Tough times as ‘big’ notes dominate circulation

May 24, 2014

An Automated Teller Machine dispensing N1,000 notes

Perhaps one of the most important daily tips for anyone nowadays would be: “Never you set off for the day without having some small denomination naira notes in your wallet.” This tip does not only apply to Nigerians, but also to any foreigner living in the country.

This is because having some of these notes in your wallet or purse could save you a lot from undue embarrassment among others, according to some findings made by keneinspiration.blogspot.com .

In these findings, not only has the circulation of high denomination naira notes prevented many people from carrying out some simple financial transactions, but it has also been a major factor that determines whether they would have smooth relationships with bus conductors, traders, etc – the people most Nigerians interact with daily.

One may think this is exaggerated until one reads about the experiences of some Nigerians who interacted with Saturday PUNCH.

In fact, not only have some of them made it a point of duty to always find change (small denomination notes) before they leave their homes every day, many of them do at times buy what they wouldn’t ordinarily want to buy just to make sure they have some change on them.

This is never their fault, though, as people could only spend what they are being paid with at banks, and what Automated Teller Machines dispense to them while withdrawing from their accounts.

And according to Saturday PUNCH findings, most ATMs in the country pay users at least N500 denomination notes, but mainly N1,000 notes.

Since these denominations are the most common in circulation, it is therefore not strange to see many people seeking for means to exchange them for smaller denominations so that they could pay for certain cheap goods and services.

And the assumption that only the poor suffer from the ‘change problem’ is virtually untrue as our correspondent interacted with Jibola, an employee of one of the oil companies in the city, who is perhaps thought would only buy things in thousands, or at least in hundreds.

She however said that assumption was false.

She narrated to our correspondent, “I am also a Nigerian and pass through almost what everyone else is passing through. Change problem is not only for the poor, of course. In fact, most times, I make sure I get some change on me by all means before I leave my house since it is not everywhere I go that I have to spend N500 or N1,000 notes.

“In fact, anytime I forget to do so, I usually blame myself. One may not realise the importance of having some change until you experience what I experienced recently.”

On a Saturday sometime in March this year, Jibola was driving her car along Ikorodu road on his way to a friend’s wedding ceremony. It was a smooth ride from Lekki down to Ojota, until she got to Ketu where one of her tyres burst.

After a roadside mechanic fixed the tyre, he demanded for a ‘meagre’ N150 as his service fee. But Jibola had only N1,000 notes on her.

After the mechanic spent almost 30 minutes looking for change to give her, she had to let go of the balance. But to her, that was not a wise economic decision.

“I do not still think it was a good decision to let go of the N850 balance. If the guy had asked me for some money, it would have been a different case. It would have become an act of giving. But to me, letting go of such amount is not the same thing as giving,” Jibola said.

Since that day, to avoid running into such acts of ‘not-from-the-heart giving,’ Jibola added that she always ensured she put some small denomination notes in her wallet anytime she was going out.

But if one really wants to know where lack of small denomination naira notes had caused problems, one should perhaps visit motor parks and shops. But mainly, the ‘change problem’ is more pronounced between passengers and drivers.

At most Lagos motor parks, for instance, if a passenger does not inform a conductor before boarding the bus that he does not have change on him, such a passenger is likely to run into some trouble with the conductor.

In fact, the bus conductors have made it a habit to always shout, “If you do not have change, don’t enter. Please come down.” These statements, which have even become both a plea and an instruction, are always repeated by them.

However, most passengers wouldn’t listen because most times, some would ask the bus conductors, “Are we the ones printing money or is it our job to look for change?”

On one particular day in April at an Ikeja motor park, a fight ensued between a bus conductor and a passenger, who identified himself as Olalekan. The fight eventually resulted into an exchange of abusive words between the other drivers in the motor park and the passengers.

Olalekan had boarded a bus heading for Ketu – a trip which costs N100. Meanwhile, all he had on him were N1,000 notes as he said he just withdrew some cash from a nearby ATM.

Because he was in a hurry to get to Ketu for an appointment, he intentionally did not inform the driver that all he had on him were N1,000 notes. But just before leaving the park, while collecting his money, the driver was paid with N1,000 note.

