Nigeria’s central bank delayed a plan to remove high-value currency notes following an order by the nation’s Supreme Court, after severe disruptions in Africa’s biggest economy.
The Central Bank of Nigeria began replacing old 200-, 500- and 1,000-naira notes with new ones in mid-December in a bid to mop up excess cash, rein in inflation and curb rising insecurity. The move led to cash shortages, stalled the nation’s estimated $220 billion informal economy and prompted some state governments to challenge the policy in court.
The Supreme Court, in a ruling earlier this month, scrapped the central bank’s Feb. 10 deadline to demonetize old notes and ordered that the bills remain in circulation along with new ones until the end of the year.
The challenges that Nigerians faced in obtaining cash may have resulted in as much as a 7.6% decrease in Nigeria’s nominal gross domestic product of 198 trillion naira ($429 billion) in the first quarter, KPMG Nigeria Chief Economist Yemi Kale, the nation’s former statistician-general, said on Twitter.
The central bank’s latest directive will bring about 2.1 trillion naira of cash back into the system. That will be a relief for businesses in the largely cash-based economy. Meanwhile, residents thronged the nation’s banks including Standard Chartered Plc’s Nigerian unit in Lagos on Tuesday to access the old bills.
“I wish returning the old naira notes will bring this suffering to an end,” said Paul Ngutor, while waiting for his turn to enter a Standard Chartered bank branch in Lagos. “It’s been tough since February.”
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