According to the apex’s bank financial statements released recently, the CBN spent 40.42 per cent more than the N53.29bn it spent in the preceding year, to rollout the naira in different denominations.

This is despite the scarcity of naira that plagued the country in the latter months of 2022.

Defining currency issue expenses, the bank said, “Currency issue expenses relates to expenses incurred in relation to the printing, processing, distribution, and disposal of currency notes. This is recognised at cost when incurred.”

The cost of sale which equates to the expenses incurred by one of the subsidiaries (the Nigerian Security Printing and Minting Plc in this case) in respect of the production of currency notes and coins was N45.19bn in 2022, an 18.72 per cent increase from the N38.07bn it was in 2021.

It added, “They include cost of raw materials, employee benefit expenses relating to production staff, electricity and diesel expenses, depreciation and repairs and maintenance.”

In 2022, the total amount in circulation was N3.01tn, a 9.47 per cent decline from the N3.32tn that was in circulation in 2021. In 2020, the total cost incurred on printing of bank notes was N58.62bn, a 28.83 per cent decrease from the N75.52bn that was recorded in 2019 according to the bank’s ‘2020 Currency Report.’

In October 2022, the suspended Governor of the CBN, Godwin Emefiele, announced that the bank would release re-designed naira notes by December 15, 2022, and certain denominations of the existing notes would cease to be legal tender by January 31, 2023.

This move led to a cash crunch plague that lasted for months and negatively affected the economy.

[Source]

The post CBN Spent N74bn on Naira Redesign, New Notes in 2022 appeared first on Tech | Business | Economy.

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The amount of queueing Nigerians have been subjected to in the last couple of weeks is unprecedented. It is equally unbecoming. It’s almost like the country had gone back four decades.

Fights have broken out in queues at bank facilities, filling stations and INEC and LGAs offices across the country. There are trending videos of people stripping naked in protest inside banking halls, others hitting each other with queue dividers and one person has been confirmed dead inside a banking hall, somewhere in Asaba. Nigerians born in the 2000s, GenZs, should be forgiven for thinking the end of the world is here.

On a typical day, a person will queue to collect new currency notes at the bank, rush to queue at the filling station to buy supposedly subsidized petrol at exorbitant prices and then drive to the closest INEC office to queue for permanent voter cards (PVCs). This is not sustainable.

The worst part is that no one is accepting responsibility for the inanity.

ALSO READ: Five Steps INEC Should Take to Address Concerns of Disenfranchisement over PVCs – EiE

The CBN Governor, Godwin Emefiele, has consistently held that the banks are given enough stock of the new naira notes. The endless queues in and around banks question the veracity of this claim. The CBN has now alleged sabotage by the banks and has deployed a monitoring task force to keep an extra eye on their operations. This shows the frosty state of the relationship between the banks and its regulator.

The CBN inspection and ICPC teams have caught a couple of banks hoarding the new naira notes. They should continue the good work that they’re doing to maintain control.

The reality is that the suffering is real, the pain is widespread and anger is rising to a boiling point. The CBN must act to ease the pain. It is a case of demand and supply – make more new naira notes available across the banks, monitor the deployment and see the relief across the land.

The naira redesign, according to the CBN, is expected to strengthen the economy, reduce the expenditure on cash management, promote financial inclusion, and enhance the bank’s visibility of naira supply. It also seeks to drive the quest for a truly cashless society. It is a good thing.

It is a change management issue. The CBN ought to have managed it better. In systematically phasing out the old note, it should have introduced the new notes earlier and ensured availability in ATMs all over the country with a restriction on the amount that can be cashed per time.

The cashless policy beyond the cash supply challenge is a digital banking infrastructure issue. Digital banking deals with everyday essentials, including checking balances, reviewing transactions, making payments and transferring funds, whether using USSD, banking apps or online/web-based systems.

It is thus a sad commentary on the actual state of the nation’s digital financial infrastructure to see apps and servers collapse under the strain of increased traffic. It shows a lot still needs to be done to strengthen the system. Transactions are not completed; alerts fail to arrive and all sorts of strange messages occur for the first time.

During this season of madness, some banks have been heard whispering to customers that the network fault that they are complaining about is failings from the telecommunications side. Telcos do not need to respond to this allegation. They simply need to work closely with financial institutions to make the transactions seamless. The first step in solving a problem is recognising there is one.

ALSO READ: No to Proposed Excise Duty on Telecommunications Services

One more thing, the CBN must also look at removing ALL charges for online and POS transactions in the short term. It can later look at a reduced fee for these transactions as volume has risen.

