Uncertainty as banks grumble over inadequate supply of new naira notes by CBN

Commercial banks in Nigeria are grumbling due to inadequate supply of the new naira notes by the Central Bank of Nigeria (CBN) as pressure mounts ahead of the 31 January deadline for the circulation of the old notes, bank officials and security sources told PREMIUM TIMES on Saturday.

In a last-minute move to improve the circulation of the new naira notes, the apex bank has intensified efforts by providing the new notes to banks for onward circulation among Nigerians, especially in rural areas.

However, sources familiar with details of the CBN operation told PREMIUM TIMES Saturday that the apex bank’s supply of the new notes has been grossly inadequate, making it difficult for commercial banks to meet customers’ demands.

A security source told this newspaper that banks are receiving an average of N12 million in some parts of the country, an amount the source explained was grossly inadequate to meet operational demands.

“Cash needed for ATM operations alone in this place is about N25m, and that’s apart from other cash transactions within the bank,” the source said. “Bankers are scared to complain openly.”

Security agencies, particularly the State Security Service, have been monitoring the implementation of the new notes policy and have been questioning bank officials including those of the apex bank, PREMIUM TIMES learnt.

The scarcity of the new notes was also confirmed to this newspaper by bank managers of commercial banks in Lagos and Abuja.

“The CBN has been lying to Nigerians. Even me, as a branch manager, I don’t have the new notes and customers keep calling me to help them get it,” a branch manager of a new generation bank in Lagos said.

The bank chief said his branch normally needs about N10 million to fill its ATMs for use by customers.

“But throughout last week, we only got a total of N2 million of the new note. That is why our ATMs have been idle with nothing to dispense because we have been ordered not to use the old notes,” the source added.

Another branch manager of another new-generation bank, in Abuja, expressed the same frustration.

“We are not getting enough cash. Our ATMs are not working as we have no money to load,” the bank official said.

All the bank chiefs spoken to asked not to be named to avoid sanctions by their head offices and the central bank.

In recent weeks, many Nigerians operating in the cash-dependent informal sector of the economy have had to scramble for the new notes. Although the Nigerian government has tried to deepen financial inclusion and promote a cashless economy in recent years, much of the activities in the nation’s informal sector are still driven by cash. According to a report by the International Monetary Fund, the informal sector in Nigeria is estimated to be around 65 per cent of the GDP, which is higher than the sub-Saharan average of 34 per cent.

Earlier in the week, the CBN governor, Godwin Emefiele, said that the 31 January deadline that the apex bank announced for the validity of the old N200, N500 and N1,000 notes remains. Speaking after the apex bank’s Monetary Policy Committee (MPC) meeting in Abuja on Tuesday, Mr Emefiele claimed that kidnapping and ransom-taking incidents have reduced since the three banknotes were redesigned. He also argued that the time given for the swap of the old naira notes with new ones was enough for Nigerians to get the new notes from commercial banks.

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“I must say here that unfortunately, I don’t have good news for those who feel that we should shift the deadline. My apologies,” Mr Emefiele said.

“The reason is because 90 days, we feel it’s 100 days, should be enough for those who have the old currency to deposit it, the money, in the banks. And we took every measure to ensure that all the banks were open to receive all old currencies. 100 days, we believe, is more than adequate.”

However, while the CBN did give about 100 days’ notice, the scarcity of the new notes has hindered the smooth transition, leading to calls for an extension.

On Saturday, President Muhammadu Buhari acknowledged that many Nigerians were ‘facing hardships‘ due to the new notes policy.

“While taking note that the poorest section of society is facing hardship as they often keep hard cash at home for various expenses, President Buhari gave strong assurances that the government will not leave them to their own fate,” Mr Buhari’s spokesperson, Garba Shehu, wrote in a statement.

The Nigerian leader, however, kept mum about calls for an extension of the deadline.

Background

Last November, weeks after the apex bank announced its plan to redesign the three banknotes, President Muhammadu Buhari unveiled the redesigned N200, N500 and N1,000 notes as the apex bank fixed the January 31 deadline for the validity of the old notes.

Since the notes were introduced, many Nigerians on social media have expressed reservations about the circulation of the new notes. While many claim that they are yet to see the new naira notes, others complain of hoarding on the part of the deposit money banks even as the January 31 deadline for the rejection of the old notes approaches.

Last week, as part of measures to deepen circulation, the CBN warned banks to load their ATMs with the new notes and threatened to sanction erring banks.

“If truly, (commercial) banks are hoarding the new notes, why has the CBN not sanctioned any bank,” a bank manager told this newspaper.

The CBN also recently directed commercial banks to halt over-the-counter payment of the old notes and load their Automated Teller Machines (ATMs) with the redesigned naira notes to boost circulation.

Similarly, the apex bank also launched a cash swap programme nationwide to enable those in unbanked areas to exchange their old notes for new notes before the 31 January deadline.

However, the Nigeria Governors’ Forum (NGF) last weekend set up a six-member committee to engage the CBN to address anomalies in the country’s monetary management and financial system, especially in the issuance of new Naira notes.

Uncertainty Looms

As the 31 January deadline approaches, many Nigerians have continued to wonder how the apex bank plans to regulate the amount of money in circulation and deepen the spread of the new notes. Analysts argue that a significant amount of old naira notes still remain in circulation as the only means of exchange for goods and services among people across many parts of the country.

Checks by PREMIUM TIMES earlier in the week showed that in major cities across Nigeria, the old notes in circulation are still more than the redesigned new notes. However, in some local stores and among traders in major markets, the old notes are being rejected as legal tender.

On Friday, PREMIUM TIMES observed that many ATM points in Lagos were besieged by frustrated Nigerians who lamented the scarcity of the new notes and complained about bank ATMs dispensing the old notes.

In the midst of the melee, the CBN has insisted that its deadline remains sacrosanct. On Saturday, amid growing concerns over the impact of the naira redesign policy on the state of the economy, the CBN in a tweet insisted that the deadline for the return of old notes remains 31 January.