By Cyril Ogar
Nigeria is staring at chaos as ATMs in Africa’s biggest economy run out of new notes, days before a deadline that will render high-value currency illegal. Hundreds of people have been stranded at popular electronics market in the heart of Lagos, victims of the chaotic rollout of a policy to redesign the naira. Residents are allowed to withdraw a maximum of 20,000 naira ($43) but many ATMs are not dispensing any cash.
In the last few months, the economic situation in Nigeria has been challenging for many Nigerians. Two main issue- the fuel scarcity and the naira redesign policy have dominated discussions in Nigeria within the last few weeks.
While the naira redesign policy was an initiative of the Central Bank of Nigeria to check counterfeiting of currencies, hoarding of banknotes by members of the public, as well as check worsening shortage of clean and fit banknotes; the issue of petrol distribution came to the fore at a time when the CBN policy was being implemented.
Nigerians spent hours searching in vain for an ATM dispensing new naira notes as a February 10 deadline looms. The cash shortage is hitting commuters
Since the CBN announced the naira redesign policy few months ago, there had been criticism on the withdrawal of the old N1,000, N500 and N200 notes. This is because the move has caused a huge cash shortage in the economy.
The CBN Governor, had last month said the apex bank had withdrawn N1.9trn from the system while only N300bn of the new notes have been printed and distributed to the banks.
Nigerians only have until February 10, 2023, to deposit the old notes in banks. But getting the cash has been a war for households and businesses.
The inability of many Nigerians to get the much-needed cash from banks may have led to slowdown in economic activities.
The scarcity of cash currently being experienced as a result of the implementation of the new Naira redesigned policy has forced Point of Sale Operators to impose a charge of N1,000 on withdrawal of N5,000.
In the city centre of Abuja and within the satellite towns, the charges were imposed by the POS merchants as a result of the paucity of cash in most of the banks.
While many of the POS terminal visited had their shops locked because of shortage of cash, the few that operated imposed very huge charges on cash withdrawal.
In Bwari for instance which is about 35 kilometers to the city centre, many of the POS operators charged between N1,000 and N1,500 for withdrawal of N10,000 while for N5,000 withdrawal, the sum of between N500 and N700 was imposed as transaction charges
Coincidentally, the announcement of the CBN to implement the naira redesign policy came at a time when Nigeria is experiencing distribution challenges in the supply of Premium Motor Spirit
While some are beginning to mix up the issue of naira redesign policy with the petrol supply gap, it must be stated that both issues are completely different.
Those conversant with the dynamics of global trade know that since last year February when the Russia-Ukraine began, there had been very cumbersome logistics nightmare everywhere in the world.
Meanwhile, the NNPC Ltd moves 1,800 trucks every day on the road on a consistent basis. Today, based on the records on the NNPC system over 38,000 trucks are on Nigerian roads just carrying petroleum products and this is the reality.
It is also instructive to state that no matter what the NNPC and regulators do, once there is a petrol supply gap caused by logistics, arbitrage and other issues, some people will take advantage of it.
Those saying that the fuel crisis is meant to sabotage the election should know that these glitches started well early in 2022. It has nothing to do with this election period or the naira redesign policy.
Once there is a challenge caused by arbitrage and logistics, it becomes a cyclic thing for regulators and the operators.
Currently, Nigeria’s redundancy in terms of petroleum product supply is just three days. But when there is a glitch that extends longer than three days, then it would require another three weeks to stabilize it.
So, irrespective of what the NNPC does, whatever causes a three days glitch is a nightmare to tackle and that is why steps are usually being taken to avoid glitches from happening.
Currently, the NNPC has takennall the necessary measures to tackle the issue of fuel scarcity as the National Oil Company is capable of living up to its mandate of bridging the energy gap as there is a sufficient quantity of PMS that can carry the country for 28 days at 60 million litres per day.
The oil giant has also embarked on road projects outside its mandate to endure motorable roads for trucks to move petroleum products.
The NNPC is also engaging partners, including the regulatory authorities, the security agencies, and it’s commercial partners to make sure that these fuel leave the mother vessels all the way through the depots into the trucks and all the way to the filling stations.
Some of the things the NNPC has done have actually addressed some of these challenges. Many roads that have been abandoned for five to ten years are now motorable.
The fuel queues have also disappeared across major cities of the country.
This is as a result of adequate supply of petrol by NNPC Ltd to filling stations.
It must also be noted that despite the current naira redesign policy which had led to shortage of cash, it did not affect people’s ability to purchase fuel as many Nigerians buying petrol from filling stations now use POS machines to pay for the product.
With the sustained attempts by the NNPC in partnership with security agencies to check arbitrage, Nigerians can begin to breath a sign of relief that the issue of petrol scarcity has been nipped in the bud.