Withdrawal of old naira notes, fuel scarcity ground Nigerian economy 


…Commuters, traders suffer as commercial transporters boycott work in Osun

…As CBN bows to pressure, extends deadline to February 10

…10-day extension is inadequate — CPPE

…Extension of validity of old naira notes is step in the right direction – ASSBIFI

By Seun Ibiyemi, Philemon Adedeji, Matthew Ibiyemi and Ismail Azeez (Oshogbo)

Worsening fuel scarcity alongside the scarcity  of new naira notes have created bottlenecks which over the weekend grounded economic activities across the Country.

The controversies of the swap of old Naira notes with the new notes by the Central Bank of Nigeria’s (CBN) adamant stance of sticking to the 31 January deadline, left many Nigerians and business owners fearing and taking cautions to take basic transactions.

Fear to be trapped by accumulating old notes in stock made business owners stop collecting the old notes over the weekend, while rising fuel scarcity grounded economic activities across Country.

Many Nigerians have criticised CBN’s naira redesign policy, with the presidential candidate of the All Progressives Congress (APC), Bola Tinubu, saying the policy was intended to scuttle his presidential ambition.

With Tuesday as the deadline, Nigerians in their numbers thronged the banks in major cities across the country to lodge their old bank notes.

The scramble by many Nigerians to meet the 31January deadline has been chaotic as many of them flooded banking halls with huge cash in old notes to exchange them with the new ones.

Others were seen on long queues at the few ATM points having the new naira notes in different parts of the country to have access.

Meanwhile, the Senate urged the CBN to extend the withdrawal date of the old naira notes from Jan. 31 to July 31.

The upper chamber also urged the CBN to open an exchange window where people that don’t have bank accounts to deposit their old notes do so.

Recall that the Governor of the CBN, Mr Godwin Emefiele, had said no going back on Jan. 31 deadline to stop the circulation of old Naira notes.

Emefiele gave the clarification last week in Abuja, after the Monetary Policy Committee (MPC) meeting of the apex bank.

According to him, the 90 days window given by the CBN for Nigerians to deposit their old currencies was enough.

“We called on the Deposit Money Banks (DMBs) to extend their working hours, and to work on weekends.

“There is no reason to talk about a shift. The new currencies are available,” he said.

Also, Central Bank of Nigeria (CBN) has denied scarcity of the new naira notes as alleged by some Nigerians.

The CBN Governor, Godwin Emefiele, represented by Musa Jimoh, Director, Payment System Management Department of the bank, denied the allegation in a news conference on in Jos.

“The CBN has massively supplied the new notes to commercial banks to dispense both at counters and ATMs.

“This is to enable quick circulation and we want to advice commercial banks to desist from keeping the cash away from the public or face the stiffer sanction,” he said.

Emefiele advised citizens to deposit their old notes at any commercial bank and acquire new ones with immediate effect, insisting that the Jan. 31 deadline remained sacrosanct.

The CBN Governor explained that the decision to redesign the currency shows that the apex bank is in tandem with global standard, adding that currency notes ought to be redesigned within five years.

He, however, regretted that it took Nigeria nine years since such changes was last effected.

CBN bows to pressure extend deadline to February 10

Barely two days to the January 31 deadline for naira swap, President Muhammadu Buhari has approved extension of the ongoing currency swap by 10 days, moving the deadline from Jan. 31 to Feb. 10.

A statement by the President’s spokesman, Mr Femi Adesina,  said the President gave the approval at a meeting with the Governor of the Central Bank of Nigeria (CBN) Mr  Godwin Emefiele, on Sunday in Daura, Katsina.

He urged more time, discretion and order to enable Nigerians successfully change their currencies to the redesigned notes, and reduce the risk of loss, especially among the underserved in rural areas.

Briefing journalists after the meeting, the CBN Governor said the currency swap had achieved more than 75 per cent success rate of the N2.7 trillion held outside the banking system.

According to him, this achievement can be seen with drop in rate of inflation, more stability of foreign exchange rates, and noticeable impact on security, especially in banditry and kidnapping figures.

