Top CBN officials will discuss the naira crisis on Monday
The management team of the Central Bank of Nigeria will meet on Monday to discuss the crisis that the naira redesign program has caused and to develop solutions for the severe cash shortage that has almost brought the nation to a standstill.
In order to alleviate the current cash shortage, the meeting will also discuss the National Council of State’s recommendation that the apex bank print more newly designed N1,000, N500, and N200 notes or reissue the older ones that were taken out of circulation.
The meeting, which will take place at CBN headquarters in Abuja, will reportedly include the apex bank’s top brass, and a new directive on whether or not to continue accepting deposits of the old notes may be given to deposit money banks.
A CBN representative informed one of our correspondents on Saturday that a decision would probably be made at the meeting regarding the continued circulation of the old notes.
However, he claimed that the suggestion to increase money production would be difficult to implement due to logistical issues and the Nigerian Security Printing and Minting Plc’s capacity constraints for the printing of the new notes.
Due to the Mint’s inability to keep up with demand and the resulting current nationwide shortage, the CBN was considering hiring foreign companies to print the redesigned naira notes.
According to reports, the Mint was able to print N1,000, N500, and N200 notes worth N500 billion but may not be able to print any more at this time, while the CBN had taken out approximately N2.1 trillion worth of the previous notes from circulation.
The head of the central bank Sunday said that the Council of State’s recommendations would be carefully considered in light of the security ramifications of the notes’ continued scarcity, the cost of printing new notes while reissuing the old ones, and the execution of the Supreme Court’s interim order that the old notes should be permitted to circulate alongside the new ones.
There is confusion.
However, recent events have left bankers, traders, and common Nigerians uncertain as to whether or not the old notes should be accepted as legal tender.
Abubakar Malami (SAN), Attorney-General of the Federation and Minister of Justice, stated that the Supreme Court’s order would be followed, but he also stated that it would be appealed.
Under the condition of anonymity, a manager of a Tier-1 bank told one of our correspondents that there was confusion all over the place because the CBN had not issued a counter-directive to its earlier order that the old notes not be put back into circulation starting on Friday, February 10, 2023.
The bank manager remarked, “The entire situation has left us clueless as to what to do. The CBN’s most recent communication to us stated that we should start paying customers up to N20,000 over the counter and that the deadline of February 10 for the withdrawal of the old notes remains in effect.
“We no longer accept deposits made by customers in older naira. We came to an end on Friday. For instance, contrary to earlier instructions from the central bank, we did not open today (Saturday) to receive deposits. Our zonal head gave us the advice to stop compiling old Friday notes. We won’t accept deposits of old naira notes once more unless a new directive is issued on Monday.
Meanwhile, on Saturday, some gas stations in the states of Lagos and Ogun refused to accept old naira notes from customers and insisted only on new notes, transfers, and point-of-sale payments.
While some traders in various markets rejected the old notes, a similar scenario played out in supermarkets and fast food outlets.
Some Abakaliki, Ebonyi State, residents have urged the federal government to urgently address the nation regarding the suspension or extension of the deadline for the exchange of old naira notes.
The residents, who gave separate interviews to the News Agency of Nigeria on Saturday, claimed that the rejection of the old naira notes by merchants and gas stations throughout the state made the appeal necessary.
Concerned residents noted that the Abakaliki business community’s refusal to accept the old notes constituted a violation of the recent Supreme Court decision suspending the February 10 deadline set by the CBN.
In order to prevent the confusion, chaos, and panic the development has caused since the deadline passed on Friday, a lawyer, Mr. Lawrance Onwe, claimed that Nigerians deserved to know from the government the true position of the naira swap.
Mr. Silas Nkpuma, a civil servant, claimed that he almost got into a fight with a commercial motorcyclist because the latter insisted on being paid with a brand-new naira note.
I didn’t have any fresh naira notes with me, and the man refused a mobile transfer,” he claimed. The cyclist held me hostage until a kind stranger stepped in and saved me.
