(Bloomberg) -- Nigeria’s central bank increased the supply of banknotes to lenders to end shortages that have hampered individual and business transactions and crippled the cash-based economy since January.
Most lenders including United Bank for Africa Plc, Zenith Bank Plc and FBN Holdings Plc called in staff on Saturday and Sunday to help customers access cash in banks or via automated teller machines.
The disbursement, in compliance with a central bank directive, is being monitored “personally” by Governor Godwin Emefiele, according to spokesman Isa Abdulmumin. Residents should have unfettered access to cash within the weekly withdrawal limits and terms, he said by phone from the nation’s capital, Abuja.
Africa’s most populous nation was hit by a cash shortage late last year after the central bank began replacing old 200-, 500- and 1,000-naira notes with new ones in a bid to mop up excess liquidity, promote electronic-based payments and rein in inflation. Some state governors challenged the program in court and the Supreme Court extended a Feb. 10 deadline set to phase out old notes until year-end.
Although the court ordered the central bank to redistribute old notes amounting to 2.2 trillion naira, or 70% of cash in circulation, to ease shortage, residents still struggled to access banknotes as of last week as few banks and ATMs had supplies. It prompted the Nigerian Labour Congress, the umbrella workers union, to call for protests at central bank offices from March 29.
The improved distribution is expected to balance the supply and demand for cash in the economy and halt further impediments to personal and business transactions. About 90% of transactions in Nigeria’s informal economy are conducted using cash.
Citizens withdrew cash from automated teller machines in the business district in Nigeria’s commercial hub of Lagos on Monday without the usual long queues. “After what I went through in the past to withdraw my own money, what I see here today is like magic; it’s a big relief,” said Adebisi Erimipe, who withdrew 10,000 naira ($21.69) in old 500 naira notes within few minutes at Unity Bank Plc’s ATM located on the Island in Lagos.
The central bank will keep weekly withdrawal limits at 500,000 naira for individuals and 5 million naira for companies to discourage residents from holding excess money, Abdulmumin said. A processing fee of 3% for individuals and 5% for companies is charged for those seeking to withdraw cash above the limits.
(Updates with normalised cash access at payment channels in penultimate paragraph)
©2023 Bloomberg L.P.