Naira redesign: Worries over January 31 deadline

Amid concerns about the scarcity of new naira notes, the Central Bank of Nigeria (CBN) has insisted that January 31 remains the deadline for the old notes to remain in circulation……………………CONTINUE READING

PAUL OGBUOKIRI reports that there is palpable fear over the lack of visibility of the new notes and seeming unwillingness of banks to release them to the public…..

14 days to deadline, new notes unavailable
Fourteen days to the deadline set by the Central Bank of Nigeria (CBN) for the current naira notes to cease to be legal tender, there are doubts the apex bank might be able to meet the January 31 target as new naira note is yet to start circulating. That is even as the commercial banks are yet to obey the Central Bank’s directive to start loading the ATM machines with the redesigned currency.
Reacting to the development, a Nigerian economist and Chief Executive Officer, Centre for Promotion of Private

Enterprises (CPPE), Muda Yusuf, said the CBN had grossly underestimated what it takes to make currencies available across the country.
Yusuf spoke on Monday when he appeared on the Arise Television morning Show Programme.
He said the January 31 deadline set by the apex bank was unrealistic.
He said: “The CBN should be a lot more sensitive to developments in the environment. Obviously, from what we can see, the evidence abounds everywhere; we are dealing with a situation of a capacity problem on the part of CBN, capacity in terms of the production of the new notes and capacity with respect to logistics.
“Obviously, the CBN has grossly underestimated what it takes to make these currencies available across the country. If we are getting these kinds of feedback and stories from cities such as Lagos, Port Harcourt and Kano, what are we going to say about people in the more remote places in other states outside of these major cities?”
However, the apex bank said it will monitor the commercial banks to ensure that they comply with the directive of loading the redesigned Naira notes in their Automated Teller Machines (ATMs).
CBN Director, Currency Operations, Mr. Ahmed Umar, made this known in Abuja on Monday at the Training Session for State Directors, National Orientation Agency (NOA) on Redesign of Currency Notes Policy.
Umar said that the CBN’s directive was to implement the January 31 deadline withdrawal of old naira notes in circulation.
“We, CBN management, have mandated banks to stop putting old notes in their ATM machines. They should only put the new notes.
“And there is a serialisation of the policy that they can put N500, N1000 or N200 notes whichever the denomination they have or combination of any of those notes, they should just put a new note in their machines.
“We are going to monitor to ensure that the banks comply and if they don’t, we have a penalty for non compliance,” the director said.
It would be recalled that the Central Bank Governor, Godwin Emefiele, had urged Nigerians to go and deposit the current naira notes for the new ones not later than the deadline, saying the January 31 deadline was sacrosanct.