The N100 and N50 naira notes are not being redesigned, they should be widely available. CBN must stick with the deadline and work assiduously to ease the flow of cash. The cashless economy cannot happen overnight. We can admit that progress has been made.

On the fuel queues which have persisted for over five months, the NNPC Limited consistently claimed it had enough fuel and urged the public to shun panic buying. The problem has remained.

The DSS, in December, gave the NNPC Limited and marketers 48 hours to end fuel scarcity. We are still here.

The House of Representatives also gave the NNPC Limited a week ultimatum to end the artificial scarcity of petroleum. It has long expired without any respite.

The Presidency has equally waded in with little success. The problem has proven intractable.

The economics is difficult to follow. How can the government be budgeting trillions for fuel subsidies and Nigerians are buying at double the approved price? Something is not right here. In a season of a global oil boom, Nigeria may be the only oil-producing nation with citizens queueing long indeterminate hours for fuel. Something is missing here. Someone is not telling Nigerians the truth. Between NNPC Limited and the major Marketers, there is a gulf.

The citizens are been made to suffer and pay for their failings.

In addition, the federal government cannot continue to pretend to be unaware of the problems that Nigerians are going through. It must, as a minimum, look to fix it, apply necessary sanctions and ensure the availability of petroleum products across the country.

The queue for PVCs is another queueing battle Nigerians are currently contending with. News reports indicate that no fewer than 6.7 million Nigerians have yet to collect their PVCs less than four weeks before the general elections. Over two million of this number are in Lagos and Abuja alone.

Before we heap the blame on the citizens, let us remember the reports of missing PVCs, poor communication about collection points and claims of extortion against INEC officials since the collection of the cards commenced on 12 December. Some people have complained on social media of discrimination from compromised INEC officials stalling the release of PVCs to people from a particular tribe, especially in Lagos State. Many people were told their PVCs had not been printed after over six months of registering. That is untidy on the part of INEC. Bank ATMs cards are now printed on demand why should PVCs take forever?

Thankfully, the umpire has been responsive. It set up collection centres in the wards, started sending text messages to people to ease the process and even extended the collection deadline.

These are good steps. But INEC can do better. INEC must do better. Registration and collection on PVCs should be open all year round in its offices. This ad-hoc, fire-brigade approach doesn’t cut it any more.

The PVC queue is important. It is expected to prove useful in determining the next leader of the country. February 25, 2023, Nigerians will have to queue to cast their votes. Let us queue patiently on the day. When we queue and vote wisely, we can take back Nigeria

Eromosele, a Corporate Communication professional and public affairs analyst lives in Lagos.

The post Naira Redesign, Queues and the Quest for a New Nigeria appeared first on Tech | Business | Economy.

The programme enables citizens in rural areas or those with limited access to formal financial services to exchange old Naira notes for redesigned notes.

ALSO READ: Redesigned Naira: 50% of Nigeria’s Unbanked Poor Could Lose Savings – Report

Since the introduction of the new Naira notes, the apex bank has sustained its nationwide awareness and sensitization programmes, enforced speedy collection of the new notes at CBN branches by the DMBs and mandated issuance of the new notes through Automated Teller Machines (ATMs) to ensure that distribution is fair, transparent and evenly spread across the country.

In a statement signed by its Director, Banking Supervision Department, Haruna B. Mustafa and the Director, Payments System Management Department, Musa I. Jimoh, the Bank said the initiative takes effect from Monday, January 23.

According to the programme, the old ₦1000, ₦500, ₦200 notes can be exchanged for the newly redesigned notes and, or the existing lower denominations (₦100, ₦50 and ₦20, ₦10 and ₦5) which remain legal tender.

Under the programme, agents can only exchange a maximum of N10,000 per person. Amounts above ₦10,000 may be treated as cash-in deposit into wallets or bank accounts in line with the cashless policy, with BVN, NIN, or Voter’s card details of the customers used for identification.

To promote financial inclusion, the service is also available to anybody without a bank account. Agents may, on request instantly open a wallet or account, leveraging the CBN Tiered KYC Framework.

This will ensure that this category of the populace is able to exchange or deposit their cash seamlessly without taking unnecessary risk or incurring undue cost.

Agents are expected to sensitize customers on opening wallets, bank accounts and the various channels for conducting electronic transactions.

The designated agents are also eligible to collect the redesigned notes from DMBs in line with the Revised Cash Withdrawal Limit policy.

The agents are also permitted to charge cash- out fees for the cash swap transactions but are prohibited from charging any further commissions to customers for this service.

