Some bank staff who spoke to TechEconomy on Monday said ever since the Supreme Court ruled that the old notes will remain legal tender until December 31, 2023, the CBN hardly delivers the new notes to commercial banks. 

Nigerian deposit banks have been largely dispensing the old naira notes through Automated Teller Machines (ATM) and paying over the counter.

“The amount of old notes I see the banks give out to customers as of now is a call for concern. If we aim to meet the December 31st deadline, by now the banks should solely be releasing new notes, allowing the old notes to naturally go out of circulation without any stress,” staff from Access Bank who prefer her name not to be mentioned said.

According to a Customer Service Specialist at GTB, the CBN at the beginning of the year usually conveys new notes to various branches, however, “the story isn’t the same today.”

He admitted that banks have not been issuing out the new notes as they should but Nigerians aren’t complaining as long as there is no scarcity. 

Background Story – Naira Redesign Policy 

Governor Godwin Emefiele, CBN Governor on October 26, 2022, announced in a press conference the intention of the apex bank to implement the naira redesign policy. 

Governor Emefiele said the recent development in photographic technology and advancements in printing devices have made counterfeiting relatively easier.

“In recent years, the CBN has recorded significantly higher rates of counterfeiting especially at the higher denominations of N500 and N1,000 banknotes,” Emefiele said.

“Although global best practice is for central banks to redesign, produce and circulate new local legal tender every five to eight years, the naira has not been redesigned in the last 20 years.

The CBN began the implementation of the new naira policy on December 15, 2022. The policy incorporates setting weekly withdrawal limits for individuals (N100,000) and corporate entities (N500,000), as well as redesigning N1000, N500, and N200 notes.

Consequently, some state Governors initiated a legal battle against the CBN which led to the final judgment that apex banks should release old notes by 31st December 2023. 

Economic Loss 

The new naira redesign policy backfired leading to scarcity of notes, suffering, economic losses, and social unrest across the country. Physical cash was largely unavailable and that crippled many activities in the country. 

Nigeria lost N20 trillion to the policy, according to a report by the Centre for the Promotion of Private Enterprise (CPPE).

In response to a news release that was spreading on social media under the CBN’s supposed name, the CBN denied it.

The press release reads: “Due to the current and unpleasant situation happening in Nigeria, in line with Mr. President after having a close meeting with him on 20th February 2023, Central Bank of Nigeria has been directed to ONLY reissue and recirculate the old N200, N500, and N1000 banknotes and this is expected to circulate as legal tender for 70 days up to May 1, 2023…”

However, the Director, Corporate Communication of the apex bank, Osita Nwanisobi in a terse statement said ‘It is fake news’.

Azuka Ogugua, the ICPC spokesperson, stated that the move was a continuation of the ICPC’s crackdown on factors impeding attempts to make the new Naira notes available to the general population.

The bank employee was arrested for purposefully refusing to upload cash into the branch’s Automated Teller Machines (ATMs), even when there was a line of people waiting to use the ATMs at the Deidei Branch of Stanbic IBTC.

The statement reads: “When the ICPC monitoring team stormed the bank at about 1:30 pm on Friday to ensure compliance and demanded an explanation as to why all the ATMs were not dispensing cash, the team was informed by the branch’s head of operations that the bank just got delivery of the cash.

“However, facts available to the ICPC operatives indicated that the branch took delivery of the cash earlier around 11:58 am, and either willfully or maliciously refused to feed the ATMs with the cash.

“Against this backdrop, the ICPC team compelled the bank to load the ATMs with the redesigned Naira notes and ensured that they were all dispensing before arresting the culprit.

“The ICPC said investigations were still ongoing and the Commission will take appropriate actions as soon they are concluded.

“Similarly, seven Point of Sale (PoS) operators as well as a security guard were arrested during an ongoing exercise in Osun State for charging exorbitant commissions for cash.

“Investigations, however, revealed that they got the money from Filling Stations that collect new notes from fuel buyers, but they then resell the cash to the public at exorbitant rates.

“The arrested persons were helping the anti-graft commission with information to assist investigations and bust other syndicates involved in the hoarding and sales of the redesigned Naira notes,” the anti-graft agency said.

The CBN Governor issued a statement on Wednesday during a special press briefing in Abuja.

He advised Nigerians to take old notes to banks to enable them to withdraw the new banknotes once circulation begins.

Part of the statement reads: “We have called this gathering to inform relevant stakeholders and the general public of persisting concerns we are facing with the management of our current series of banknotes and currency in circulation, particularly those outside the banking system in Nigeria.

“As you all may be aware, currency management is a key function of the Central Bank of Nigeria, as enshrined in Section 2 (b) of the CBN Act 2007.

“Indeed, the integrity of a local legal tender, the efficiency of its supply, as well as its efficacy in the conduct of monetary policy are some of the hallmarks of a great Central Bank.

“In recent times, however, currency management has faced several daunting challenges that have continued to grow in scale and sophistication, with attendant and unintended consequences for the integrity of both the CBN and the country.

“These challenges primarily include significant hoarding of banknotes by members of the public, with statistics showing that over 80 percent of currency in circulation is outside the CBN; the growing scarcity of clean and fit banknotes, resulting in a negative perception of the CBN and an increased risk to financial stability; the increasing ease and risk of counterfeiting, evidenced by several security reports.

“Indeed, recent developments in photographic technology and advancements in printing devices have made counterfeiting relatively easier. In recent years, the CBN has recorded significantly higher rates of counterfeiting, especially in the higher denominations of N500 and N1,000 banknotes.

“Although the global best practice is for central banks to redesign, produce, and circulate new local legal tender every 5–8 years, the Naira has not been redesigned in the last 20 years.

“On the basis of these trends, problems, and facts, and in line with Sections 19, Subsections a and b of the CBN Act 2007, the Management of the CBN sought and obtained the approval of President Muhammadu Buhari to redesign, produce, and circulate a new series of banknotes at the N100, N200, N500, and N1,000 levels.

“In line with this approval, we have finalized arrangements for the new currency to begin circulation on December 15, 2022. The new and existing currencies shall remain legal tender and circulate together until January 31, 2023, when the existing currencies shall cease to be legal tender.

“Accordingly, all deposit money banks currently holding the existing denominations of the currency may begin returning these notes back to the CBN effective immediately. The newly designed currency will be released to the banks on a first-come-first-serve basis.

“Customers of banks are enjoined to begin paying into their bank accounts with the existing currency to enable them to withdraw the new banknotes once circulation begins in mid-December 2022.

“All banks are therefore expected to keep open their currency processing centers from Monday to Saturday so as to accommodate all cash that will be returned by their customers. For the purpose of this transition from existing to new notes, bank charges for cash deposits are hereby suspended with immediate effect.

“Therefore, DMBs are to note that no bank customer shall bear any charges for cash returned/paid into their accounts. Members of the public are to please note that the present notes remain legal tender and should not be rejected as a means of exchange for the purchase of goods and services.

“We would like to use this opportunity to reassure the general public that the CBN will continue to monitor both the financial system in particular and the economy in general and always act in good faith for the achievement of the bank’s objectives and the betterment of the country.”