Speaking at the 2022 Annual Bankers Dinner hosted by the Chartered Institute of Bankers of Nigeria (CIBN), Emefiele noted that there was no going back on the January 31, 2023 deadline given for Nigerians to deposit the existing naira notes in the banks in exchange for the newly redesigned notes.
The apex bank had vowed that they would not shift the deadline despite the call by the Senate that it should urgently extend the date from January 31 to June 30, 2023.
Though the newly redesigned naira notes commenced circulation on Thursday last week, financial experts are worried that there may be an artificial scarcity of the new currencies.
Our correspondent, who went round some banks’ ATMs in Lagos, found none of them dispensing the new notes.
This came as an Abuja resident, Adamu Ismail, a taxi driver, told Sunday Telegraph, that he checked for the new naira in most ATMs at Jabi and Wuse but none was dispensing the new notes.
Speaking on Thursday on the development, a financial inclusion/wealth management expert, Mr. Idakolo Gbolade, said it was unlikely that CBN would give banks enough of the new currencies.
He urged the Central Bank to implement measures to circulate the new naira notes to Nigerians adequately.
He said: “There is bound to be teething problems as the ATMs must be configured to accommodate the new notes. Also, note that it is unlikely that the CBN will give enough of the new currencies to the Deposit Money banks and the microfinance banks. So, the cash loaded to the ATMs might not be enough to service demands.”
The CBN, he said, might need, “to put measures in place to ensure adequate circulation of the new notes to avoid persistent shortages.”
Similarly, Accounting and Financial Development expert at Lead City University, Ibadan, Prof Godwin Oyedokun, urged Nigerians not to panic about the availability of the new naira notes.
He reiterated the likelihood of artificial scarcity was imminent because most Nigerians long to have the new notes.
“No matter how perfect the situation is, there is always room for improvement. When the Central Bank of Nigeria says the new notes will be out today, don’t forget that the supply won’t be in the quantity of the old naira notes. Rather, it will be out strategically, and the withdrawal limit may also affect its circulation.
“Everybody longs to have the new naira notes; on that basis, it will create artificial scarcity. There is no way the CBN will not compromise in terms of extending the cashless policy deadline. On the issue of the availability of the new notes, Nigerians should not lose their sleep over it. No need for panic,” he stated.
He explained that banks’ ATMs across the country also need to remove the old notes and ensure the availability of new naira notes.
The CBN said Deposit Money Banks had received stock of the new naira notes.
Speaking, Professor of Finance and Capital Markets, Nasarawa State University, Keffi, Professor Uche Uwaleke, said though he did not support calls for an extension of the deadline for withdrawal of the old notes at the end of the month; the CBN must address the concerns over the availability of the new currency.
The former Imo State Commissioner for Finance, said: “Since December 15, 2022, more than two weeks after the CBN began distributing the new naira notes via the banks, you hardly find them in circulation. The bulk of cash withdrawals from the banks and POS agents are still done in old naira notes.
“It appears the banks have been hoarding the new naira notes for distribution to their high-net-worth customers, most of whom are politicians, especially during this festive period.”
Uwaleke also said: “If the January 31, 2023 deadline must be kept, I expect the CBN to push out more of the redesigned notes and also ensure that the banks are dispensing them to their customers. This has become necessary given the upward revision of the cash withdrawal limit from N100, 000 to N500, 000 per week for individuals.
“Else, at the current slow rate and the lopsided manner in which the distribution of the new naira notes is being done by the banks, I foresee a situation where the deadline is extended by at least two weeks.”
He, however, said that he does not support the idea of extending it to June 30, 2023, as has been canvassed in some quarters, saying that doing so, would defeat one of the aims of the currency redesign, which is to discourage vote-buying, in view of the fact that the general election would have been over by then.
Commenting on the development also, Managing Director/Chief Executive, Dignity Finance and Investment Limited, Dr. Chijioke Ekechukwu, stressed the need for the CBN to boost education and awareness of Nigerians, pointing out that the rural dwellers “prefer the currency they know and would rather not sell than to receive the new naira”.
According to the former Director General, Abuja Chamber of Commerce and Industry (ACCI): “The awareness has to be increased by CBN. Many market women and rural dwellers are rejecting the new currency, even now. They prefer the currency they know and would rather not sell than receive the new naira. In rural communities, therefore, they may encounter a scarcity of the new currency and may not be aware of the deadline.
“The circulation should be intense by now to enable everybody to have access in good time. By now, all ATMs should be dispensing new notes and banks should by now be paying only new notes. That’s the way to go, in order to achieve the desired milestone.”
On his part, Managing Director/Chief Executive, SD&D Capital Management Limited, Mr. Idakolo Gbolade, said the deadline for the use of the old banknotes could see Nigerians scrambling for the new notes, which are “limited in circulation and is facing rejection from the market traders and rural dwellers due to lack of adequate education and awareness”.
Gbolade said: “Since the introduction of the new naira notes, it has been fraught with scarcity and counterfeiting problems. The deadline for the use of the old notes at the end of January 2023 will see Nigerians scrambling for the new notes.
“The major implication is that when the old legal tenders become void, it would lead to loss of value for those having the old notes and could lead to protests by the masses, who are already impoverished, as it were, to still be at risk of losing the little they have acquired.”
He said: “The economy will also feel the impact because, according to statistics from CBN, 80 per cent of cash in circulation are outside their control. So, losing such huge amounts of cash because of the deadline for changing to the new notes could portend great danger for the economy.”
Emefiele’s visibility shrinks
The Central Bank Governor, Godwin Emefiele has been on his foreign trip to the United State with President Buhari. It is believed that his stay abroad might not be unconnected to the threat of arrest and probe from the Department of State Services (DSS) amid seeming reluctance by the Presidency to wade into the matter.
Emefiele travelled out of the country on December 26 for the United States, where he has remained till the time of filing this report. Some reports claimed he returned to the country within the week.
The Central Bank governor, had on October 26, 2022, announced the Central Bank’s resolve to redesign, produce, and circulate new series of the N200, N500, and N1, 000 denominations.
Emefiele said the move would help to manage money supply, tackle currency counterfeiting and terrorism, among others.
He explained that while the circulation of the new banknotes would commence on December 15, 2022, the new and existing currencies would remain legal tender and circulate together until January 31, 2023, when the existing currencies shall cease to be legal tender.
CBN to sanction banks over failure to dispense new naira notes
Henceforth, all commercial banks in Nigeria will be sanctioned by the Central Bank for failing to load the newly-designed naira notes into the Automated Teller Machines (ATM).
At the last quarter of last year, the apex bank had announced the change of the designs and colours of the N200, N500 and N1000 denominations, alongside pegging the daily withdrawal of cash across the counter