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Shortage of ₦100 Notes Disrupts Businesses

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By Mercy Kelani

Businesses express frustration as banks are blamed for hoarding the notes.

Given how heavily cash is used in daily transactions, Nigeria’s shortage of ₦100 notes is seriously disrupting consumers, small companies, and transportation services. Because they frequently have to offer sweets or other items in lieu of change to make up for the scarcity of lower denominations, traders and vendors are disproportionately impacted, which reduces their earnings. Frustrations have resulted from the problem; some blame commercial banks for hoarding the notes, while others blame The Central Bank of Nigeria (CBN) for taking longer to generate new currency.

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With Inflation at 32.7% at the moment, demand for smaller denominations like the ₦100 bill has gotten worse. In both urban and rural areas, the situation is grave, with rural residents suffering the most as cash loses its value. Due to the scarcity, some retailers and transit companies are being forced to charge clients more if they are unable to give precise change. Large financial losses are reported by many small business owners as a result of consumers leaving without making purchases or being unable to return with the exact change.

Physical currency is still necessary for many daily transactions.

Concerns over additional shortages have been raised after the CBN rejected attempts by lawmakers to remedy the problem by encouraging it to progressively replace obsolete notes. Financial analysts and economists caution that stockpiling and a greater sense of currency instability might make matters worse if the issue persists. Physical currency is still necessary for many daily transactions, especially in more unofficial marketplaces, even though the usage of electronic payments is growing. A combination of inflation, poor economic management, and ineffective currency distribution by the Central Bank of Nigeria (CBN) and commercial banks is the cause of Nigeria’s currency shortage, especially the lack of ₦100 notes.

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The cost of goods and services has skyrocketed due to inflation, which peaked in September 2024 at 32.7%. This has created demand for smaller denominations, such as the ₦100 note. Higher prices have caused people to depend increasingly on lower denomination notes for daily transactions, which has led to a shortage of these notes. There are also claims that banks are hoarding money, which makes the shortage worse. Compounding the issue, the CBN has come under fire for removing old currency from circulation without sufficiently replacing it with fresh notes.

Nigeria may approach hyperinflation as a result of this.

From an economic standpoint, inflation reduces the naira’s purchasing power, making it harder for consumers to afford products without having to use smaller denominations of change. Cash-dependent industries are disrupted by this shortage, particularly unofficial marketplaces where online transactions are less common. Due to their heavy reliance on actual currency, small companies, transportation providers, and merchants in rural areas are especially at risk. Businesses who are unable to deliver change frequently lose clients or substitute items for cash, which lowers their profitability.

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There may be serious long-term consequences from the money scarcity. Businesses may raise prices to offset their losses from incorrect payments if the shortage persists, which might exacerbate inflationary pressures. Nigeria may approach hyperinflation as a result of this cycle of growing costs and cash shortages, making even ₦200 or ₦500 notes potentially scarce. The CBN must give priority to distributing lesser denomination notes, like as the ₦100 note, especially in rural and unofficial markets, in order to alleviate the scarcity. Shortages might be avoided in the short term if cash were printed and distributed more methodically.

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Additionally, the government might launch awareness programs to inform the public about the advantages of digital payments and offer financial incentives to companies who implement cashless transactions. Maintaining Nigeria’s Economic Stability and shielding the most vulnerable segments of society from more financial hardship require addressing the lack of smaller denominations. To address the distribution inequalities, the CBN and commercial banks must act right away. Long-term fixes should concentrate on boosting the use of cashless transactions, especially in areas where cash is still widely used.

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