The driver was so furious that he had to tell Olalekan to alight from the bus because he did not have any change. But Olalekan wouldn’t bulge. He told our correspondent that it would be unwise for him to alight from the bus when it was almost full.

Because it was a Saturday and not a weekday when many passengers throng the park, it would probably take about 30 minutes for the next bus to be full. And even if he were to get down, there was no assurance that the driver of another bus would also have change.

The resolve of Olalekan not to come down from the bus led to the fight. Eventually, the driver had to look for the change due to the intervention and persuasion of his colleagues. But still, he maintained that if it were not for the intervention of his colleagues and some other passengers, he would have given Olalekan ‘the beating of his life.’

But Olalekan did not bother to reply (the driver) again. He knew he had won – till another day.

However, according to some drivers and bus conductors in the motor park, the fight would not be the first and not probably be the last to occur there. In fact, it has become a normal thing to be expected.

A driver, Bashiru Adeshina, told our correspondent that was the reason he usually tells passengers to have change on them before they board his bus.

He said, “What you saw today is not a new thing. This is what usually happens here. Some passengers are just too stubborn. Most times, we tell them not to board the bus if they do not have change, but they would not listen.

“If you know you are going somewhere which costs just N100, why do you have to give the driver N1,000 note? It is not just fair. Where do they expect us to find change? Are we banks? As for me, I even do not have that kind of patience. If I tell a passenger that I do not have change, and he still boards my bus, I will not bother to argue with him.”

Instead, Adeshina said he would keep the passenger’s money until he reaches the last bus stop – where every other passenger would get down. And there, he would intentionally delay the passenger until he apologises to him, at least.

Adeshina continued, “At times, soft words turn away wrath, but some passengers are just too proud to apologise. What we normally experience here is passengers shouting at us to bring out change as if we are change factories.

“Some passengers give us high denomination notes and still shout at us to quickly give them their balance in a rude manner. That I cannot bear.”

For another driver, Bayo Oluyomi, who plies Berger en route to Ikeja, buying things that he ordinarily would not want to buy is the method he uses to bail himself out of the ‘change problem.’

Oluyomi told Saturday PUNCH, “Many times, I buy things I do not want to buy because there is no change. For instance, I can buy recharge card or bottled soft drink just to make sure I find a way to get change for my passengers.

“Finding change is a real big problem. Almost everybody seems to carry high denomination notes these days. You see someone going to a place which costs N50 and pays with N500 or N1,000 note. Is that not temptation?

“There is no way I can escape engaging in an exchange of abusive words with passengers in a day. That is why many people call us rascals. But why should anyone subject us to temptations?

“If passengers give us small denomination notes, there will not be any problem whatsoever.”

Like conductors, like passengers

In order to avoid the embarrassment meted out to them by some conductors, some passengers too have devised means of solving the ‘change problem,’ according to some observations made by our correspondent.

For instance, most passengers who have high denomination notes on them board a bus, collect money from the other passengers who have change, then hand over the highest denomination note to the conductor – in a manner that seems like they are paying for others.

At least that is what Emma told our correspondent he does each time he knows he does not have small denomination notes on him.

“That’s the trick nowadays,” Emma said. “If one does not do that, one would spend eternity in the car park. No driver would ever tell you he has change on him, even if you tell them before boarding their buses.”

Emma continued, “If I am going to a place, say Ketu from Berger which costs N50, and I have, say N500 on me, I will still board the bus, then quickly plead with three or four passengers to give me their money. In the end, if our collective fare is N250 and I give the conductor N500, he would not tell me he does not have change. I do this anywhere I go only if I do not have any change on me.”

Apart from Emma, almost every other passenger applies this method, according to Saturday PUNCH findings.

And likewise, the ‘change problem’ is not peculiar to Lagos only. It is a major economic phenomenon in almost every city and major towns in the country.

Ebikeme Fred is a petroleum engineer who resides in Yenagoa, Bayelsa State capital. And his experience in the oil-rich state is not so different from the others who interacted with our correspondent. Though he has a car, he said, “It is not good to always be on the steering wheel.”

However, Fred said he was always kind and gentle enough to ask taxi drivers in the city before he board their cabs, “I am going to… and I do not have change. Do you have change?”

