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Anger and chaos outside banks in Nigeria

People in Nigeria have taken to sleeping outside banks. They want to be among the first in line to get notes from the cash machine once it is loaded up in the morning.

A lack of newly designed naira notes has led to a cash shortage and a growing sense of anxiety among those desperate to get hold of their money in a country where 40% of the population don't have bank accounts.

The Supreme Court has even become involved and has ordered that the deadline to hand in old notes be extended but this has made little difference.

People here have long been used to the periodic bouts of fuel shortages leading to long lines of cars snaking from the petrol stations. But now long lines of frustrated, confused and angry people have become a common sight outside banks as the country builds up to a presidential election at the end of the month.

"I have not eaten today," says Abraham Osundiran, 36, as he stands in one of two queues at a bank in Ikoyi, a district in the country's main commercial hub, Lagos.

He has had to miss work at a construction company for a second day because he does not have the cash to pay the taxi fare. Some Nigerians have embraced digital payments, but many still rely heavily on cash.

"I don't have any cash. I've had to skip breakfast so I could come here, and I don't know what I will eat for the rest of the day."

It is a similar situation for many others.

"It's painful. I can't go to the market, because they want cash. Buses want cash - now I have to trek everywhere," hairdresser Lilian Ineh, 26, tells the BBC from her salon.

"There's no money to buy stock, so I have less products to sell. There are even less customers. Usually on a Saturday I have a minimum of five."

Last Saturday, she only had two.

Nigerians were told last October that the old notes were being replaced with new notes and they were encouraged to deposit any cash savings in the bank.

"They made us put all our money into our accounts, and now we can't access it. It's unbearable," says Osarenoma Kolawole, 40. She works in telesales, but has not been able to access her salary since getting paid last week.

"The last time I went to the shops, I had to buy eggs instead of fish - that really hurt me - not the food, but having to buy what I didn't want to, just because the banks won't let me get my money."

The Central Bank of Nigeria (CBN) said it redesigned the higher denomination notes - 200, 500 and 1,000 naira - to replace the dirty cash in circulation, to tackle inflation, curb counterfeiting and promote a cashless society.

It hoped the redesign would bring some of the money being hoarded by individuals and companies back into the financial system.

The reform has created something like a cashless society - but not in the way the CBN had planned.

People have been finding it difficult to make online payments and transfers. Analysts say the infrastructure to support a digital system is not robust enough.

"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," says Paul Alaje, a senior economist at management consultants SPM Professionals.

"But Nigerian banks don't have the capacity or structure to make digital payments work seamlessly."

The CBN has not said whether the shortages are deliberate.

"The government has been trying to move the country into a cashless economy for ages," argues policy analyst and economist Yemi Makinde.

"Its intention is good, but it is just not feasible, the banking systems were not ready and Nigeria is just used to cash."

When announcing the redesign, the CBN said the new notes would begin circulating from 15 December and the old notes would cease to be legal tender at the end of January.

The bank then extended the deadline to last Friday. But the Supreme Court stepped in and suspended this deadline but the queues outside banks remain.

"The only way this judgment would work is to release old notes back into system to meet the shortage [but] doing that will only take us back to square one," says economist Mr Alaje.

Accusations of hoarding

Many have also blamed individual bank branches.

Firstly, they were still giving out the old notes rather than new ones, even up to the week of the initial deadline, thereby keeping them in circulation.

Secondly, agents from the country's anti-fraud body, the Economic and Financial Crimes Commission, raided some bank branches and arrested managers who were accused of hoarding the new notes in vaults rather than putting them in cash machines and giving them to customers.

"The banks are not doing a good job distributing the money. Bank managers have been keeping a lot of the money aside for people with connections and for the rich, misusing the central bank's policy," Dr Makinde says.

As a consequence, the lack of new naira notes has hit those who primarily deal with cash day-to-day, like market sellers and hawkers.

Iya Ruka, 52, sells plantains at a market in Ojodu Berger, Lagos. She has had to adapt by accepting bank transfers - but this has not helped her when she needs money.

"All my customers are saying they don't have cash, they will pay using a bank transfer, but I go to the bank and there's no cash for me to collect. So what do I do?"

Further down the street, Kingsley, who only gave his first name, sells mobile phone accessories.

The 27-year-old told me he has hardly sold anything in the last few days.

"People only pay [by] transfer. If I want to get home, I need to go to a Point of Sale (POS) to get money and they charge a lot now."

POS vendors are individuals standing at street corners who have a card machine and can make transfers for people, but often charge a commission.

They have been accused of fleecing ordinary people by charging extortionate amounts for cash withdrawals.

'Things will get better'

One vendor, who spoke on condition of anonymity, defended the need to charge extra.

"I queued for an entire day at a bank to get new notes and old notes. That's why they must pay, because we queue," says the 25-year-old, who runs a kiosk in Lekki.

She adds that she is not sure how much longer she will be able to keep up the business, as the banks run dry.

"Some customers can get angry and nearly violent - I just avoid looking up at them. They forget I'm suffering as well, like now, I have to trek for an hour home, and I have only been eating garri [cassava flakes]."

CBN Governor Godwin Emefiele has said he has taken steps to get more of the new notes into the system with the aim of easing the situation.

The chaos has become a major election issue with calls for President Muhammadu Buhari to take action to avoid losing votes for the ruling All Progressives Congress.

Despite the crisis, there are a few people, especially those who managed to plan well ahead, who have not felt the crunch just yet.

Ruth Okeke, 35, runs a convenience shop in Omole. She says even though her number of customers has dropped, she is not worried.

