The Central Bank of Nigeria says that old naira notes would no longer be legal money in the next 15 days, despite the fact that many banks’ ATMs continue to accept them. Nigerians are thus depending on the central bank to eliminate any barriers erected by banks to the implementation of its naira redesign program as soon as possible, according to Festus Akanbi.
Although the Central Bank of Nigeria (CBN) has stated that there will be no going back on the expiration of old naira notes on January 31, financial market observers have stated that a combination of poor logistics, manifested in poor circulation of new currency notes by banks, and sabotage by some bank staff, is threatening the Naira redesign policy.
This is due to the fact that, with two weeks to go, many banks are still giving old naira notes through their Automated Teller Machines (ATMs), making it a waste of time for anyone to take their old naira notes to the bank.
Last year, the apex bank revealed plans to redesign N1,000, N500, and N200 notes, with the existing notes becoming legal currency on January 31, 2023.
Amid mounting concerns over the lack of new notes in banks, THISDAY conducted a random poll in Lagos banks this week and found that, with less than two weeks till the CBN’s deadline, many Nigerians may still have plenty of old naira notes since they are still being issued by banks ATM.
In Ikoyi, Lagos State, for example, compliance by banks varied.
Some banks along Awolowo Road still dispensed old naira notes on the weekend, while many others were able to give out fresh notes to consumers. It was the similar situation in Lagos’ Ojodu, Berger, Ijanikin, Ojuelegba, and Egbeda neighborhoods, where most banks continued to issue a mix of old and new naira notes.
THISDAY saw demonstrations by several bank clients who bemoaned their hardship in attempting to exchange old notes for fresh ones. They stated that after following the CBN’s instructions and returning their old naira notes, they expected banks to replenish their ATMs with fresh notes. They complained that all they had received up to the weekend were old notes.
“If the CBN cannot ensure compliance, then we hold them accountable. Why should people who deposit old notes suddenly be compensated with old notes via ATMs?” An irate client inquired.
Allegations
Another consumer said that bank employees are motivated to undermine the CBN’s efforts by selling the new notes to syndicates that sell the naira at social occasions.
“Did we take into account the scam of banks providing fresh banknotes to the Owanbe Party Sprayers Cash Vendors Association? After selling illegally to these vendors and POS operators, they end up stuffing ATMs with outdated notes and blaming non-availability on the government. Not only that, but they reserve fresh notes for political sponsors to use for vote buying and other purposes.”
“Just let CBN release a significant inspection team on them and watch new notes enter the system by force,” he added, insisting that trade blames over the lack of new notes will not cease until the central bank employs force on the banks.
Alternatives Available
As demonstrations over the lack of new banknotes continue, some Nigerians feel the only way out is for the apex bank to extend its deadline in the national interest. Many stated that, given the existing state of the banks, it is highly doubtful that the new notes will circulate sufficiently by the deadline’s end.
Following the concerns expressed by bank clients, the Senate requested that the deadline be pushed out to the end of June, stressing the hardship that a fast implementation would cause Nigerians. While the CBN stated that the currency redesign is intended to combat counterfeiting and reduce the volume of money outside the banking system, which was previously estimated at N2.7 trillion, some have speculated that the program is intended to mop up black money and checkmate politicians ahead of the February and March general elections.
Former Director General of the Lagos Chamber of Commerce and Industry (LCCI) and private sector advocate, Dr. Muda Yusuf, said that there “is no rationale to CBN’s rush”.
He cautioned that if the straightjacket is implemented, millions of poor Nigerians in rural regions may lose their money or have to pay a large premium to have their old banknotes exchanged for the new legal ones.
“The CBN assures us that it will satisfy all of the criteria. Even if some of us disagreed with the overall concept, we have begged that because we are in the process, Nigerians be given more time. That makes sense, and I don’t see what it would lose by pushing out the deadline by two or three months,” the economist told THISDAY yesterday.
On the tardy switchover of ATMs, an official from one of the banks stated that banks are hesitant to configure the machines because they are unsure about long-term supplies. According to the source, the slow supply has prohibited banks from complying with the CBN regulation.
CBN Threatens to Use Heavy Weapons
In addition, the CBN recently warned banks that failed to comply with its instruction to dispense the newly redesigned N200, N500, and N1,000 notes through their ATMs would face fines.
Ahmed Umar, CBN Director of the Currency Operations Department, delivered the warning last week in Abuja at a training session for state directors of the National Orientation Agency (NOA).
The CBN decision, according to Umar, was given to enforce the January 31 deadline for the removal of obsolete naira notes in circulation.
The central bank has directed banks to stop issuing fresh currency notes over the counter and instead make them available through ATMs.
“We want to use this training session to send a message that the CBN has adequate cash notes for the general people,” Umar stated.
“We, CBN management, have directed banks to cease placing outdated money in their ATMs. Only fresh notes should be placed.” And there is a serialisation of the policy in that they may put either N500, N1,000, or N200 notes in their machines, regardless of denomination or mix of any of those notes.”
“We are going to monitor to ensure that the banks comply,” he added, adding that “if they don’t, we have a punishment for non-compliance.”
The CBN director further observed that in many nations throughout the world, it takes a few years to alter a currency, adding that, “in our situation what we had was almost 20 years of having the same design of the note.
“What it did to us throughout that era was establish an opportunity for some people to master the process of faking the note.” In our situation, we have at least 17 years or more until we have to restructure our currency.” It took us 17 years to redesign the N1,000 note, which was released in 2005; the N500 and N200 notes were likewise revised after 21 and 22 years, respectively.
“So, if currency notes linger too long in the system, there is a propensity for individuals to make a lot of attempts to create the identical notes. As a result, we must alter our notes on a frequent basis,” he noted.
Umar went on to say that the N500 and N1,000 notes accounted for 99 percent of the currency notes targeted by counterfeiters.
“It’s basic reasoning; the work you put into counterfeiting N1,000 is the same effort you put into counterfeiting N5. “So, why will they spend their efforts on tiny notes; they always target the higher note, notably N1,000, because of the values linked to it,” he stated.
The CBN Governor, Godwin Emefiele, announced the bank’s intention to develop, create, and circulate new series of the N200, N500, and N1,000 denominations on October 26, 2022.
Emefiele stated that the measure will aid in the management of the money supply, as well as combating currency counterfeiting and terrorism, among other things.
He said that while the new banknotes will enter circulation on December 15, 2022, the old and new currencies would be legal tender and circulate together until January 31, 2023, when the existing currencies would cease to be legal tender.
Emefiele had pushed on keeping the January 31 deadline, saying that the 100 days allowed for consumers to deposit current cash in commercial banks was sufficient.
Whatever measures the CBN implements this week will demonstrate which direction to go. In the sake of the nation’s economy, it is necessary to deal with currency traffickers and bank sabotage.
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