Osinbajo faults new naira notes policy

Nigeria’s Vice President, Yemi Osinbajo, has faulted the implementation of the currency redesign policy of the federal government and lamented the hardship it has caused residents of the West African country.

Mr Osinbajo expressed his view in Abuja Friday at a meeting with players in the financial technology (FinTech) space, his spokesperson, Laolu Akande, said in a statement.

“You need cash to pay for transport. For instance, in Abuja how do you take ‘drop or along’ or use a Keke NAPEP without cash, or buy foodstuff on the road or in canteens, or even buying recharge cards?

“Parents with kids in public schools give money daily to their children for lunch, most commerce is informal, so you need cash for most things,” Mr Osinbajo was quoted as saying.

The Central Bank of Nigeria, with the permission of President Muhammadu Buhari, announced the new policy last October. The central bank announced that the three highest denominations of the naira – N200, N500 and N1,000 – would be redesigned and the old notes would no longer be accepted as legal tender by 31 January.

However, the scarcity of the new notes led to the postponement of the deadline to 10 February. The scarcity has persisted with citizens spending hours in queues at banks and ATMS to access the new notes.

On Friday, President Muhammadu Buhari told governors elected on his party’s platform that he was aware of the suffering the policy had caused and would review the situation if the problems persisted by the end of the new deadline,

In his statement, Mr Akande said the vice president made reference to President Buhari’s remarks as an indication the policy would be reviewed.

Read Mr Akande’s full statement below.

Worried by the difficulty experienced by Nigerians in getting the new naira notes, Vice President Yemi Osinbajo today met with some players in the FinTech space, exploring possible ways of mitigating the hardship.

Specifically, he urged regulators and the banks to deploy more FinTechs and money agents to the hinterlands to address the worrying situation.

According to the VP “you need cash to pay for transport. For instance, in Abuja how do you take ‘drop or along’ or use a Keke NAPEP without cash, or buy foodstuff on the road or in canteens, or even buying recharge cards?

“Parents with kids in public schools give money daily to their children for lunch, most commerce is informal, so you need cash for most things,” Mr Osinbajo pointed out.

During the virtual interactive session with a number of FinTech investors and ecosystem players, the Vice President said that the Central Bank of Nigeria and the commercial banks should work with all FinTechs that have mobile money agents, not just some of them, in order to reach the farthest places in the country.

According to him, “it seems to me that banks must engage their mobile money operators – FinTechs with mobile money licenses and many of them have micro-finance bank licenses now and already have a network of mobile money agents or human banks or human ATMs (as they are sometimes called) who are responsible to them and they can supervise by themselves. They can do currency swaps and open bank accounts.”

The vice president spoke just as the president in a meeting with some All Progressives Congress (APC) governors at the Presidential Villa, assured the nation that the challenges are being addressed and would be solved very soon.

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Speaking further about some of the concerns arising from the redesign of the new naira notes, the VP stated that “more disturbing is the fact that after depositing your old notes, there are no new notes, so people everywhere in the urban areas and rural areas simply have no money.”

The vice president acknowledged that “there are logistical challenges that have to be addressed by the CBN and the banks, especially from the point of view of the average Nigerian and those in the hinterland who hardly use any electronic platforms.”

He also observed that while there has always been a certain failure rate in online banking and money transactions, they have become even more difficult now with the increase in the number of transactions congesting the system.

His words: “so where in the past you used POS or any of the electronic platforms, you had maybe 20%-30% failure rate, now because everyone is trying to get on those platforms, obviously, the failure rate is much more and the problems are much more pronounced.”

He thanked the participants at the meeting for their commitment and contributions, noting that “it has really been revealing hearing all your thoughts about what is going on, our country just simply needs to have the quality of advice that I have received, today.

“We really need to make progress even as we make efforts to deal with some of these issues confronting us today.”

In separate remarks, some of the players made valuable suggestions on how to address the current situation in the country and offered to support the government at all levels with the required expertise to address the bottlenecks.

They suggested that USSD fees and the cost of data be reduced, while regulators should remove floor prices and called for relieving choke points in online transactions by cutting out some of the technical procedures.

Laolu Akande
Senior Special Assistant to the President on Media & Publicity
Office of the Vice President
3rd February, 2023