By Our Correspondent
The Central Bank of Nigeria (CBN) introduced new banknotes on October 26, 2022, for the naira denominations of 200, 500, and 1,000. The CBN’s governor at the time, Godwin Emefiele, announced the redesign policy, which aims to improve Nigeria’s monetary policy, promote digital alternatives like the eNaira, and enhance the currency’s integrity. Notably, it also aims to reduce cash circulation for illicit activities like kidnapping-for-ransom and vote-buying. The new naira notes have been in circulation since December 15, 2022.
However the redesign policy has not achieved the outcomes needed to meet most of its objectives. The policy resulted in a cash shortage and a black market for selling naira notes, causing economic difficulties for Nigerian businesses and individuals who rely heavily on cash.
The Naira became scarce as a result of the naira notes mop-up, which forced many businesses to increase prices or incur costs from lost IT-related transactions to delayed projects due to the scarcity.
It could be recalled that during an MPC press briefing in October 2022, the then CBN Governor, Godwin Emefiele, noted that the volume of higher denominations in the economy was fueling the rise in inflationary pressure. He stated that the apex bank was going to gradually reduce the volume of N500 and N1,000 in circulation.
The former President, Muhammadu Buhari, however, stated that the naira scarcity suffered by Nigerians was due to unscrupulous banking officials entrusted with the process of implementing the new
According to a financial expert, Okechukwu Unegbu, the MPC should discuss the cash situation as a matter of priority.
It was reported that the total amount mopped up since the policy to remove old naira notes from circulation is an estimated N2 trillion in two months. The total currency in circulation as of December 2022 was just over N3 trillion.
But the figure has risen now, as at December 11, 2023 the currency in circulation is N3.4 trillion,” according to CBN .
The CBN said it has directed all its branches across the country to continue to issue different denominations of old and redesigned banknotes in adequate quantities to deposit money banks (DMBs) for onward circulation to bank customers.
The CBN also cautioned that all bank notes issued by it remain legal tender.
The CBN tried to douse fears over possible scarcity of cash in some major cities across the country as the December, 2023 deadline for the transition to the new naira policy nears.
The clarification became necessary following recent panic that there could be currency scarcity, despite the apex bank’s assurances of sufficient cash stocks in all locations across the country.
As cash scarcity occasioned by the redesign of three naira notes continues to bite Nigerians about a year after the implementation of the policy, the Central Bank of Nigeria (CBN) has warned against collusion between Deposit Money Banks (DMBs) and Point-Of- Sale (PoS) operators.
In a statement by its spokesperson, Sidi Ali, Hakama, the apex bank said such collusion was affecting the availability of cash and the seamless circulation of the naira in the country.
The CBN said it was investigating reported cases of collusion between banks and PoS operators “capable of undermining the smooth running of the economy”.
“The CBN frowns at such inappropriate actions by certain individuals and is investigating the reported cases capable of undermining the smooth running of the economy,” the statement partly read.
“The CBN has, therefore, warned banks and PoS operators to desist from such activities as relevant sanctions shall be meted out to those found wanting.”
The apex bank encouraged members of the public to use alternative payment channels as well as report any case of unauthorised activities, such as capping and hoarding, by banks or PoS agents to the CBN branch in their locations.
In further advancing its efforts at redressing the situation, the apex bank, directed the banks to pick all their cash requirements from the CBN to serve all customer demands while opening their branches for the same purpose on Saturdays and Sundays.
The CBN says it is addressing the reported cases of cash scarcity in some parts of the country.
The apex bank attributed the current situation to the hoarding of the currency by some individuals.
The acting Director , corporate communication, Sidi Ali said that CBN had released sufficient cash to its branches across the country for distribution to deposit money banks (DMBS).
“On the issue of cash not being sufficient, there is enough cash. CBN issued enough cash to the deposit money banks (DMBS),” she said.
Ali said as of March 2023, the currency in circulation amounted to N1 trillion.
Ali said Nigerians should exercise patience as CBN takes necessary steps to guaran cash availability, especially throughout the holiday season and beyond.
The apex bank assured that there is sufficient cash for economic activities after reports of scarcity in some locations.
The bank also cautioned citizens against panic withdrawals, saying there is sufficier stock of currency notes for transactions in the country.
The Central Bank of Nigeria, CBN, has said enough Naira notes are in circulation amid reports of scarcity of banknotes.
In a statement issued by the Corporate Communications Department of the CBN, the apex bank explained the reasons behind the scarcity of Naira notes in some parts of the country.
CBN’s reaction is coming amid a series of complaints by some bank customers concerning the scarcity of Naira notes at bank counters, Automated Teller Machines (ATMs), Points of Sale (PoS), and Bureaux de Change (BDCs).
However, the apex bank said the seeming currency scarcity was occasioned by large volume withdrawals of cash from various CBN branches by Deposit Money Banks (DMBs).
It stated that panic withdrawals by bank customers were also partly responsible for the seeming scarcity.
The CBN said there is no shortage of naira notes, noting that there is adequate supply of the currency in the economy.
“The attention of the CBN has been drawn to reports of alleged scarcity of cash at banks, ATMs, PoS and BDCs in some major cities across the country.
“Our findings reveal that the seeming cash scarcity in some locations is due largely to high volume withdrawals from the CBN branches by DMBs and panic withdrawals by customers from the ATMs.
“While we note the concerns of Nigerians on the availability of cash for financial transactions, we wish to assure the public that there is sufficient stock of currency notes for economic activities in the country,” the statement reads.
The Central Bank has also stated that it is investigating collusion between the banks and Point-of-Sale operators over the lingering cash scarcity in the country.
It said this in a statement titled, ‘CBN cautions banks, PoS operators over availability of the naira …Provides digital feedback box to address complaints’.
The statement said, “The attention of the Central Bank of Nigeria has been drawn to alleged cases of collusion between some Deposit Money Banks and Point-of-Sale operators affecting the availability of cash and disrupting the seamless circulation of the Naira.
“The CBN frowns at such inappropriate actions by certain individuals and is investigating the reported cases capable of undermining the smooth running of the economy. The CBN has, therefore, warned banks and PoS operators to desist from such activities as relevant sanctions shall be meted out to those found wanting.
“Meanwhile, members of the public are encouraged to use alternative payment channels as well as report any case of unauthorised activities, such as capping and hoarding, by banks or PoS agents to the CBN branch in their locations.”
Meanwhile, despite the Central Bank’s gains in mopping the currency outside banks, Nigeria’s total money supply also increased, echoing Nairametric’s earlier warnings on India’s example with a demonetization policy in recent years.
Nigeria’s money supply (M3) rose to N53.3 trillion in February 2023 from N52.16 trillion recorded at the beginning of the year, representing a 2.2% increase year to date. Compared to the previous month, the money supply increased marginally by 0.3% from N53.14 trillion.
