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Posts Tagged ‘Central Bank of Nigeria’

Naira notes.

Nigeria is a cash economy. If you want to buy a meal, you pay cash. If you want to buy a car, you pay cash. If you want to buy a cow (which is a very common item to purchase), you use cash. Finally, if you want to buy a house, you whip out a massive wad (you might need a Ghana-must-go bag) of cash. You don’t hear any Nigerians talking about payment plans, mortgage rates or credit card debt. When you buy something you pay for it in full, end of story. While credit cards do exist, they are used by the tiny upper class and only accepted at expensive hotels and restaurants. I’ve never heard a typical Nigerian (I’m excluding the upper upper class here) talk about how their stocks are doing, but I do see little stalls selling lotto tickets all around, although I’m not sure how that works yet.

Nigerian currency is called Naira. It comes in denominations of 5, 10, 20, 50, 100, 200, 500 and 1,000 Naira notes. They also have coins called kobobut no one uses them anymore. I’ve been here for 9 months and not once have I seen a kobo. The current exchange rate from Naira to U.S. dollars is about 153 Naira for $1. So 1000 Naira is about $6.50. If you are buying a car for $12,000 dollars, you will pay about 1.8 million Naira. Imagine what the amount of cash would look like. Checks are more common than credit cards but they are still scarce. So as a tip for travelers, bring cash, not travelers checks or credit cards to Nigeria.

The vast majority of Nigerians do not have a bank account. An article stated that out of the 150 million or so people who live in Nigeria, only 22.5 million bank accounts exist. Many people cannot use banks because they are illiterate. If you can’t read, you cannot maintain a bank account. Many people do not want to deal with the wahala and stress of opening a bank account. When I went to open mine, I filled out my form, handed over my wad of cash then had to wait two whole weeks before I received my bank account number and my ATM card. When I returned a week later to see how far, the bankers said my money was in “ibi kan ti won n toju dada (one place they are taking care of it well).” Two weeks with no word about the whereabouts of my money? It’s no wonder many Nigerians distrust the banks and therefore choose to keep their money in a box under the bed rather than a bank account.

A recent report from the World Bank said $6 million worth of transactions takes place on the streets of Nigeria everyday. These are hand to hand exchanges of pure hard cash, no swipe of the plastic included. This probably explains why a lot of the Naira notes I get are totally brown and hardly discernible. But the Central Bank of Nigeria–the bank that prints all the Naira– wants to move away from the dependence on cash. They recently announced a plan to limit the amount of cash an individual can withdraw to N150,000 per day. That’s about $1,000 per day. The new policy aims to start June 1, 2012. While this is still highernthan the limits on ATM withdrawal in the U.S. of $200, $400 or $600 depending on the ATM, it might impact Nigerians who pay for everything, even their homes in cash.

I come from a country that covets the credit card, we even have key chain credit cards now. Many people don’t even carry cash anymore in the U.S. Living in a society that is entirely cash dependent is refreshing because I am never worried about paying my bills on time or my credit score. I still have my credit card here, tucked away in a safe place (I haven’t used it once). I don’t know if any other country is as cash dependent as Nigeria or what will happen to Nigeria as banks start limiting cash withdrawals and issuing credit cards. In the mean time we will watch with wallets open.

This is an interesting article on this topic.

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