The CBN Governor noted that redesigns are supposed to be every five to eight years.

“First, I would like to thank the President for giving the CBN the approval to embark on this ambitious programme because, like I said, in the past, the CBN has not had the opportunity to embark on such currency redesign programme in the last 19 years.

“And indeed, let me emphasise, that only an incorruptible leader of the President’s stature can give such approval to the CBN.

“Our aim is mainly to make Monetary Policy Decisions more efficacious and as you can see; we have started to see inflation trending downwards and exchange rates relatively stable.

“Secondly, we aim to support the efforts of our security agencies in combating banditry and ransom taking in Nigeria through this programme and we see that the military are making good progress in this important task,” he added.

The head of the apex financial regulator said available data had shown that currency-in-circulation in 2015 was only N1.4 trillion, while as at October 2022, currency in circulation had risen to N3.23 trillion, out of which only N500 billion was within the banking industry.

He said N2.7 trillion was held permanently in people’s homes.

“Ordinarily, when CBN releases currency into circulation, it is meant to be used and after effluxion of time, it returns to the CBN, thereby keeping the volume of currency in circulation under the firm control of the CBN.

“So far and since commencement of this programme, we have collected about N1.9 trillion; leaving us with about N900 billion (N500 billion + N1.9 trillion),” the CBN Governor said.

According to Emefiele, to achieve effective distribution of the new currency, the CBN has taken some steps.

He said several meetings were held with Deposit Money Banks and they were provided with Guidance Notes on processes they must adopt in the collection of old notes and distribution of the New Notes, including directives that new notes should be loaded in ATMs nationwide for equitable and transparent mechanism.

The CBN Governor explained that the regulatory body worked with the media, print and broadcast, and the National Orientation Agency for sensitisation of citizens.

He revealed that 30,000 Super Agents were deployed nationwide, particularly in rural areas, regions underserved by banks and to reach the weak and vulnerable for currency swap.

To ensure compliance, Emefiele said staff members, mostly Assistant Directors, Deputy Directors and Directors in Abuja were sent to all CBN branches nationwide to join the mass mobilisation campaign and monitoring programmes.

He said breaches of the programme had been reported to the EFCC and ICPC for further action.

“Aside from those holding illicit/stolen naira in their homes for speculative purposes, we do aim to give all Nigerians that have Naira legitimately earned and trapped, the opportunity to deposit their legitimately trapped monies at the CBN for exchange.

“Based on the foregoing, we have sort and obtained the President’s approval for the following:

“A 10-day extension of the deadline from Jan. 31,  to Feb. 10, to allow for collection of more old notes legitimately held by Nigerians and achieve more success in cash swap in our rural communities after which all old notes outside CBN losses their legal tender status,” he explained.

Emefiele said a seven-day grace period had been given by the President, beginning from Feb. 10 to 17,  in compliance with Sections 20 (3) and 22 of CBN Act allowing Nigerians to deposit their old notes at the CBN after the February deadline.

Fielding questions from journalists, the CBN Governor said the excuse of security threats pushed by the Kano State Governor, Abdullahi Ganduje, had no bearing on the swap, which had achieved compliance and recorded huge success across the country.

“I don’t understand the relationship between the CBN policy and security challenges in Kano State,” he added.

He noted that all new currencies had security features that make them easy for tracking to bank branches, and the process had begun to deal with defaulters and those who breached the programme.

“Even if they are CBN staff, they will be sanctioned,” Emefiele warned.

10-day extension is inadequate — CPPE

In a swift response to the extension, the Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, has expressed concern that the 10 days extension of the deadline for currency swap is grossly inadequate to make up for the glaring shortcomings of the apex bank in the process.

He said failure to further extend the deadline for the currency swap could put the N100 trillion component of the national GDP at risk.

Dr Yusuf said two critical sectors are particularly vulnerable – Trade and Commerce and Agriculture. He stated that the crippling of business transactions at the distributive trade end amid the currency swap crisis would not only undermine the trade and agricultural sectors but would have a knock-on effect on the manufacturing value chain and the services sectors.