In addition, the agents will render weekly returns to their designated banks regarding the cash swap transactions, while the DMBs will in turn render same to the CBN on a weekly basis.

The Principals, namely Super Agents, MMOs, DMBs will be held accountable for their agents’ adherence to the above guidelines.

The Cash Swap agents will be readily identifiable in all local governments, particularly those in the rural areas.

To ensure the success of the progamme, the CBN assured that it will continue to monitor its implementation and provide further guidance as may be necessary.

The post Naira Redesign: CBN Launches Cash Swap Programme, Targets Underserved Areas appeared first on Tech | Business | Economy.

This he said is as a result of continuous rise in the inability of banks to control the circulation of Nigeria’s naira notes, which poses as incompetence on the side of the banking sector as well as causative factor to why the naira keeps decreasing in value.

Mr. Emeliefe mentioned that, amongst the many other reasons behind this new policy, the mass hoarding of banknotes by members of the public and an increasing shortage of banknotes that are standard and clean, which has heightened the ease in the production of counterfeit currencies in the country are notable reasons for this development.

Although this new policy has been revolted by some top personalities in the country including the Minister of Finance, Budget and National Planning, Zainab Ahmed, saying that she and the ministry is not aware of any plan by the CBN to redesign new banknotes and also complained that it is ill-timed, however the President has given his support for the plan.

This move by the CBN has been viewed by many to be political, while the institution and others are seeing it from an economical point of view. But the CBN has said that the redesign only applies to denotations like the 200, 500 and 1000 naira note respectively.

The banknotes (old ones) in circulation now are expected to be submitted to the banks on or before the 31th of January, 2023 as after this date, it will be treated as expired currency. 

Political Implications of Redesigning the Naira Notes.

Just as the 2023 general election is around the corner, this new policy of the CBN seems to be politically motivated.

But on the other hand, certain financial and political analysts have come out to say that this move would disrupt the plan of some political party to use cash stored in different individual vaults in the country to buy votes.

Statistics of the bank has it that over 80% of the nation’s currency are stored in private vaults by corrupt politicians who are involved in one crime or the other and who wouldn’t be able to defend the source of such huge funds if brought to the bank.

This group applauds the CBN for coming up with such a strong plan at such a strategic season in the country when new leaders are selected. This policy, if successful, is likely to guarantee a bribery-free election by 2023, where voters and agencies would not be offered money to vote a candidates into power.

Economic Implication of The New Naira Note

For the banking sector, which has reportedly lost control of over 80% of the money in circulation, it will help them regain it. Mr. Emefiele said that, as at September 2022, the CBN had released 3.23trillion naira and 2.73trillion is said to be outside the bank vault. This development is a negative one on the banking sector as it weakens her monetary policy. If control is regained it will go a long way to help curb the inflation rate which is currently over 20%.

Although, between the time of launching the new note which is 15th of December and the expiry date for the old one, after 31th of January, there is likely going to be a lot of money in circulation when those who hoard money will be forced to spend them on purchasing and some would also exchange theirs to foreign currency.

When this happens the naira is likely to fall the most, but however, with time when the CBN takes back control of the money in circulation, the economy will smile again.

Some persons have also expressed concerns on the cost of printing this new currency, going by what it cost them to print the ones printed in 2020.

Questions have been asked if this is really a good time to do this, considering the various crises surrounding the nation’s economy, including debt crisis, poor revenue, underfunded government projects, etc.

On the side of average, alarm has also been raised, concerning the effect of this on the price of commodities in the market especially now that the festive period is around the corner.

People are worried and pleading that adjustments be made or other measures taken to achieve the same thing other than totally clearing the old currency within such a short time and notice.

In conclusion, there is a need to grow and stabilize the nation’s economy and the even distribution of money, properly monitored by our Central Bank, would play a significant role in achieving this. A policy is to make the life of the people and not worsen it. There is need for the CBN to take into consideration the plea of the average Nigerian for this new innovation, although Nigerians have over the years grown hard-skin to circumstances and if swallowing one more pill of suffering during this short time would guarantee a better future, we might as well take it in with a smiling face.

About the author: 

Emmanuel Otori has over 9 years of experience working with 100 start-ups and SMEs across Nigeria. He has worked on the Growth and Employment (GEM) Project of the World Bank, GiZ, Consulted for businesses at the Abuja Enterprise Agency, Novustack, Splitspot and NITDA. He is the Chief Executive Officer at Abuja Data School.

The post <strong>Economic Implications of the Introduction of New Naira Notes in Nigeria</strong> appeared first on Tech | Business | Economy.