With CBN’s deadline for old naira notes looming, banks are urged to quickly phase out dispensing of outdated notes and comply with the naira redesign policy.
CBN’s Naira redesign policy faces challenges as poor logistics and sabotage by bank staff hinder the circulation of new currency notes before the expiration of old notes on January 31st.
With only two weeks left until the deadline set by the Central Bank of Nigeria (CBN) for the redesign of N1,000, N500, and N200 notes, many banks are still dispensing the old notes through their Automated Teller Machines (ATMs). This is causing frustration among the public, as it is a waste of time for anyone to take their old notes to the bank. A recent survey by THISDAY in banks in Lagos confirms that many Nigerians may still have large amounts of old notes, as they are still being dispensed by bank ATMs.
Compliance with the Central Bank of Nigeria’s (CBN) directive to redesign N1,000, N500, and N200 notes vary among banks in Ikoyi, Lagos State. In some banks along Awolowo road, old notes were still being dispensed at the weekend, while others were able to provide new notes to customers. Similar inconsistencies were observed in the Ojodu, Berger, Ijanikin, Ojuelegba, and Egbeda areas of Lagos, where most banks were still dispensing a combination of old and new notes. Customers have expressed frustration and held protests over their difficulty in obtaining new notes, despite having returned their old notes in compliance with the CBN’s directive. They complained that despite returning their old notes, they were still receiving old notes through ATMs. One customer questioned the CBN’s ability to enforce compliance and held them accountable for the confusion.
Allegations
Another customer alleged that bank staff is deliberately undermining the efforts of the Central Bank of Nigeria (CBN) by selling new notes to syndicates that sell the naira at social events. This customer questioned the bank’s integrity and alleged that new notes are being sold to vendors and Point of Sale operators illegally, and then ATMs are loaded with old notes, creating a false narrative of non-availability. Additionally, this customer alleged that new notes are also being reserved for political patrons for vote buying and other illegal activities.
A customer stated that blaming each other over the scarcity of new notes will not stop until the Central Bank of Nigeria (CBN) takes action against the banks. The customer suggested that the CBN should send an inspection team to enforce compliance and that this would result in new notes flooding the economy.
Available Options
As protests over the scarcity of new banknotes continue, some Nigerians are calling for the Central Bank of Nigeria (CBN) to extend its deadline for the redesign of N1,000, N500, and N200 notes in order to avoid negative impacts on the nation’s economy. Many argue that based on the current situation in banks, it is unlikely that the new notes will be circulating adequately by the expiration of the deadline. In response to the concerns raised by bank customers, the Senate has suggested that the CBN move the deadline to the end of June. While the CBN claims the redesign is aimed at combatting counterfeiting and reducing the amount of money outside of the banking system, which was estimated at N2.7 trillion, some suggest that the program is intended to mop up black money and checkmate politicians ahead of the February and March general election.
Former Director General of the Lagos Chamber of Commerce and Industry (LCCI) and private sector advocate, Dr. Muda Yusuf, has criticized the Central Bank of Nigeria’s (CBN) approach and argued that “there is no logic behind CBN’s stampede”. He warned that many poor Nigerians in rural areas could lose their money or pay a high premium to exchange their old banknotes for the new legal tenders if the current implementation continues. He suggested that it would make sense for the CBN to give Nigerians more time and that postponing the timeline by two or three months would not harm the CBN. An official of one of the banks, who requested anonymity, said that banks are hesitant to configure the machines, as they are not sure of a sustainable supply, which has prevented them from complying with the CBN’s directive.
CBN Threatens to Wield Big Sticks
The Central Bank of Nigeria (CBN) has warned that banks that fail to comply with its directive to dispense the newly redesigned N200, N500, and N1,000 notes through their ATMs will face penalties. The Director of the Currency Operations Department, Ahmed Umar, made this announcement during a training session for state directors of the National Orientation Agency (NOA) in Abuja last week. He explained that the CBN directive was issued to enforce the January 31 deadline for the withdrawal of old naira notes in circulation.
The Central Bank of Nigeria (CBN) has instructed banks to only dispense new currency notes through ATMs and to stop over-the-counter distribution. The CBN’s Director, Umar, stated that the training session was meant to convey the message that there is enough currency for the general public. He also mandated banks to only put new notes in their ATMs, in denominations of N500, N1,000, or N200 and warned that non-compliance will result in penalties. Umar explained that in many countries, it takes several years to change a currency and that over 20 years of having the same design had led to a significant amount of counterfeiting in Nigeria. He added that it will take at least 17 years or more to redesign the currency.
The Central Bank of Nigeria (CBN) plans to redesign and circulate new series of N200, N500, and N1,000 denominations to combat counterfeiting and terrorism. The CBN Governor, Godwin Emefiele, announced on October 26, 2022, that the new banknotes will begin circulation on December 15, 2022, and the old and new currencies will remain legal tender until January 31, 2023, when the old currencies will no longer be accepted. Emefiele emphasized that the January 31 deadline is final and that the 100-day window for depositing old banknotes in commercial banks is sufficient. The CBN’s actions this week will indicate the direction it plans to take to combat currency trafficking and sabotage in banks in the interest of the nation’s economy.
Source: ThisDay Live