Why Nigerians are rejecting old N500, N1000 Notes

By Starrys Obazei | March 8, 2023

The widespread rejection of the old N500 and N1000 notes is driven by the defiant silence of the Federal Government and the Central Bank of Nigeria, CBN, on the Supreme Court judgment of March 3.

Meanwhile, banks have started effecting cash withdrawal limits of N100,000 per week for individual customers.

However, the money is paid in old banknotes which most customers have refused to collect, according to Vanguard’s investigation.

According to a top bank official, customers are insisting that there must be an official statement from the Federal Government and CBN approving the old N500 and N1,000 notes as legal tenders before they can accept the notes.

Speaking on condition of anonymity, the banker who heads one of the branches of a Tier 1 bank said: “Everybody (customers) that came to my branch today rejected the old N500, N1,000 notes. They said people are not collecting them and I tried it. I gave somebody an N1,000 note to go to a popular restaurant in Lagos to buy me rice, but the restaurant rejected it. I gave another person N500 to use to board a commercial bus to see if transporters will accept it. The person came back and said the commercial buses refused to collect it too.

“In the case of the old N200 banknote,  the President spoke and everybody adhered to it. So, why are they not speaking now? They (customers) said President Mohammadu Buhari or CBN Governor should say okay to the Supreme Court ruling.

“Unfortunately that is what they are even bringing for us here. We held a meeting and they said more notes are even coming, the N1,000 and N500.”

The banker also confirmed the commencement of the cash withdrawal limit. He said: “Yes, they even said we should be doing N20,000 per customer per day. That is what the circular our banks sent to us today said.”

When contacted on the above development, the Acting Director of, the Corporate Communication Department, CBN, Dr AbdulMumin Issa, said, “There is no official statement on the old N500 and N1,000 notes.”

The development in Lagos is also noticed in Ibadan, Oyo State capital yesterday, where bank customers said they would not take the old banknotes from their banks since the banks had earlier on Monday claimed that they were waiting for CBN or the President before they can dispense the old banknotes.

They wondered why the banks are now giving them out without the pronouncements from the two authorities – FG and CBN.

A staff of one of the tier-one banks said that her bank started dispensing the old banknotes because on Monday the CBN sent back the old Naira banknotes they had earlier deposited at the apex bank last week.

She hinted that she also made a personal withdrawal of N30,000, to be used for personal spending, but regretted that she could not use the notes for transactions as traders and commercial motorcyclists rejected them.

“I also made a withdrawal of N30,000 old notes but unfortunately I became stranded when I wanted to pay an okada rider and he rejected it. Since that was the only money I had on me, I was also affected by the scarcity of new naira notes, I had to call someone that brought N500 for me to settle the bike man.”

She said though there is no official statement from the CBN on the acceptability of the old naira notes, following the Supreme Court judgement, there was hope that the situation would get better in a few days to come.

Commenting on the cash crisis, Tajudeen Olayinka, CEO, of Wyoming Capital and Partners said: “Cash scarcity could have been avoided or minimized if cash withdrawal limit set by CBN was met by banks and CBN between January and February 2023 when the old notes ceased to be legal tenders.

“The fact that CBN did not release a sufficient amount of new banknotes to replace the old ones, and could not also provide near cash alternative in lieu of insufficiency of cash, worsened the situation.

The use of  ATM or PoS machines cannot be taken as a near-cash alternative

Speaking against the backdrop of the Court ruling and the compliance by the banks, Mallam, Garba Kurfi, Chief Executive Officer, APT Securities & Funds Limited, said: “It’s a good development and will bring relief over the cash shortage but much better if CBN can release the old notes with it. Also, the FG should make a pronouncement so that it will be generally accepted as legal tender as many people are not accepting it for transaction purposes.

Prof Uche Uwaleke, President, of the Association of Capital Market Academic of Nigeria, ACMAN said: “It’s a welcome development.

“The directive to banks to accept the N500 and N1000 notes, in compliance with the Supreme Court judgment, portrays the CBN as a law-abiding Institution. It will also help to clear the uncertainty and confusion surrounding the legal tender status of those old naira notes.

“The cash crunch may linger for some time bearing in mind that the CBN has not said it would re-circulate about N2 trillion of old currencies already mopped up which explains why it has retained the cash withdrawal limit.

‘‘The way forward, in my opinion, is to ensure that banks have the lower denominations of the old and new notes in sufficient quantities to dispense over the counter as well as load in their ATMs.

Reacting, Mr David Adonri, Vice Chairman, of Highcap Securities noted that since the CBN has not been able to print and supply new currency notes to replace the withdrawn ones, it is proper to reintroduce the old notes so as to end the current excruciating scarcity of cash.

He stated: “As more new notes come into circulation, hopefully, the old notes will gradually be withdrawn. If CBN had implemented the policy properly by supplying the same quantity of new notes to replace the withdrawn old notes, the economy would not have suffered the kind of dislocation it is currently experiencing.”

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