku, an operator at the fish market, charges N600 on every N5,000 transaction, he told PREMIUM TIMES.

“The man (banker) only gives me N300,000 daily and if I give people any amount they want, it wont go round. The first day I tried it, the money didn’t last up to 30 minutes” he said.

“Even with that, I can’t serve customers for the whole day and the stress my brother and I go through daily to get access to the man is another thing.

“When people talk about the charges, they think we are making a lot of money from it but we sincerely pray this ends soon because we also suffer the same thing as the people.”

Benin

PoS agents who spoke with this newspaper in Benin city, the capital of Edo State, described the cash crunch in the city as a “big problem”.

A PoS operator who identified himself as Abdul said many PoS agents in the state are now taking advantage of the situation to extort Nigerians.

“We POS agents have now taken advantage of the situation. Although I can’t blame them because they are now buying cash from either bank managers or agents of bank managers as if they are buying tomatoes in the market,” he told PREMIUM TIMES in a telephone interview.

He alleged some agents are displaying both the new and old notes for sales like book vendors in the market. Mr Abdul claimed that among PoS operators, N100,000 new notes are being exchanged for N150,000 in Benin while the old notes of same amount are being exchanged for N120,000.

“People are still buying it from them, and most of the buyers are PoS agents. So they will now increase withdrawals and transfer charges to make up for the extra cost of buying the currency,” he explained.

Mr Abdul lamented that ATMs of top banks like Zenith, Access and GT banks in Benin are not dispensing cash unlike others like Union and Keystone banks.

“Even the ones dispensing are rationing the cash. The maximum withdrawal is N20,000 and the stress is just too much,” he said.

Similarly, another PoS agent, Hauwa, who does cash transactions at Aviele community in Auchi, said that she was discouraged by the queues at banks, in addition to the low amount of cash being paid to customers by banks.

“The major thing now is that there is no money. Agents who have cash are charging N100 per N1000 (old currency) and N200 per N1000 of new notes,” she said. Based on this, she said she has not been able to make any transactions within the past few days.

Lagos

In most places in Lagos, the nation’s commercial nerve center, PoS operators charged N100 for every N5,000 withdrawal before the new policy was introduced.

But PREMIUM TIMES found over the weekend that the charges have been jerked up to an average of N500. Similarly, PoS operators that charged N200 on every N10,000 transaction now charge an average of N1000 or more.

At the Ojodu area of Lagos State, a PoS operator who identified herself simply as Sandra told PREMIUM TIMES that the charges skyrocketed because of the difficulty experienced at the banks.

“It’s difficult to get cash, whether old or new notes, at the bank,” she said. “In some instances, we have to beg and bribe bank people and we also have to factor in those extra fees into our charges.”

In most parts of Igando and Ijaiye areas in the state, residents told this newspaper that many PoS outlets were shut as they scramble for cash.

“Sales have been very dull since this trouble started because people don’t have cash, including even salary earners who have money in their accounts,” Bisi Aina, a trader in Iyana-Ipaja area of the state, told PREMIUM TIMES Sunday evening.

Double whammy

The chaos caused by the cash crunch has been worsened by the hardship inflicted on Nigerians due to a lingering fuel crisis. In recent months, the scarcity of petroleum products across the country has stifled the operations of businesses that depend on generators for power supply.

Despite the government’s repeated claims that the nation has enough supply, the scarcity has persisted amid a poor supply of electricity across the country.

In addition to the massive disruption in economic activities, the crisis has led to an unprecedented spike in the cost of essential goods and transportation services across states in the country.

Last Tuesday, President Muhammadu Buhari approved the constitution of a 14-member steering committee to address the supply and distribution of petroleum products across the country.

The Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), also attributed the lingering fuel scarcity in the country to a disruption in the product distribution chain caused by the activities of cross-border smugglers.The agency also claimed that there is petrol sufficiency of over 1.6 billion litres as of 26 January both on land and marine.

On Tuesday, Nigeria’s chief of defence staff, Lucky Irabor, warned that the scarcity had become a ‘security concern’ and ‘nobody is indispensable’ in bringing a solution to the problem.

On Friday, the Nigerian government said it is working towards finding a lasting solution to the lingering petrol scarcity across the country.

Despite the government’s position, PREMIUM TIMES’ found that Nigerians have continued to suffer from scarcity of petrol across the country, especially in the nation’s commercial nerve center, Lagos.

As the cash crunch inflicts more pains on Nigerians, many angry Nigerians are taking to the streets to vent their frustration.

Protests, tension

On Friday, a protester was killed in Ibadan as security officers clashed with a group protesting scarcity of fuel and new naira notes in Apata area of the capital of Oyo State.

Protests have been going on in many parts of the city since Friday as mostly young people expressed their frustration over the scarcity in the state.

A group of protesters also attacked the Oyo State governor’s office when security agencies attempted to deny them access to speak with the governor.

Subsequently, on Saturday, soldiers and police officers were deployed to major areas where protests were taking place but the protesters in Apata refused to stop their protest when the security officers approached them.

Similarly, residents of Uvwie and Warri South Local Government Area of Delta State, on Friday, took to the streets to protest against lack of access to the naira.

The protest forced some banks to suspend activities and scores of market women barricaded the Warri-Sapele Road and NPA Expressway.

While tension rises in both states amid scarcity of the new notes, and amid fears that the violence could spread to other states of the federation, Nigerians await the impact of the CBN and Nigerian government’s intervention in addressing their pains this week.

Mr Buhari last week urged Nigerians to give him seven days to address the hardship and other concerns generated by the new notes scarcity.

Experts Speak

In his intervention, an Abuja-based economist, Razaq Fatai, urged the CBN to allow both the new and old notes as legal tender until there are sufficient new notes in circulation.

“They should temporarily allow both the old and new notes as legal tender until they are able to inject sufficient new notes into the system,” Mr Fatai said.

He said the CBN also needs to step up their supervision of deposit money banks to ensure effective circulation of the money to citizens as soon as possible.

“This is not the time to keep money in the vaults,” he added.

On his part, Onofiok Kings, a financial expert, said a lot of Nigerian politicians are not happy with the naira redesigning policy because of illicit motives and vote-buying culture.

“Basically, most politicians aren’t happy because they still have a lot of cash stacked up to use for bribe during the forthcoming elections,” he said.

“Even though it’s affecting the masses, I’m happy with this decision of lack of circulation that is if it’s really being strictly controlled.”

PREMIUM TIMES