economic malaise on the presidential menu

CONTRADICTIONS. A shortage of banknotes… A shame for Africa’s leading economy, which is not beyond a paradox, three weeks before the elections.

Par Africa Point

Dozens of people line up to withdraw new naira banknotes from an ATM in Lagos on February 1, 2023. In October 2022, the Nigerian government announced to change the banknotes (including their color), and decided that old tickets would no longer be valid on January 31.
© PIUS UTOMI EKPEI / AFP

Published on 02/02/2023 at 7:00 p.m.

Subscriber-only audio playback

I subscribe to 1€ the 1st month

L’rating agency Moody’s is clear: Nigeria’s efforts to carry out urgent tax reforms will face “social and institutional constraints”, even following the election of a new president. Fiscal pressures may even worsen following the election, experts write in a recent report. It must be said that the country knows no respite economically. The Central Bank of Nigeria (CBN) has also announced this Thursday, February 2 the distribution of new banknotes at bank counters to reduce massive queues at ATMs, a decision aimed at appease the growing social discontent.

Moody’s rating service lowered the country’s long-term external debt rating from B3 to Caa1 in late January with a stable outlook.

The downgrade of Africa’s largest economy is explained by the fiscal situation as debt continues to deteriorate. “Depressed and uncertain oil production, capital outflows amid a flight to quality and limited government access to external financing are likely to continue to weigh on Nigeria’s external position in 2023,” Moody’s said.

READ ALSONigeria: an economic giant with feet of clay

Shortages of all kinds

With three weeks to go before presidential and legislative elections in Africa’s most populous country, frustration is high among Nigerians, not only because of ongoing reforms, but also because they struggle to get hold of cash. following the introduction of new banknotes at the end of 2022. They are indeed already faced with fuel shortages and frequent load shedding. “The (Central Bank) Governor, Mr. Godwin Emefiele, has ordered depository banks to pay for the new naira notes at the counters within the daily limit of 20,000 naira (40 euros),” the spokesman said. Osita Nwanisobi.

Everywhere in Nigeria, especially in the megalopolis Lagos and in the capital Abuja, many people wait for hours in front of the very few distributors issuing the new tickets.

Enough to fuel the exasperation of Nigerians, the majority of whom live in poverty and depend on the informal economy, where cash remains essential. Riots notably broke out this week in Kano, the largest city in the north of the country.

In October, the Central Bank announced, without warning, changing the banknotes (including their color), and decided that the old banknotes would no longer be valid on January 31, ie 25 days before the presidential election.

This calendar is highly criticized in Nigeria, where pre-election periods are already synonymous with suffering for Nigerians. Economic activity there is slowing down, fuel shortages are greater than usual, and insecurity is growing.

In the face of popular pressure, the authorities postponed the date to February 10, specifying that there would be a grace period of seven days following the deadline for depositing the old notes at the central bank. The CBN blames the shortage in particular on a significant number of people “hoarding” and “hoarding” the new banknotes they obtain by withdrawing “in series” from vending machines.

The new notes, according to the CBN, are aimed at reducing the volume of money outside the banking system to optimize monetary policies, combat counterfeit currency and complicate ransom payments to kidnappers in the kidnapping-ridden country.

READ ALSONigeria: rage on cash withdrawals

The heavy task ahead of Buhari’s successor

And for Moody’s, the election of a new president might not change the situation, even if the latter accelerates economic reforms, whose “implementation will probably remain long in the midst of marked social and institutional constraints”, declared Moody’s. “Fiscal pressure from declining oil production, increasingly expensive oil subsidies and rising interest rates are likely to persist over the next two years. »

The election in Nigeria, where some 93 million Nigerians are registered to vote, has sparked unprecedented interest, especially among young people, who are hoping for sea change for the 215 million-scarred West African nation. by corruption, glaring inequalities, almost generalized insecurity and an exodus of the country’s elite.

READ ALSONigeria: “Neither of the two candidates arouses much enthusiasm”