The accelerated drive for a cashless economy emanating from the Naira re-design policy announced by the Central Bank of Nigeria (CBN) on October 26, 2022 appears to have run into murky waters. The socio-economic crisis being experienced in the past few days, long after the festive period when it was predicted that the exercise would be riddled with chaos, is disturbing.
At the centre of the crisis is shortage of new Naira notes in the N200, N500 and N1,000 denominations affected by the re-design policy, while the lower denominations have virtually disappeared. The CBN had put a number of measures in place to ensure smooth implementation of the exercise. These include directing banks to open during weekends (Saturdays and Sundays) to receive deposits of the old Naira notes from customers.
The apex bank also engaged 30,000 super Agents to do currency swaps for Nigerians in outlying districts where banking services are not available to ensure that they are not in any way deprived. The earlier directive to banks to pay the new Naira notes only through their Automated Teller Machines (ATMs) have been reversed. Notwithstanding these measures, scarcity of Naira persists, frustrating citizens’ legitimate businesses and interactions.
In the process, many economic activities have been grounded due to shortage of cash. Commuters are stranded as commercial vehicles suspend operations amid soaring fares. Motorists also spend days at the petrol stations to buy fuel which has become very expensive – selling up to N450 per litre in some parts of the country. To pay for these services has become more difficult with the increasing shortage of Naira.
While the CBN maintained that a reasonable quantity of the new Naira notes has been supplied to the deposit money banks, the banks complain of inadequate stock of the new currency notes. In the process, angry customers have attacked bank staff and facilities in different parts of the country, according to reports.
The CBN has accused the banks of mismanaging the disbursement of the new Naira notes by concentrating on their high net-worth clients at the expense of small-holder customers. It also accused some members of the public of hoarding the new currency notes making effective circulation difficult. The apex bank also frowned at the abuse of the new currency notes through “spraying” at social functions.
We are aware of the desirable objectives of the Naira re-design which the CBN said was meant to curb counterfeiting, money laundering and make digital payments the norm in Africa’s largest economy. The scorecard announced by CBN Governor, Godwin Emefiele, during a meeting with the House of Representatives ad-hoc committee on the review of the Bank’s cashless policy and extension of the timeframe of the currency swap programme of the Bank on Tuesday, January 31, 2023, suggests that the exercise is successful.
Emefiele disclosed that about N1.9 trillion had so far been collected since the commencement of the exercise. He said the currency redesign policy had so far recorded about a 75 per cent success rate given the fact that many of those in the rural and under-served locations across the 36 states of the country have had the opportunity of swapping their old banknotes for the new series of the banknotes.
The CBN governor also disclosed that the exercise has achieved 75 percent success: The money outside the banks has been drastically reduced that what is now left outside the banks is N900 billion as opposed to over 2.7 trillion Naira hitherto
While we appreciate the inevitable challenges inherent in transiting from a cash-full to a cashless economy amidst currency redesign, we urge the CBN to effectively monitor the distribution of the new currency notes by the banks and sanction those found wanting in any way. The apex bank’s collaboration with the Economic and Financial Crimes Commission (EFCC) and the Independent Corrupt Practices and Other Related Offences Commission. (ICPC) towards this purpose should be strengthened . The CBN should ensure that adequate supply of the new currency notes is in circulation to address the critical shortage plaguing the citizens.
We believe that when adequate supply of the new Naira notes is available, the socio-economic crisis brewing across the country due to the biting scarcity of ‘cash’ will be drastically eliminated. This should be the CBN’s target as we approach the new deadline of February 10, 2023 for the old notes to cease being legal tender.
Nigerians must appreciate the fact that in the light of the current scenario, no further extensions should be expected and therefore all are better advised to act timely by embracing digital payment options. It will help to boost economic activities, grow GDP and improve government tax revenues.
The CBN and the banks should step up awareness campaigns to promote digital financial transactions to the level that is witnessed in Kenya, South Africa and Rwanda where digital payment has contributed to the growth of small and medium enterprises.
We urge the CBN to also work with the Ministry of Communications and Digital Economy, the National Communications Commission (NCC) and the telecommunication operators to work out an arrangement for collaborative activities that would make the cashless policy a real success
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