Amid the crisis trailing the naira redesign, angry traders have begun to defy the Central Bank of Nigeria’s order banning the use of old N1,000 and N500 notes as legal tender in the country.
Findings by our correspondents over the weekend and on Monday revealed that some traders had started accepting the old currencies in exchange for goods and services at a premium.
This came barely two weeks after the President, Major General Muhammadu Buhari, retd, during a national television broadcast ordered the CBN to re-circulate the old N200 notes.
Buhari’s directive followed the expiration of the February 10th deadline stipulated by the apex bank for the phasing out of old notes. The president also stopped the use of old N1,000 and N500 notes as legal tender.
However, following a mass protest over the scarcity of new notes, the CBN ordered Deposit Money Banks to begin the collection of old N1,000 and N500 notes from their customers, even while they remain a non-legal tender.
However, the latest findings have shown that traders have started accepting the old N500 and N1,000 in exchange for goods and services despite the government’s ban of them as legal tender.
A trader at Oshodi, Lagos on Sunday offered to sell a bottle of soft drinks for N300 if the buyer would pay with old notes. The regular price is N200.
The potential buyer, Andrew Nonso, who was visibly surprised, however, rejected the offer.
While replying to the seller, Nonso said, “You should clarify, don’t just say you will accept old N500, N1000 notes.”
Also, some traders at Suru market in Lagos offered to sell a pack of spaghetti for N1,000, if payment was to be made with old notes. The regular price is between N400 and N500.
Our correspondent also observed this practice among roadside traders at Orile, Lagos, especially at night.
Speaking with our correspondent on Sunday, a betting business operator, Toyin Aremu, said he survived in the last few days by collecting old notes.
He said, “If I don’t collect old notes, my family and I would go hungry. It is as simple as that. I had to start collecting the old notes. Thankfully, the banks are collecting them too, so they quickly leave my hand.”
On Monday, some of the few traders who opened for business at the open-air market in First Gate, Lagos-Badagry Expressway, called on passers-by to buy their products with old notes.
The CBN had declared that old N200, N500 and N1,000 notes would cease to be legal tender by January 31, 2023.
Following a public outcry, the date was extended to February 10, 2023.
Meanwhile, banks have been collecting old naira notes up to N500,000 a day.
Intending depositors were however expected to generate codes from the CBN website. Any amount above N500,000 is expected to be deposited at the CBN offices across the country.
Reacting to the development, a professor of Economics and Public Policy at the University of Uyo, Akwa Ibom State, Akpan Ekpo, said the traders were simply following the Supreme Court ruling on the matter.
The Supreme Court had on February 8 restrained the Federal Government from implementing the February 10 deadline for swapping the old naira notes with new ones.
However, the CBN reportedly ignored the Supreme Court order.
The injunction was sequel to a suit filed by Zamfara, Kogi and Kaduna states against the Attorney-General of the Federation on February 3.
Other states have joined the suit. At the resumed hearing last Wednesday, the Supreme Court fixed March for its final judgment on the naira redesign case.
Ekpo told media source, “If you go Supreme Court ruling, the old N1000 and N500 notes should still continue as legal tender.
“Then the president addressed the nation and said they should bring back old N200 notes, that was what caused confusion. If they are still collecting old N500 and N1000 notes, they are obeying the Supreme Court ruling.
“What has happened has impacted our economy. What has happened has led to a decline in our GDP. People are disenchanted, prices are very low and people aren’t interested in the supply or production of commodities. That is not good for the economy.”
Expressing concerns about how this will impact the banking industry, the economist said, “Another major problem is people will begin to lose confidence in the banking system. Already people don’t trust the government, it will be worse now and that will affect the banking system. Once people lose confidence in the banking system, it will be a problem for growth, because people will now keep money in their houses. It will take a while, maybe more education and awareness to bring back that confidence.”