As CBN Renews Mandate on New Naira Notes

Finance

Rather than succumbing to the activities of social media rumour peddlers predicting the phasing out of the newly redesigned currency notes ahead of the inauguration of a new administration on May 29, the Central Bank of Nigeria, which promised to flood banks with the new notes, said the naira redesign policy has come to stay, reports Festus Akanbi 

Last week, the Central Bank of Nigeria (CBN) took a step ahead of purveyors of fake news by reassuring Nigerians of its resolve to continue to make the new naira notes available in banks ahead of the December 31, 2023 deadline when it will phase out old currency notes.

In an age of social media misinformation where many public and private institutions have been brought to their knees as a result of mischief-laden reports, analysts said the CBN’s rebuttal of the fake report couldn’t have come at a better time.

While denying the reports that it plans to withdraw the recently redesigned N1000, N500, and N200 currency banknotes from circulation, the apex bank, in a statement by its acting Director of Communications, Dr. Isa AbdulMumim said there is no going back on the policy which has started yielding results in the nation’s financial system.

According to him, banks are expected to disburse the new currencies to their customers via over-the-counter payments and Automated Teller Machines. 

The statement by the CBN read, “We wish to reiterate that the new and old currency notes have been circulating side by side just as the bank has been taking delivery of a good quantity of the redesigned bank notes from the Nigerian Security Printing and Minting Company Limited.”

The CBN further reaffirmed its commitment to supplying the approved notes for the smooth running of the economy and urged members of the public to disregard any report suggesting a phase-out of the redesigned currency.

“Furthermore, we are committed to supplying the approved indent for the smooth running of the economy. We, therefore, urge members of the public to disregard any report suggesting a phase-out of the redesigned currency.” 

The statement said the redesigned notes and the old notes will continue to be accepted as legal tender and will circulate side-by-side for transactions ahead of the  December 31 deadline, when the old N1000, N500, and N200 banknotes will eventually be phased out.

The CBN urged members of the public to be guided accordingly and ignore any fake news circulating on social media.

The bank had on December 6, 2022, announced its plans to redesign the naira notes as part of efforts to check inflation, counterfeiting, and corruption.

Deadlines

The bank initially set January 31 as the deadline for the use of old naira notes across Nigeria, but the deadline was later shifted to 10 February.

Many Nigerians still face difficulties in accessing the redesigned notes, with riots and protests breaking out in parts of the country.

Subsequently, following a Supreme Court ruling, the CBN on March 13, directed commercial banks to dispense and receive the old N200, N500, and N1000 bank notes adding that the notes remain legal tender until December 31.

A Lagos-based banker, Mr. Olasunkami Adeagbo commended the speedy rebuttal of the misleading report which he said was informed by the assumption that the incoming civilian administration might suspend the naira redesign policy.

“This must be an idea that originated from a beer parlour gist or deliberate misinformation by politically exposed people who were against the policy ab initio.

“Nigerians are getting used to the new naira notes, and since the apex bank has promised to flood the system with new notes, I don’t see any reason why anyone would suggest that the CBN was about to phase out the new currency notes,” he stated.

Rise in Money-in-Circulation

THISDAY gathered that the CBN’s clarification was coming on the heels of the gradual rise of the currency-in-circulation for April which stood at N2.34 trillion although it fell short of the figure for October last year, where the currency-in-circulation was put at  N3.23 trillion in October last year. 

Data from the CBN shows that Nigeria’s currency in circulation increased to N1.68 trillion in March 2023, a 71.4% rise from the previous month. The surge in currency circulation is attributed to the Supreme Court’s judgment to return old notes into circulation.

Nigeria’s money supply rose to N54.6 trillion in March 2023, with credit to the private sector increasing to N43.1 trillion and credit to the government dropping to N27.5 trillion.

The apex bank maintained that rather than look back on the naira redesign policy, it is forging ahead in not only making the currency available to Nigerians but also in its efforts to reduce physical cash in transactions.

This was the position of the CBN Director, Currency Operations Department, Mr. Ahmed Umar while speaking on Arise News last week. He used the opportunity to clarify that there was no decision by the apex bank to withdraw the new naira denominations from circulation as alleged in the social media.

He said both the new and old banknotes would continue to circulate in the system up to when the old notes would be withdrawn on December 31, 2023, in compliance with the order of the Supreme Court of Nigeria.

He said: “So, there is no truth in the news making the rounds that CBN is going to stop issuing the new notes.

The new and old notes are circulating side by side and as of April 18, we have over N2.34 trillion in circulation.”

He stressed that both notes would continue to circulate until the period the Supreme Court had given that the old notes should cease to be legal tender.

Umar said that the currency redesign project has had a positive impact on the economy.

Alternate Channels to the Rescue

Interestingly, the apex bank is already looking beyond physical cash for transactions as efforts were being made to encourage the use of alternative payment channels.

It is therefore not a surprise that Umar expressed confidence that between now and December, the uptick in the use of alternative channels of payment transactions would reduce the amount of physical cash in the system and help increase the visibility of the central bank’s digital currency – eNaira.

Giving an update on the e-Naira policy, Umar said that as a result of the implementation of the cashless policy, the volume of electronic transactions had risen significantly.

He said the electronic payment system showed an increase of 984 per cent in transactions in the first quarter of 2023 when compared with the corresponding period of 2022.

According to him, electronic transactions stood at N434 million in Q1 2022 and went up to N7 billion between January and March 2023, representing a growth of about 984 per cent.

 He pointed out that there had been an increase in enrolment of the Biometric Verification Number (BVN) from 55 million in October 2022 to about 57 million in April 2023.

He also said mobile money wallet had increased from N15 million in October last year to about N25 million in 2023.

He stated that the naira redesign programme had further helped to address issues around counterfeiting, ransom-taking, and money laundering.

He said the Nigerian Security Printing and Minting Company (NSPMC) is currently ramping up production of the redesigned banknotes as well as issuing them side by side with the old notes.

We believe between now and December, there would be an uptick in the use of alternative channels and the increased visibility of the eNaira.

“We are hoping that resort to cash will decline and we will come back to a comfortable level that we feel is stable and feasible for appropriate policy transmission,” he added.

He said the CBN was working to increase the outlets where people can use the eNaira.

“We want to have it at every corner so people don’t need to carry cash for their daily transactions and we are working with so many people who are coming up with new ideas,” Umar stated.

Financial sector watchers said the CBN will need to engage Nigerians from time to time as a way of staying ahead of those bent on confusing the financial system.

They also warned the incoming administration not to pander to the wishes of agents of destabilisation seeking the reversal of the policy on naira redesign given the huge resources deployed to the process.