By Elijah Akoji
As the cash crunch bites harder and hardship deepens, Nigerians in border communities in some states in the North West are settling for currencies of other countries for transactions. In this investigation across Sokoto and Kebbi states, Elijah Akoji uncovers how residents of these border communities are doing this.
Ali Danliti, a resident of Tsolawa community in Illela Local Government Area, (LGA) and commercial motorcycle rider, knows the council area well and was willing to take the reporter to his destination through a safe route.
Travelling from Tozie community, a few kilometres from Sokoto’s main town, to Illela, Danliti was willing to take N7,000 as his charge. But he insisted that the reporter had to pay him cefa (CFA), the Nigerien currency. He declared that he would not take naira notes – old or new. The CFA franc is used in many countries in West Africa – Benin, Burkina Faso, Côte d’Ivoire, Guinea-Bissau, Mali, Niger, Senegal and Togo.
This was a clear pointer to what the reporter’s investigation was all about. The journalist’s assignment was to find out how residents of far-flung communities, particularly those along Nigeria’s border with Niger Republic, were faring in the face of the naira redesign policy of the Central Bank of Nigeria (CBN) and the attending cash crunch. The irony of his situation was not lost on the reporter who had struggled to get new naira notes for his journey but was now confronted with ⁴the possibility of being stranded as his newly acquired, mint fresh notes were rejected for the currency of another country.
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Alarmed, the reporter blurted out that he only had naira. Asking if the reporter had cash in naira or if he intended to do a transfer, Danliti then suggested there was a PoS (point-of- sale) agent in Illela Market who could do the exchange for the reporter. The PoS operator would take my naira in whatever form and then exchange it for the CFA value after deducting all his charges, the motorcyclist said.
Arriving at Illela, Danliti walked straight to the PoS centre, managed by a man named Idris. The reporter offered Idris N11,000 and was given 9,000 CFA in return.
The reporter wondered what the exchange rate used could be. Could CFA be more than naira, and why was he given 9,000 CFA in exchange for N11,000?
However, at the parallel market, the CBN exchange rate for 1 CFA was 0.7408 naira, while at the black market rate, 1 CFA was sold at 1.4 naira.
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With no answer forthcoming, the reporter gave Danliti 7,000 CFA and kept 2,000 CFA in 500 denominations for himself. But there was a need to ask some questions. So, the reporter asked Idris if he could speak with the owner of the POS shop.
“You can come around by 5pm. That is when Alhaji Tijjani Usman will be in the shop to take account. Only then can you have the opportunity to speak with him,” Idris declared.
New naira policy
On October 26, 2022, the Central Bank of Nigeria (CBN) announced the introduction of the redesigned N200, N500 and N1,000 banknotes into the financial system. According to the apex bank, the redesigned notes and new limits on large cash withdrawals would help curb money laundering and make digital payments the norm, thus promoting the cashless policy in Africa’s biggest economy.
Also, the new cash policy was promoted as capable of preventing counterfeit banknotes, corruption, and terrorism financing, while stabilising and strengthening the Nigerian economy.
However, the Nigerian economy has a huge informal sector that is based on physical cash transactions. While the new Naira policy looks like a comprehensive approach to addressing the issues facing the economy, it is, however, posing challenges to the unbanked and the informal sector, one of which is the scarcity of the naira notes.
Illela discovery
Dehydrated by the hot weather after a long ride to Illela, there was need to take water, which was another opportunity to confirm if the naira note – old or new – will be accepted.
The reporter approached the shop and ordered for three bottles of table water and offered the seller a new N1,000 note. The young man refused to collect it and suggested that he should either do a transfer to his account or pay cash using CFA.
“For now, we no longer accept the naira note in cash,” he said.
Illela is a local government in Sokoto East Senatorial District that shares borders with Niger Republic. With a population of about 450,000, Illela is one of the security-challenged LGAs in Sokoto State, ravaged by banditry and kidnapping for ransom.
With no trace of a functional commercial bank, residents of Illela will have to travel about 60 kilometres to Sokoto to access any banking service or conduct their financial transactions.
Inside Illela Market where naira is shunned
In the grain section of the market, Sadiq Ismail, one of the major dealers of maize and groundnut was sighted counting some foreign-looking notes. On getting closer, it became clear that he was counting the 1,000 CFA and 500 CFA notes he had just received from a customer, Aisha Salami, as payment for the goods she bought.
Aisha was unaware that coming to the market with the old naira note would only be a wasted effort as all her regular customers declined to transact with the old notes. Her saving grace was the availability of the CFA notes in the market.
“I have been in this business for about seven years and, despite the insecurity and other challenges, we still travel with cash to buy our goods because these villagers won’t take a transfer from you.