This is because whatever is produced has to be sold. The trading end of the chain has been greatly disrupted by this currency swap crisis.

He said the trade sector contributes about 14 per cent of GDP valued at an estimated N35 trillion; the agricultural sector contributes 25 per cent, valued at an estimated N62 trillion. Most of the activities in these sectors are either in the rural areas or in the informal sector of the economy.

These are the sectors that have been driving the resilience of the Nigerian economy amid numerous domestic and global headwinds. Any policy measure that would negatively disrupt these sectors should be avoided.

Yusuf stated that for an economy that is tottering on the brink, the capacity to absorb shocks and disruptions is severely constrained.

With 133 million Nigerians in poverty, inflicting additional hardship on the citizens would be unfair, insensitive and inconsiderate.

The reality is that present in many parts of the country, more than half of the currency in the hands of citizens is still old notes. And it is on record that the banks were still giving out old notes even a few days before the CBN deadline. The citizens should not be made to pay for the incompetence, inefficiency and ineptitude of state institutions.

He noted that given the size of the Nigerian economy, the large population of over 200 million people, the dominance of the rural economy, the huge informal sector, unbanked Nigerians and the literacy level, a minimum of six months window ought to have been given for the currency swap exercise.

“The CPPE calls for the urgent intervention of President Muhammadu Buhari to save millions of Nigerians from the anguish and pain of the current stampede of currency swap inflicted by an unrealistic timeline and glaring capacity gaps in the management of the process.

“The vote-buying argument is not compelling enough to justify the scale of pain, agony, trauma and economic disruptions foisted on Nigerians by this currency swap pandemonium. There should be better ways of curbing vote buying than inflicting pain on innocent citizens. The SFIU, EFCC POLICE and ICPC have bigger responsibilities in this respect.

“And the argument that currency swaps would enhance monetary policy effectiveness and curb inflation has no strong basis in economic theory. The money supply is a more critical variable in the inflation equation.

“The total money supply in the Nigerian economy as of December 2022 was N52 trillion; the total currency was N2.6 trillion. Thus, cash as a percentage of the money supply was only 5 per cent. The implication is that 95 per cent of the money is still within the banking system.

“It is therefore a gross misrepresentation to give the impression that 85 per cent of the money is outside the banking system. Currency is only 5 per cent of the money in the economy and should therefore not warrant the scale of energy and resources being dissipated around it. The focus of monetary authorities should be on regulating the money supply, not on mopping up currency notes,” he said.

Yusuf added that currency notes are meant to be largely outside the banks, not in the banks. Cash is a medium of exchange to be used by citizens, not to be stored in banks. There is nothing unusual if 85 per cent of cash is outside the banking system; just as cheque books or ATM cards are supposed to be largely in the hands of bank customers.

“Another key metric to determine the cash dominance in an economy is the Currency in Circulation to GDP ratio. Nigeria’s currency-to-GDP ratio is less than 1.5 per cent. The ratio is 7.4 per cent in the United States; 12.5 per cent in India; 18 per cent in Japan; 3.4 per cent in South Africa; 4 per cent in the UK; and 10 per cent in the Eurozone.

“The implication of this comparative analysis is that Nigeria is already well ahead of even many advanced economies as far as a cashless environment is concerned. To the credit of our financial system, it is also an indication that our payment system is one of the best globally. The CPPE is therefore worried that the CBN is committing huge resources to fix what is not broken. The cost to the economy is also enormous.

“Of course, our cashless performance can be better, but it should not be presented as the most urgent matter confronting the Nigerian economy. There are more critical macroeconomic issues demanding the attention of the country’s economic managers and policymakers.

“The CPPE reiterates its calls for an extension by a minimum of six months to allow for seamless currency swap exercise,” Yusuf stated.

Extension of validity of old naira notes is step in the right direction – ASSBIFI

Also, the Association of Senior Staff of Banks, Insurance and Financial Institutions (ASSBIFI) in a response on Sunday in Lagos endorsed the extension of the validity of old naira notes from Jan. 31 to Feb. 10.

