New naira notes: Why CBN should use the stick on erring commercial banks

Chief Brown Mene is a former director of administration and assistant general manager in the Nigeria Security Printing and Minting Company Limited. In this interview with EBENEZER ADUROKIYA, he took a swipe at the Central Bank of Nigeria (CBN) over the scarcity of the new naira notes, urging the apex bank to wield the stick.

WHAT are your views and fears concerning the redesigns of the naira?
First, my view is to say it is the proper thing to do; in fact, it is long overdue, but it is better late than never. The logistics of ensuring that they are everywhere for people to have the notes and for the deadline to be maintained and kept without panic is the area of my concern. Because as of today, some banks are still paying out old notes and that is not good enough. So, the Central Bank of Nigeria should take responsibility for that based on the fact that they have a supervisory role over all commercial banks. Because it is their own policy, they should be the drivers to make it work. So, there is a need for them to step up in the few days that are left.

Would you canvass an extension of the deadline, which is January 31?
I would not canvass the need for extension because they ought to be monitoring the volume of cash that is available to each bank. They should be in position to tell if they have enough or not. Because, the banks can also be laid back and out of convenience, they just do not want to be bothered. So, it is up to Central Bank of Nigeria to move out to the banks and ensure that they are not just sitting back in laziness. If they rise up and do it, they can still accomplish it depending on when they find out and there will not be the need to bring in the extension.

What is your message to the CBN?
What I am saying to them is that the advocacy they are doing now, they ought to have done it even before the new notes were out. When there was a change in my tenure, we knew it was happening, but our families didn’t know because we recognised confidentiality about it and didn’t tell anybody. By the time the Central Bank finally made the announcement that things were going to change, it had already been distributed around the country and on the due date it was already being dished out. That’s the way to go about it but now, it is not so. By now, no bank should be paying old notes.

What is your message to people in rural areas?
The CBN should put out a number to everyone to report any bank that is still paying old notes and when the banks know that that is being done, they will sit up.

Don’t you think there are some people manipulating the commercial banks against the CBN policy?
I don’t know; the commercial banks should not be foolish; they are in business and confidence is a major factor in banking. Any commercial bank that will allow itself involved in frustrating the system should not be in banking business at all. Their business is to provide financial services; let people have enough confidence to bring their money and give to them, use for business and gain interest. So, if they will be frustrating the system, it will fall out on them.

During your period, did you experience individual hoarding of the naira?
That has always been there and it’s not something new, but we should be able to combat it and discourage it.

Are the new notes scarce because money is meant to be scarce as one of its qualities?
When you talk of money being scarce, it means that the system should not be saturated with too much cash because that will bring down the value. That is, the CBN will sometimes put up a policy to mop up excess liquidity from the system.

Is the scarcity of the new naira notes not a ploy to encourage the cashless policy?
Cashless transaction is that you will still be making your transactions. When you say excess liquidity, it doesn’t mean excess bank notes circulated, but that there’s too much money in the system. So, the way to go about it is not to penalize people, but to bring incentive so that people will invest in it such as bonds and that will take care of the excess money around.

Why should the CBN give a directive and the commercial banks will not strictly adhere to it? Central Bank of Nigeria has the stick, they have the power to penalise the banks for violating any policy that has to do with their banking operations. I don’t know if they are doing it or not, but the result is what we see. They can tell you they have done it, but the effect is not there and because the effect is not there, that is why I’m saying to them to do it because they have the power to do it.