“I have just exchanged over N500,000 to CFA and I have lost over N20,000 in the process of this exchange. I am not worried. The fact that they were able to provide an alternative plan for the business people is good. Imagine travelling from Lokoja to Illela and going back because of the naira note issue,” Aisha said.
It was the same situation at the Illella cattle market as most cattle sellers would only accept to be paid in CFA. Here they scoffed at any mention of transferring naira for any purchase.
Ibrahim Muhammed, a cattle dealer, narrated how he stayed for about a week without a single sale until he began to take CFA.
“Buyers come from all over Nigeria to this cattle market to do business with us, and our business here is cash-based. When this whole cash issue started, I stayed for about a week without a single sale.
“Accepting payment in CFA made it so easy for me, and its availability made it even easier for my customers as there is a PoS agent who will take their charges, make some extra profit and provide the money to our customers,” Muhammed said.
The central chairman of Illela Market, Faruk Umar, said that the decision to begin to use CFA as an exchange currency was an agreement to sustain business as many dealers were already lamenting the poor patronage.
Umar said, “Considering our location, it is very easy to have access to CFA than even the naira. But being that most buyers come from across Nigeria, we had to consider that. But with this naira scarcity and fear of people losing their money, many had to travel to Sokoto to open a bank.
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“While you see that CFA has become a transactional currency is because we have access to it and it’s a way of playing safe for both the interest of our members and their customers. We have ensured through the POS agents to see that there are enough CFA notes, so once you make the transfer to them in naira, they give u cash in the CFA equivalent.
“In the case where it’s over N500,000, we have directed the PoS to do some documentation. Once the money enters his account, he will notify the owner of the goods of the successful transaction and the goods will be released to the customer. After the close of business they will balance the account together and each will get what is due to him.”
Back to the POS agent
It was about 5pm and Tijjani Usman, Idris’ boss and the PoS owner, was already around, taking the account for the day when the reporter arrived at the outlet.
Usman was in a better position to explain how he was able to be getting such volumes of cash in CFA circulating well in the market even though he was not the only supplier.
Usman would not say much, and he declined to respond to some questions.
“I am a businessman and I am also affected by all of this misfortune. I saw an opportunity in the situation, so I decided to mobilise the different union heads in the market for a meeting. We discussed and they saw reasons with me on the urgent use of CFA instead of naira, which was almost sending us out of business,” Usman said.
“While they agreed, I immediately invested in bringing in CFA. So, I travelled to Niger and Benin where I got hooked up with my contacts and gradually, almost everyone now transacts in CFA.
He added, “I am not the only one in this business; there are others too, even down to Illela town, since CFA is mostly accepted by even shops owners. Your naira is only useful in Sokoto main town, not across the villages. What we do is take the naira transfer and give the CFA equivalent and then take out our charges as well.”
In Illela, church, fuel station not spared
A Reverend Father, Micah Josiah, head of St. Theresa Catholic Church in Tamaje community, Illela local government area, narrated how strange it was for him to count CFA in the offering box.
“My catechist brought the offering, and I was surprised to see that almost all the money was in CFA denomination. It was really strange, but we are now getting used to seeing it. That’s the change we have to adapt to.
“Since it’s gradually becoming legal tender and most people accept it, we now keep them for our use and then exchange the one we might spend outside this location or take to the bank,” Josiah said.
At Dodo fuel station in Illela, both naira and CFA notes were accepted but an extra charge of N300 was added for those paying with the old note, while for those paying in CFA, fuel was sold at the 400 per litre.
Bala Dahiru, the fuel attendant at the fuel station, explained how they had to adapt as a result of naira scarcity.
“Most bike men and commercial vehicle owners were all coming with CFA. Initially, we weren’t taking it but we had to adjust because there is no other option and, if I won’t lie, it’s better than hoping on the naira to be available,” stated Dahiru.
A businesswoman, Jamila Audu, who buys grains in large quantities from Illela market, had just finished loading her truck and was getting set to be transported to Lagos. Audu spoke of how frustrating the process of converting her money into CFA was before she could buy all her goods.
“There are guys who I never saw, but I was told they are into the supply of CFA. Once you transfer to them, they will confirm it and then they will send their boys to bring the CFA equivalent to you in the market. The community people know them but we don’t know them.
“I got about 2 million CFA, which I used to buy all of these goods, and over N100,000 was deducted. Nobody is willing to tell you the exchange rate used for me to even know if I will gain or lose in the exchange process. I gave them N2.1 million and they brought 2 million CFA,” Audu said.
Unlike Sokoto, the Kebbi way
Bachaka community is a community in Arewa LGA, in Kebbi state which borders Niger Republic. Due to the proximity, business has always thrived between the people of Bachaka community and residents of Dogon-Dutse in Niger Republic.
