Nigeria’s new Naira creates a cash shortage and shuts down critical sectors of the economy.

According to experts and business associations, Nigeria’s efforts to replace its paper money with newly produced currency notes have resulted in a cash scarcity that has made it difficult for citizens to acquire the things they need and forced businesses to shut down all around the West African country.

According to the Central Bank of Nigeria, the redesigned 200 (43 U.S. cents), 500 ($1.08), and 1,000 naira ($2.17) notes, as well as new restrictions on large cash withdrawals, would help prevent money laundering and make digital payments the standard in the largest economy in Africa.

According to Ayokunle Olubunmi of Nigeria’s leading rating agency, Agusto, and Co., the procedure to replace the old currency notes is “rushed,” and commercial banks don’t have enough new cash to deliver to consumers.

You can’t legislate a change in habit, according to Olubunmi, because the central bank “doesn’t want us to be spending cash; they want us to be performing transactions online.” “You need to make sure those channels are trustworthy and get people to see the reasons.”

The administration promotes a more inclusive, cashless economy and claims that the measures would spur economic expansion. Skeptics point to decades of widespread corruption by public officials, who are known to steal public monies and make life harder for those already dealing with poverty.

The central bank governor, Godwin Emefiele, stated over the weekend that 75% of the 3.2 trillion naira ($7.2 billion) in circulation in Nigeria as of October had been deposited with financial institutions.

He gave Nigerians till February 10th, an additional 10 days, to deposit their old currency.

Reporters observed that some financial institutions were still handing out outdated notes to consumers as of Monday, even as more Nigerians deposit their old currency in banks. Customers of banks said that they can only withdraw a small amount of cash and pay exorbitant fees for each transaction.

In Nigeria, bank-run digital payments are frequently problematic, which causes businesses to struggle as an increasing number of customers are unable to find the cash to pay for goods and services. The circumstance has made it possible for people to sell the new banknotes illegally on a parallel market, according to the Nigerian secret police on Monday.

Chima Ekwueme, a vehicle parts vendor in Abuja, the capital of Nigeria, said: “Someone can wish to transfer payments to you, but it can’t be completed and they don’t have cash because of this difficulty. Sometimes I beg them to leave my items behind so I may go look for money elsewhere.

According to Muda Yusuf, director of the Nigeria Center for Promotion of Private Enterprise, the cash supply crisis has interrupted such sales across the nation and forced a significant number of enterprises to close.

Because they do many transactions in cash, particularly in rural regions, trade, and commerce as well as agriculture have been severely impacted, according to Yusuf. “This approach has put a stop to their economic activity.”

According to him, the authorities should give additional time so that the old notes can be gradually replaced with new ones.

“The supply is incredibly scarce, which only makes things worse. Some people have locked their stores, thereby crippling economic activity, Yusuf continued.

Although analysts contend that the currency modifications are being made at the cost of the majority of Nigerians, Nigerian officials said that the redesigned banknotes and new withdrawal limits would help reduce the use of money to influence the February 25 presidential election. Inflation is already 21.3%, which is a 37% increase in a year’s time.

According to Tunde Ajileye, a partner at the Lagos-based SBM Intelligence business, “all these together are inflicting tremendous difficulty in both rural and urban regions, (and) the misery for people is essentially collateral damage to the political elite.”