Its president, Mr Olusoji Oluwole, said that the CBN decision to extend the deadline was a step in the right direction.

CBN Governor, Mr Godwin Emefiele, in a statement on Sunday said the CBN added a 10-day extension of the deadline of Jan. 31 to Feb. 10, to allow for the collection of more old notes.

He also noted that Nigerians would still have grace period to deposit their old notes directly with the CBN until Feb. 17.

“It is a step in the right direction, especially in providing more time for the return of old notes after the actual date of invalidation.

“CBN, however, needs to proactively monitor and address sufficient availability and distribution of the new notes.

“It should also increase sensitisation of, and probably incentivising the general public on the cashless policy to reduce the pressure on cash,” Oluwole said.

Banks have been contending with increased number of customers rushing to beat the Jan. 31 deadline given by CBN for the return of old naira notes which would cease to be legal tender.

New N200, N500 and N1,000 notes became legal tender on Dec. 15, 2022 after they were unveiled by President Muhammadu Buhari in Abuja on Nov. 23, 2022.

Many bank customers, however, complained that the new notes were not readily available and have yet to circulate adequately four days to the expiration of the old notes

Decision creates uncertainty, hurts economy greatly — Professor Shuiab

In a swift response on the effect on the economy, an economist from University of Lagos (UNILAG), Professor Shuiab Femi said, “It creates uncertainty and this hurts the economy greatly. It is already impacting on cost of fund in the POS”..

Professor Femi said that “many transactions are denied and payment of finial commitment be disrupted.”

‘A small survey on UNILAG campus over 80 per cent of the SMEs on campus lost over 30 per cent of customer which translates to millions of naira.

“None of them could withdraw cash to pay small bills.

“If this is scaled up to national level it amount to billions of naira lost in business value and income.

“An important implication is loss of confidence and credibility on CBN and this will affect even the main essence of new life policy. This comes when fuel crisis is worsening and hence a double economic tragedy,” he added.

Scarcity of cash has hit the economy

The Vice President of Highcap Securities Limited, David Andori commenting on the deposit deadline of old naira notes stated  that, “Since beginning of the week, ATMs in Lagos stopped dispensing old Naira notes. At the same time, no ATM in Lagos dispensed new Naira Notes. Many people have deposited their old notes in the banks to beat the 31st January deadline.

“Consequently, scarcity of cash has hit the economy in a very dangerous manner. With the rejection of old notes by transporters and traders, amidst absence of new notes, people’s purchasing power has crashed and revenues of businesses have plunged.”

He said, “CBN has put the economy in reverse gear by needlessly inflicting scarcity of cash on the economy and hardship on citizens. Due to unreliability of the virtual payment channels and costs incurred for money transfer, traders who accept transfer are adding a fee to the cost of merchandise to cover transfer charges. CBN appears to be on a misguided course that can trigger an uprising.”

It will encourage the inflow of fake currency – Garba Kufi

The MD/CEO of Apt Securities and Funds Limited, Kasimu Garba Kufi also commented that, “The economy will definitely slow, especially in the rural area where there are neither Banks nor bank accounts to transfer funds while doing transactions.

“In addition to that, most people will like to hold the new currency rather than take it to the bank as a deposit, which will encourage the inflow of fake currency because of the scarcity of the real currency.

“What is left is for traders to go trade by barter, which makes things very expensive because of a lack of divisibility. Those along the boundaries will patronise foreign currency, especially CFA Afric, rather than naira, which is not good for the economy while those in the cities continue to price things in USA Dollars, which is not good for economy.”

CBN needs to be more proactive – Engr. Eleojo

Also, an Energy power expert, Engr Eleojo Joseph told Nigerian NewsDirect that the CBN, the commercial banks and the public are to blame.

He said they rejected the old notes due to the problems people are experiencing to change their money.