Interestingly, in Bachaka and Madanfara communities, while the naira is still legal tender used for buying and selling, at the Bachaka Market, most dealers and shop owners will either prefer you make a transfer into their account or pay cash in CFA.
Nababa Gwandu, the union chairman of Bachaka main market, said the major reason for such a decision was because most business people in the market and across the communities did not even have bank accounts.
“Rural people believe in cash for every transaction. Some of them are millionaires, but will still prefer you pay them in cash.
“While they have not stopped anyone from accepting the naira note but gave approval for the use of CFA for transaction, they are gradually becoming more comfortable with the availability and access to it,” Gwandu said.
Gasko Yunusa, a major grain dealer in Bachaka main market, still collects whatever currency is brought to him. He will only make some extra charges if payment is in the old naira note.
“I won’t chase my customers away. While I will prefer payment in CFA, if there is any transaction above N50,000 in cash, I will prefer such a customer pays in CFA, which must, be in cash. I have an account with one of the commercial banks, but my worries are should there be transaction failure, I will have to go to the bank, and I am not ready for such a problem,” Yunusa said.
In Dadin-Kowa Market, as the reporter approached Bala Ya’u, the man selling local rice in large quantities alongside other grains, his question was “da wani kudi za ku bia ni, kudi Nigaria ko da kudi Niger?” which means, “in what currency will you pay me, Nigerian currency or Niger money?”
Bala Ya’u narrated it was very easy for him to collect the naira note, but was worried about access to the bank, as he was scared of losing his money.
“We have always been doing our business with naira, but with this government policy, we are far from the bank, and at this point, we can’t trust even the banks, so I do tell my customers to pay in CFA since we have our way of exchanging naira to CFA,” Ya’u said.
Zakari Ali is one of the chief suppliers of CFA in Dadi-Kowa Market and its environ.
While the suppliers are keeping it a secret not to reveal their identity, they also have the backing of their traditional rulers.
“We are not doing anything illegal. The hardship was already setting in. There are no banks and most people don’t even have the money to save. They just sell their produce and feed from it. When we noticed that there is going to be withdrawal and access to the new note was becoming a big problem, we immediately swung into action and looked for an alternative means of doing business, and it was easy getting CFA from Niger and Benin,” Ali said.
Akilu Shuaibu, the district head of Dadin-Kowa, spoke of how the ward heads visited him and explained the hardship setting in across their communities.
“We all can’t lie about the hardship people are going through. The scarcity of money will make it even worse for them to cope. The people have decided to ease the hardship themselves and only the government can stop them from their decision,” Shuaibu told The ICIR.
The position of the law
The Central Bank of Nigeria Act forbids Nigerians from using other currencies aside from the one issued by the CBN itself as legal tender. Section 20 of the Central Bank of Nigeria (Establishment) Act (CBN Act), which provides in sub-sections (1) and (5) that – (1) says: The currency notes issued by the Bank shall be legal tender in Nigeria at their face value for the payment of any amount;
(5) A person who refuses to accept the naira as a means or (sic) payment is guilty of an offence and liable on conviction to a fine of N50,000.00 or six months’ imprisonment. Provided that the Bank shall have power to prescribe the circumstances and conditions under which other currencies may be used as a medium of exchange in Nigeria.
Revenue decline, high cost of living looms
As an economy majorly dependent on cash transactions, experts believe naira substitution will negatively impact the economy and further create macroeconomic instability, reductions in government revenues, and weak monetary policy.
The spokesperson of the Sokoto State Board of Internal Revenue, Nura Bulama, described the naira substitution practice as an automatic tax waiver with a huge negative implication on the economy.
“We have received several reports from our local government offices that traders have refused to pay tax even after several meetings with their unions, and when they offer to pay, they offer CFA as what they have since they can’t go to the bank. The usage of CFA, which we are aware of as a revenue body, is impacting on our remittances to the government negatively and we are working out modalities to get it resolved within the shortest possible time.
“Because of the undetermined exchange rate used to exchange naira for CFA, we fear that the cost of living might shoot up as everyone will want to gain, so the buyers suffer the consequences by paying more to get lesser CFA to purchase their needs,” Bulama said.
Poorly managed economy leading to depression – expert says
A professor, Abubakar Ibrahim, of the department of Banking and Finance, Bayero University Kano, described the Nigerian economy as a poorly managed one capable of creating loopholes.
Ibrahim said, “The usage of foreign currency in Nigeria when we have our currency is a sign of a poorly managed economy. No one ever thought that Nigerians will one day descend to using CFA as their source of exchange, not to talk of trading. But today, here we find ourselves in a system where Nigerians have to decide their means of exchange to survive.
“Those at the borderside are predominantly farmers, and people from the cities go to them to buy their harvest, so if CFA is used as a means of exchange, that means Nigerians are already growing the economy of Benin and the Niger Republic. It is that simple in economics.”
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