A market in Lagos
A market in Lagos

By Hamisu Muhammad

It was midday. I was hungry and very busy trying to catch up with some appointments. There was no time for me to go to the restaurant for launch. Suddenly, I saw a group of vendors selling snacks (Gala) and soft drinks and quickly parked. About three of them rushed to my car window, asking what I wanted. When I brought out N500 from my pocket, all of them looked reluctant and disturbed. I ordered for Gala and a bottle of soft drink, totalling about N150, but none of them had change. ‘Oga no change,’ they said. They even called the last boy at the shed, asking if he had change, and he responded the same way. At the end, I could not buy anything.’’ This was a narrative by Ibrahim Abubakar, a property agent, on his experience about the scarcity of lower naira denominations.

Many small scale businesses are facing similar challenges, missing a lot of transactions due to lack of change. The four snack vendors who had an encounter with Abubakar missed the chance to sell their products, and that affected their daily turnover.

Abubakar is just one out of many people who want to make one or two transactions but couldn’t do that due to lack of change.

The lower notes matter in a cash-based economy like ours, where about 90 per cent of our day-to-day transactions are made in raw cash and a large chunk of these transactions circulate among small and medium enterprises (SMEs). Mostly affected are small businesses, artisans, drivers, vendors and students.

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Usman Barde, a sachet water vendor in Kubwa, Abuja, said that in a day, he would ignore transactions worth N100. This means that about 10 people would ask for water but he won’t sell because of change.

Rita Daniel, who fries akara and yam at a junction in Area II, Abuja, said she was finding it difficult to make sales, not because people don’t want to buy but because there is no change.

It is the same story everywhere, including public transportation and kiosks.

It is difficult to single out any reason why the smaller naira notes are scarce. However, analysts have identified people’s attitude towards lower notes, short supply, dirty notes in circulations and huge volume of transactions in cash as some of the factors responsible for the scarcity.

It was gathered that in Nigeria, because of pride and inconveniences, people don’t like to do business with small notes and coins. But in other climes, it is very normal to do business and receive change in coins. It is said that some of the top class Nigerians collect change in coins when they travel abroad.

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It was further observed that in recent times, coins have disappeared as people no longer collect them. They are not even considered as legal tender despite the fact that they are still part of the country’s currency. N5, N10 and N20 are in notes.

Many companies that produce sweet, chewing gums, biscuits and other confectionaries rely on these smaller notes for their retail transactions.

A banker who simply identified herself as Ann told our reporter in Abuja that,

“People don’t collect old smaller notes from us. We used to collect from customers but they won’t collect from us. At the end of the day we would bear the cost. For now, we no longer collect them.’’

Also, Mr. Emeka Eze, a financial analyst, said if you keep depositing and not withdrawing, no matter how much notes are in circulation, one day it will become scarce. He said the Central Bank of Nigeria (CBN) should come with a policy to increase supply of the lower naira notes from time to time in order to salvage the situation.

For Dr Muttaka Usman, a senior lecturer in the Department of Economics, Ahmadu Bello University (ABU), Zaria, most people shun the lower naira notes from the banks because they are mutilated and dirty. They prefer higher notes because they are neat and easy to carry.

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He said the scarcity of lower notes could cause slow economic activities but not inflation.

“It will increase economic hardship because people will not sell their products due to lack of change,’’ he said

He, however, said that just because people are not collecting the notes from the banks would not cause scarcity because already, there are huge amounts of money in circulation.

He said most of the notes in circulation were smaller notes and are mostly found in the rural areas.

Mr. Eze also accused some bankers of hiding new naira notes to sell to vendors. According to him, such action leads to scarcity.

He, however, ignored the call for banks to add smaller notes in the Automated Teller Machines (ATMs), saying the machines cannot handle such notes as they cannot manage up to N10,000 in lower denominations. If that happens, the machines will get depleted frequently.

Efforts to get the reaction of the spokesman of the CBN, Mr. Isaac Okorafor, were not successful as he said he was attending a meeting. He did not reply the text message sent to his phone.