"I know things will get better. The bankers are the ones making money from all this panic, but there will be new notes soon, everybody should relax."

By Simi Jolaoso, BBC

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President Buhari sets transition to a new leader in motion

Nigerian President Muhammadu Buhari on Thursday signed an executive order setting up a council to facilitate transition to a new president who will emerge after a Feb. 25 election.

Buhari, 80, who is constitutionally barred from contesting the election, is serving his second and final term. He becomes the second Nigerian leader to complete two terms in office since the end of military rule in 1999.

A new president will be sworn in on May 29.

"The new Executive Order puts in place a legal framework for the seamless transition of power from one Presidential Administration to another," Buhari said in a statement.

He said Nigeria's secretary to the federation would chair the transition council, which will be launched on Tuesday.

Three main candidates, Bola Tinubu from the ruling party, Atiku Abubakar of the main opposition party and Peter Obi from a smaller party are the top contenders vying to succeed Buhari.

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Fuel and cash shortage in Nigeria rile voters ahead of election

At a fuel station in Nigeria's commercial capital, tempers flare and harsh words are exchanged as motorists wait in line for hours to fill up their tanks at one of the few outlets with petrol left in the vicinity.

Across the road, young men drenched in sweat from the sweltering Lagos heat sell petrol in plastic containers at more than double the regulated pump price.

Recurring fuel shortages in Africa's top oil producer are adding to voter frustration as Nigeria prepares to hold presidential and parliamentary elections on Feb. 25. They are a stark example of the economic hardships that have dogged Nigeria for years, including surging inflation, widespread unemployment and acute shortages of foreign exchange that have severely weakened the naira currency.

"People are suffering; there is no money; there is no food," said Titus Nwafor, a 53-year-old bus driver as he waited to fill up at the Lagos station.

With elections around the corner, he expressed frustration with the candidates, who he said were "blaming this, blaming that" without offering any solutions.

President Muhammadu Buhari, who will be stepping down in May after serving his constitutionally allowed two terms, promised to revive the economy and improve livelihoods when he took office in 2015.

He has prioritised state-funded infrastructure, investing billions of dollars in new roads, bridges, airports and rail.

Nigeria's poor transport and power networks have stymied economic growth for decades, holding back the distribution of wealth in Africa's biggest economy where 63% of people live below the poverty line, according to the national statistics bureau.

Building infrastructure has, however, come at a cost.

Nigeria's foreign debt has risen fourfold to $40 billion under Buhari, and the budget deficit has widened every year. The government spent 98% of the revenue it collected in 2022 on debt servicing, finance ministry data showed.

Buhari has also pushed protectionist policies, including import bans on the staple rice. This initially spurred local production, but spreading insecurity is hurting farmers' ability to plant, while the high cost of fertiliser and diesel have pushed the price of a 50 kg bag of rice nearly 90%, to 55,000 naira ($120) last year.

In 2017, the central bank introduced a multiple exchange rate system to avoid devaluing the naira currency, but this has contributed to dollar shortages, and the local unit has weakened to record lows against the greenback on the black market.

A central bank decision to replace old banknotes with new ones - part of an initiative to curb cash in circulation and control double-digit inflation - has caused huge controversy because there are not yet enough new notes in circulation. Enterprising Nigerians are selling cash at premiums of up to 20%.
 

GETTING WORSE

While Buhari says his government has been laying the foundations for a stronger economy, many Nigerians complain that economic conditions have worsened on his watch.

The country has weathered two recessions since 2016, driven by crude oil price slumps, hard currency shortages and the COVID-19 pandemic.

Economic fallout from the war in Ukraine and heavy flooding last year pushed inflation to its highest level in 17 years, further squeezing consumers in a country where 33% of job seekers are unemployed.

Oil is the biggest foreign exchange earner, but rampant crude theft in the Niger Delta and years of underinvestment have hurt output and strained government finances. For a few months last year, Angola overtook Nigeria as Africa's biggest oil producer and exporter.

Nigeria relies on imports for nearly all refined fuels. Its state refineries have produced little or no fuel over the past decade due to poor maintenance, and a refinery being built by Nigerian billionaire Aliko Dangote has been beset by delays.

Fortune Alfred, who makes a living driving for the Bolt ride-sharing business, had to park his car at home after spending six hours in a fuel line in Nigeria's southern oil-producing Rivers state. When he reached the pump, fuel had run out.

"The economic situation at the moment is worse than the early days of Buhari, the 40-year-old said. "The hardships have been created by failure of government."
 

CANDIDATES PROMISES

Amaka Anku, head of the Eurasia Group consulting firm's Africa practice, said Nigeria's economic woes had "created this very high anti-establishment sentiment".

That is propelling a presidential candidate, the Labour Party's Peter Obi, who is mounting a challenge to the two parties that have dominated Nigeria since the end of military rule in 1999.

"Obi will do better, and I hope he is able to resuscitate this country and not let it drown even further," said Ruth Geku, a 21-year-old street food seller in Yenagoa city, Rivers state.

However, there are few major policy differences between Obi and his establishment rivals - Bola Tinubu of Buhari's All Progressives Congress and Atiku Abubakar of the main opposition People's Democratic Party.

All have promised to reform the economy, including ending the multiple exchange regime and a fuel subsidy that cost the government $10 billion last year.

But that has proven difficult in the past. Nigerians say cheap fuel - at 184 naira ($0.40) a litre - is one of the few benefits they get from their government.

By Tife Owolabi in Yenagoa, Reuters

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