Eleojob said, “We leave most things done last minute. Most people were non-chalant towards the whole exercise and at the end everyone is running helter skelter like headless chickens. Just like the NIN or voters card registration in the past. Most people were even saying they will extend it.

“CBN as the currency regulator should have been more proactive by coming up with a more practical approach in partnership  with commercial Banks towards the whole exercise like physically deploying adhoc staffs to the nooks and crannies of the country to markets and motor parks to exchange the currency for poor and unbanked Nigerians. These are the people mostly affected.

“The commercial Banks should have adopted the same or similar approach in exchanging currencies for their customers.  Like what happened in Port Harcourt yesterday where I saw thousands of people stranded trying to get the new currency to no avail.  I spoke to a food vendor (Mamaput) who said she will not be cooking over the weekend and early next week because of the whole exercise.

“On the whole, millions if not billions will be at a loss during this process in terms of manhour and real economic transactions.”

Nigeria is very ripe to go cashless – AMMBAN

In an interview with Mr Olowu Babs Azeez, a former chairman of the Association of Mobile Money and Bank Agents in Nigeria (AMMBAN) and current National Treasurer of the association, has commended the Central Bank of Nigeria (CBN) for the introduction of the new naira notes and adjoining policy.

He said, “Nigeria is very ripe to go cashless.

“If CBN says its time, it is not a bad idea. It is the way forward.”

Commenting on the impact of the scarcity of the new naira notes on Nigerians and her agents, he noted that “many of the agents of the association are finding it difficult to get the new notes and even when they do, the banks don’t give them a huge sum.”

Olowu advised that the CBN should have identified AMMBAN and leveraged on AMMBAN’s  network for cash swap to ease the pressure on Nigerians and the banks.

He added that agency network as the last mile to fast-track financial inclusion in the country ought to be more involved by the regulator in the process.

“One of the main issues is that CBN has failed in their own capacity to recognise AMMBAN. We have not been involved in the policy making especially as it concerns formulation driving financial inclusion strategies.

“CBN should recognise super agents that have been duly registered with them that have mortar and bricks as their outlets where other agents can come to get cash to facilitate easy cash swap.

“I will advise the CBN to educate people on using N5,000 transaction for minor expenses and transactions above N5,000 should be done electronically,” he concluded.

Economy will shift to cashless transactions – Expert

Also, a business expert, Wole Samuel Adeyeye said that the economy will shift to cashless transactions as people are expected to find alternatives to cash transactions.

“On the flip side, it may likely slow down business activities, in a very short period of time, as people who are used to cash transactions are expected to be cautious in trading activities.

“Traders would rather keep their stocks rather than accept old notes, even for huge profit.”

Commuters, traders suffer as commercial transporters boycott work in Osun

Commuters and traders in Osun State, were on Saturday suffered as commercial transporters boycott work over scarcity and hike in the price of Premium Motor Spirit (PMS), also known as Petrol in the state.

Our correspondent gathered that many passengers had to trek a long distance before getting to their destination.

It was learnt that some traders had to abandon their business when they didn’t see intercity bus to convey them to their business places.

Speaking, the immediate past Chairman of Road Transport Employees Association of Nigeria (RTEAN) in Osun, Mr Abioye Adekunle, told our  correspondent that their men boycott the work to protest the exorbitant price petrol is sold in the state.

Adekunle said their members (commercial transporters) had been earlier informed to down tools , and those blocking the road and forcing passengers down commercial mini-buses and off commercial motorcycles were just enforcing the decision the unions had taken.

“The price of petrol in Osun is ridiculously high. We are buying between N370 to N460.

“I just came back from Abuja, even when there is queue, when you go into the filling station, you will still buy, at most, N196.

“Here in Osun, the petrol is not even available and those selling are selling between N370 and N460.

“Like yesterday, a lot of our members bought fuel for N450 and some could not even get to buy because of the long queues and because most of the filling stations are closed.

“They are even selling petrol at N460 in some places like Ikirin Town.

“The high cost of fuel is negatively affecting the operation of our members and that is why we are protesting so government can know what is going on and maybe come to our aid,” he said.