Business

Disappearance of new naira notes and lingering blame game

Despite the currency increase in circulation from N982.09 billion in February to N1.6 trillion at the end of March 2023, the new naira notes introduced by the Central Bank of Nigeria (CBN) have become very scarce.

It is barely one month after the reintroduction of old currency notes and many Nigerians are asking questions as to why the newly redesigned naira notes are not easily accessible.

Indeed, it is as difficult to get the redesigned naira as the biblical Elephant passing through the eye of a needle.

While the CBN blames Nigerians for hoarding available ones, maybe in anticipation of the December 31 deadline, the banking public in turn accuses the apex bank of not supplying enough to banks. The banks themselves are pointing fingers at CBN, saying that the apex banking sector regulator is only targeting cashless economy and do not worry about supplying them with new notes.

The banks’ Automated Teller Machines (ATMs), which dispensed new notes at the time the new notes were launched, have returned to old notes disbursement across the counter or through other payment channels.

The bottom line is that nobody wants to be a victim of scarcity again, because it brought not only anguish, but also led to death of businesses and humans.

A member of the Presidential Economic Advisory Council, Bismarck Rewane, said the CBN printed approximately N400 billion new naira notes following the currency redesign programme.

In a report titled: Nigeria Hits A Brick Wall, Rewane said that a shortfall of N2.48 trillion cash exists, leading to near paralysis of commercial activities in the economy.

He said the shortfall represents 90 per cent of the cash in circulation, meaning that only about 10 per cent of the cash needed was printed.

According to Rewane, an economist and Managing Director, Financial Derivatives Company Limited, three of the eight naira denominations – N200, N500 and N1,000 estimated at N2.88 trillion – make up 90 per cent of the total cash in circulation.

A breakdown of the N400 billion new notes printed by the Nigeria Printing and Minting Company showed that about 700 million pieces of new notes are in circulation at present.

This means that the volume of the new notes falls drastically below the 9.75 billion pieces naira notes circulating before naira reforms.

According to CBN sources, in the past, the naira suffered from hoarding by the political class, but now, ordinary citizens are hoarding the new notes.

To provide clarity to yet another round of blame game, the apex bank says it is managing the circulation of the new notes, while releasing more old notes to the commercial banks.

“Over a trillion naira is in circulation and more notes are being released to the banks,” a CBN source said.

The Supreme Court had in a landmark ruling on March 3, extended the validity of the old N200, N500 and N1000 notes till December 31, 2023.

A seven-member panel of the court led by John Okoro ruled that the old notes should circulate alongside the new notes until the end of the year.

It took the CBN about two weeks to act on the judgment.

According to a source at the CBN: “People, not only politicians but ordinary Nigerians, are hoarding the new notes because of uncertainties.

“You know December will soon come. That is when all the old notes will cease to be legal tender. So people are stocking the new notes to mitigate uncertainties over the old or new naira notes.”

The CBN official advised the “authorities to engage in massive enlightenment and reassurances that the new notes will be available in and after December.”

According to the official, that is the reason the CBN is dishing out the old notes so that they become available and citizens can make transactions very easily. That is the current position.

“So, it’s not that the CBN is not releasing money at all.”

When told that Nigerians want the new notes, the CBN official said “Why are people looking for the new notes if they want to buy goods and services and money is available?

“For now that is not the problem of the citizens.

“Those complaining are looking for the new notes to hoard. That’s the implication.”

What is happening, the source said, “is that the new notes are not returned to the commercial banks.

“If they can be returning them to the commercial banks, the banks will also give them out to the citizens to use, but it appears that that is not happening.

“For now, the strategy of the CBN is to meet the present exigencies, ameliorate any suffering, make money available, either old or new, so that people can have easy access.

“But the CBN has its own strategy to ease out the old notes before the end of December, so the implication is that there is the likelihood that more new notes will come into circulation.”

He said the large denomination notes are very vulnerable to counterfeiting because of the huge profit they make from it.

So there is the possibility that the CBN will print more of the lower denominations in line with its own objective.

Emefiele had in a press conference in Lagos said “CBN is aware of the difficulty faced by Nigerians in accessing the new currency at this initial stage of its issue and circulation, but wishes to plead with all to please show some understanding as everything is being done to correct some of the observed lapses in the implementation of this ambitious programme.”

Accordung to him, some bankers have not complied with a directive to only load the new notes on Automatic Teller Machines (ATMs).

Emefiele at the peak if tge cash crunch said instead, the banks have been handing out bundles to individuals who spray them at parties.

Also, when he appeared before the senate, he told them that CBN gave specific directives to the banks to load the new notes into the ATM nationwide to ensure equitable and transparent mechanisms for the distribution of the new notes to all Nigerians.

“Many of us have unfortunately seen the new naira, instead of being used for the purpose it’s meant, is used in parties, in celebrations.

“Some said, maybe, it’s money from the ATM and I said no, money from the ATMs is already broken. They (the ones spread at parties) are in leaflets.

“What we saw being stamped on people at parties were packages of the new naira notes, which means they (banks) had breached certain aspects of the guidance note we gave to them.”

A senior bank executive who spoke on condition of anonymity, said, “The CBN did not print enough new notes and does not want to return the old notes it has collected because it is still driving its cashless policy.”

READ ALSO FROM NIGERIAN TRIBUNE