Why is there scarcity of change in Nigeria?

Nabanker


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Posted by on Friday July 12, 2013 at 11:45:25:

I don't know if this is affecting the whole of Nigeria but in Lagos where I live, there is a growing scarcity of change. Almost all the currencies below N500 are in short supply and as far as we know, it is the CBN's job to control the supply of currencies to people. One begins to wonder if this is part of CBN's policy for a cashless society but I guess that policy is targeted at people who still keep millions at home and not people who do small business on a regular basis.

The situation has gotten so worse one would think that the CBN wants to get rid of all lower currencies and probably pave way for the N5000 which has bee popularly rejected by the Nigerian masses.

Yes, the situation has gotten so worse that even the Suya selling Mallam whom I met yesterday didn't have N200 change. Even small businesses like restaurants, danfo buses and Okadas also face a similar scarcity of change problem especially for the N100 and N200 notes which seem to be in limited supply. Every customer seems to be bringing out N1000 notes even when they want to buy something worth as little as N200.

Perhaps this would not be a problem if customers were paying small business with their ATM cards using POS payments but you know that not all Nigerians. Infact most Nigerians I know who have the money, don't even use ATM cards because they just don't understand it and perhaps a generational thing.

Yeah, most Nigerians don't think they should involve their bank when they are doing small transactions worth under N10,000 and this is the range which those businesses which are mostly in retailing tend to change per item sold. Besides, not everyone like punching in their ATM PINS on POS machines other that ATM machines for security sake. Even me, I prefer paying in cash at Shoprite rather than punching in card PIN unless I'm spending above N5,000.

If you ask me what is really causing this scarcity, I would say that it could be any or the combination of the following:

- The CBN may be removing lower denominations in supply and rather supplying more higher denominations.
- Maybe the CBN wants to print new notes
- Maybe the bank are selling their change to Shoprite stores(Cos that's the only place where I can get change)

At the rate at which this is going, it won't be a surprise if Nigeria becomes like some of those Francophone West African countries where the lowest available denomination is at around 1000 units of their currency.

Where can one find change in Nigeria?
Well it can be found at a few places such as:
- Change sellers at car parks and event locations. You buy crisp notes at a higher price
- Shopping malls like Shoprite. Buy stuff and pay with N1000 notes
- The conductor in Commercial buses. Just pay for fare with a N1000 note
- Bank branches. It may be dirty and torn

It may probably not be economical for the CBN to keep printing lower currency denominations of the Naira but they need to continue doing so since for most some small businesses, POS payments are not practically feasible.




Comments:
    Re: Why is there scarcity of change in Nigeria? Reply by Prosper on Sunday October 6, 2013 at 12:58:14:

    This change issue has become a general problem in Nigeria. I think one of the causes is this ATM stuff. Each time you visit the ATM to collect money, you find out that the minimum denomination it dispenses is N500 note and @ a very rare occasion because most times it gives N1,000 notes. Now imagine a situation whereby 70% of persons living in a particular region visits this ATM in a week and transacts businesses within themselves, who will have change to give in exchange? Is it the remaining 30%? There is more to this change issue and we are yet to find out what is about to happen in a short while I am very sure that something is behind this worry some scarcity of lower Naira denominations.






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