Still on CBN and new notes

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A week to the cessation of the old N200, N500 and N1000 notes as legal tender, the redesigned notes are still in short supply from the Deposit Money Banks (DMBs). Virtually all DMBs are still dispensing old notes from their Automatic Teller Machines (ATM) and that is also what is happening across the counter. It seems difficult to choose who to believe between the DMBs and the Central Bank of Nigeria (CBN) on the worrying supply situation. The former claims shortage of supply from the latter, while the latter says it is begging the former to pick up the new notes for disbursement to customers. Certainly, something is amiss and one of the parties is being economical with the truth. What is clear, however, is the unavailability of the new notes for transactions in the country just over a week to the deadline for the cessation of the legality of the old notes. We had envisaged the present awkward situation and that was why we warned the CBN about its apparently less than stellar and unorganised approach to the currency redesigning exercise.

At that point, we observed that the banks were still vending old notes with the complaint that they did not have sufficient new notes to dispense even well into the regime of the new notes and posited that it was irresponsible of the CBN not to have made enough new notes available to the banks before the start of their use. Now, the CBN claims it is appealing to the DMBs to come for the new notes, but we don’t think it should be begging: it should be acting decisively. To be sure, the redesigning of the new notes and their seamless introduction into the economy are within the CBN’s mandate. If indeed the CBN has played its part creditably, as it would have Nigerians believe, and yet some stakeholders within the financial system over which it has supervisory and regulatory responsibilities are sabotaging the achievement of its mandate, then it should not be begging. It should be whipping the recalcitrant DBMs into line.

The only way for the new notes to supplant the old notes seamlessly is for every visit to the banks or ATMs to yield new notes, such that every old note would stay with the banks. There was no sense in banks dispensing old notes through their ATMs and over the counter when the use of the new notes had commenced, but that, unfortunately, was what happened. Truth be told, the CBN should not just be asking banks to come and collect new notes now if it was serious about the exercise: that ought to have been done before the rollout of the new notes.

It is disturbing to observe the present confusion whereby the use of old notes, which will lapse in a matter of days, dominates transactions within the economy while the new ones are hardly used because they are not freely available. It is either the planning that went into the naira redesign was less than rigorous or the redesign was meant to achieve ignoble objectives. If economic actors and ordinary citizens in major cities across the country, including Lagos, the nerve centre of the Nigerian economy, are complaining of the paucity of the new naira notes a week to the cancellation of the old ones, the situation in the rural areas can only be imagined. This sordid state of affairs is an egregious official lapse which has strengthened speculations in some quarters that the naira redesign exercise may have been promoted to achieve some objectives other than the improvement in the health of the economy . The apex bank knows what to do to put a lie to the rumour.

Nonetheless, we appeal to the DMBs to heed the call by the CBN to collect new notes from it for onward disbursement to their customers. Both the CBN and the DMBs must do everything to move the new notes in sufficient quantities to the banks in order to help suffuse the country with the new notes immediately. That course of action would help a great deal to stave off further crisis as the deadline for the use of the old notes approaches. The CBN, in particular, owes itself and the country the responsibility of ensuring that the paucity of new naira notes within the system is decisively and pragmatically addressed without further delay in order to obviate the veritable tension that is already threatening to engulf the currency redesign exercise.

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