Then if the said driver had change on him, Fred said he would allow him to board. Otherwise, he had to wait till “God’s time” before he sets off to wherever he’s going.

Fred told our correspondent, “I do not like people shout at me over some issues, and this is one of them. In order to avoid this, I have to be gentle and kind enough to ask them whether they have change to give me.

“Because most of the time, some of these drivers too expect you to board without asking you whether you are giving them change. Some of them are tricky too, especially that is what I know about some drivers in this city.

“If you do not have change and they also do not have, on getting to your destination, they would now tell you they do not have change. In the end, they would expect you to let go of your balance, which is what I used to do. Being wiser now, I have to make sure I ask drivers before boarding their taxis.”

But apart from motor parks, it may not be a good idea to buy goods worth, say N200 and hand in a N1,000 note to a trader because most times, the trader would feel you were out to ‘punish’ him/her.

That is the impression Saturday PUNCH got from some Nigerians.

A lady, who identified herself as Seyi, said, “Change is a big issue in our economy, and it even makes relationships turn sour between traders and buyers. In fact, the rule is: ‘Do not give N1,000 note to a trader whenever you buy goods worth less than N500.’ They would tell you they do not have change, even if they have.

“Since I am not the type of person who likes trouble or disagreements, I usually ensure I find some change before I buy things that are meagre.”

High denomination notes bad for the economy

The possession of only high denomination notes is not a sign of being rich or poor. That is the opinion of Mr. Bankole Alamu, an Ibadan-based political and economic analyst.

Alamu said it was the responsibility of the Central Bank of Nigeria to monitor the circulation of naira notes in the country. “Unfortunately, it is not doing so,” he said.

He explained further to our correspondent that the circulation of only high denomination notes leads to inflation.

He said, “Inflation is an economic condition where the prices of goods and services increase due to many reasons, one of them being the circulation of high denomination notes in the country.”

Alamu explained that if there were too many high denomination notes in the country, it would be easy for traders to manipulate the prices of goods and services – most times increasing the prices of such products.

He said, “For a trader who should sell a product for N70, if he realises there is a change problem, it would not cost him more than a single thought to round the figure off to N100. Once this happens to the price of every product in the country, it will lead to inflation.

“From inflation, there will be economic instability which, if the CBN does not correct on time, could lead to other serious economic problems.

“In some countries, say the United States of America, for example, it is not so common to see high denomination notes in circulation because they know it is harmful to the economy. It is only here you see people with too many high denomination notes.

“There was even a time the CBN proposed the printing of N5,000 notes. If that had happened, it would have been a sorry case for our economy. The gap between the rich and the poor would have greatly widened.”

Alamu concluded that good economies of the world maintain economic stabilities – but definitely not by printing high denomination notes.

When Saturday PUNCH contacted the CBN’s spokesperson, Ugochukwu Okoroafor, he said, “I cannot respond to you now because I am on leave. But if you want to know why ATMs dispense only N500 and N1,000 notes, you can go to the banks.”

An information officer of one of the new generation banks in Lagos, who simply identified herself as Afure, said the main reason why banks load their ATMs with N1,000 notes was due to the high volume of withdrawals that customers make daily.

She said, “It is not that ATMs cannot dispense any denomination, but the main reason why we do not stock the machines with small denominations is because the machines can only dispense forty notes of any denomination at a time.

“So imagine if a customer wants to withdraw N40,000 and we stock the machine with N100 or N200 notes. It is definitely going to be a tedious task for both the customer and the bank official in charge of loading.

“And apart from this reason, another one is that people make lots of withdrawals every day. In fact, if we load an ATM now, in the next one hour, you can be sure that the canister where cash is loaded in the ATM has been emptied.”

Apart from the reasons that Afure gave, another information officer of a Guaranty Trust Bank, who pleaded anonymity, told keneinspiration.blogspot.com that most banks do not load their ATMs with small denominations because of the texture of such notes.

She said, “Ideally, we should load ATMs with the cash that customers deposit with us – which are often small denomination notes.

“Unfortunately, most of the cash that customers deposit are often mutilated notes which ATMs would reject. That is why we do not stock the machines with small denominations.”