Large-scale protests took place in Nigeria as citizens attacked banks and ATMs amid a cash crunch in the African country, reported News Express Nigeria on Tuesday.
Nigeria has been struggling with a shortage in cash since the Central Bank of Nigeria began to swap old bills of the local naira currency for new ones, reported The Guardian. The decision to demonetise 200, 500 and 1,000 naira notes was announced in October and the last day to hand in notes was set to January 31. However, the deadline was extended to February 20 due to the unavailability of new notes.
Banks still have limited access to cash for withdrawals as there is a scarcity of new notes even as some businesses refuse to accept the old currency. This has resulted in huge queues outside banks, angering customers and disrupting businesses.
The protests that began earlier this month come ahead of general elections to be held on 25 February during which the country will pick the successor to President Muhammadu Buhari, who will step down after two terms.
On Monday, the police said that 10 branches of commercial banks were destroyed by protestors in Ogun state, according to News Express Nigeria. The protestors also torched the council secretariat and an electricity distribution station.
After torching the banks, the protesters barricaded the Sagamu-Benin expressway, bringing the traffic to a logjam, reported Pulse Nigeria.
Some protesters also stripped themselves naked and shouted slogans.
A video on Twitter showed a naked customer demanding to close his bank account after the employees refused to give him more than 20,000 naira, according to Mint
Soon after the protests had begun, the police had described them as actions by “misguided youths” while the government blamed the Opposition behind the attacks.
As the protests grew, the Supreme Court took up the matter and ordered that the deadline to hand in old notes be extended.
The decision to demonetise the currency has been done in a country where 40% of the population do not have bank accounts, according to the BBC.
The central bank was aiming to target black money in circulation, 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 aim to make a cashless society has, however, faced hurdles as residents are facing difficulties in making online payments and transfers.
Analysts told the BBC that the country’s infrastructure is not robust enough to support digital payments.
“The whole idea was to limit how much cash people have access to, in order to encourage them to make digital payments, so they [the central bank] can monitor where money goes,” Economist Paul Alaje told the British broadcaster. “But Nigerian banks don’t have the capacity or structure to make digital payments work seamlessly.”
Individual bank branches too have been accused of hoarding cash. Raids by anti-fraud bodies had found that bank branches were hoarding new notes even when they were directed to put them in ATMs and give them to customers.
“The banks are not doing a good job distributing the money,” said Economist Dr Yemi Makinde told the BBC. “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.”
This has resulted in paucity of cash among those who need money on a daily basis such as market sellers and hawkers.
Meanwhile, Central Bank of Nigeria Governor Godwin Emefiele has said he has taken steps to get more new notes into the system.
Demonetisation in India
The cash crunch in Nigeria mirrors the situation that prevailed in India following the Centre’s decision to demonetise Rs 500 and Rs 1,000 currency notes in November 2016. Prime Minister Narendra Modi had said that the decision had been taken to “fight corruption, black money and terrorism”.
Soon after the decision was announced, several persons, many of them elderly, had died while standing in long queues to exchange their money.
Residents had found it tremendously hard to make do without cash. In Maharashtra, for example, people were unable to buy medicines or pay for treatment because the exemption allowing old notes to be used at hospitals only applied to government facilities.
Adivasi villagers outside Mumbai were forced to eat just rice, with no vegetables, because their money had become useless in the market. Women who were not in the banking system were hit hard. Wage workers were either stuck without pay or given older notes, and many of them working in other states had to return home because employers were simply unable to withdraw currency notes to pay them.
Food markets froze, with commodity prices staying stable because barely any actual buying or selling took place. Small and medium enterprises in Punjab registered an 80% drop in production, and saw hordes of labourers returning home without any work or pay.
The demonetisation decision was challenged before the Supreme Court but it was upheld in a 4:1 majority verdict in January this year. The Supreme Court said that the demonetisation exercise cannot be struck down on the grounds of proportionality or on the process followed to make the decision.