“I believe that if the public had been properly informed by pertinent government agencies, the confusion caused by the rejection of the old notes could have been avoided.
“The rejection was based on what appeared to be ignorance, and what is more concerning is that gas stations and major corporations began rejecting the old money on Friday.”
Food vendor Mrs. Chika Iteshi said she stopped collecting old naira because okada and keke (tricycle) riders wouldn’t take it. She is located at the Ophoke-Abba, Kpiri-Kpiri Market.
Similar to this, some Enugu residents began rejecting the old naira notes on Saturday.
An investigation by NAN revealed that many residents who were still in possession of the old naira notes were having trouble using them.
Mr. George Nweze, a resident of Awkunanaw in the state’s Enugu South Local Government Area, claimed to have witnessed the incident when he gave a bus driver the old N500, which he rejected.
“I was surprised that the driver didn’t accept the old note because I assumed he could use it to pay for gas with no problem. He rejected it outright,” Nweze said.
Mrs. Marta Chukwu, a small-time trader, claimed that her customer rejected the old naira notes, which she had used to purchase provisions and totaled N25,000.
According to Chukwu, her client refused to pick up the notes from her, saying he stopped collecting old notes on Friday.
NAN noticed that tricycle drivers would ask prospective customers if they had fresh cash before boarding.
Civil servant Mr. John Nwabueze claimed that although he had given an old note to a taxi driver on his way to work on Friday, by the time he got home that night, things had changed.
Mr. Ejike Ogbodo, a tricycle driver, claimed that the issue began when a NNPC mega station started rejecting old naira notes.
The attendants at the NNPC mega station refused to take our old notes when we were in line to buy fuel yesterday, so Ogbodo said, “We decided not to take old notes again.”
Similar to this, the Amalgamated Union of Northern Traders applauded the governor of Zamfara State, Bello Matawalle, for ordering security personnel to detain anyone who refused to accept the old naira notes for use in transactions on Saturday in Sokoto.
Matawalle was one of the governors who petitioned the Supreme Court for a restraining order to halt the Federal Government’s naira redesign policy.
Alhaji Sanusi Daudu-Nufawa, the union’s youth leader, praised the governor for ordering security personnel in Zamfara State to closely monitor all business transactions near markets in an effort to lessen general suffering.
According to Daudu-Nufawa, leaders could only successfully force people to conduct transactions using both the old and new notes if they made drastic decisions.
He claimed that the effort would further lessen and ease the suffering that common Nigerians were going through due to the shortage of both the old and new naira notes.
He expressed hope that people’s suffering would be lessened by the circulation of old notes and their gradual replacement with new notes.
unions imply strike threat
If they continue to face abuse from irate clients, the National Union of Banks, Insurance and Financial Institution Employees and the Association of Senior Staff of Banks, Insurance and Financial Institutions have threatened to lay off their members.
Anthony Abakpa, the president of NUBIFIE, stated that “Bank workers are also the target” and that “Nigerians are suffering.” Our members who work in the staff are receiving angry messages from customers. The only regulatory body that oversees banks is the CBN. As a result, if it gives Bank A or Bank B a certain amount, it should be able to monitor them and determine which bank is acting ethically. I believe we will organize a shutdown if nothing is done in a week.
In a similar vein, Olusoji Oluwole, President of ASSBIFI, stated that banks could only distribute to customers the amount of cash that was made available to them.
“The sad thing is that yes, banks are receiving money, but banks are not receiving enough money to circulate,” said Oluwole. Only what the banks have is available for issuance. But telling an already agitated public that banks are the ones holding the money makes us very concerned because it practically undermines public confidence in the banking system and puts the workers in danger. That is the sad part of it at the moment.
Beyond that, I believe that regardless of how recently designed they are or even how old they are, people just want access to money. The N100, N50, and N20 are what I’m referring to (notes). Let the CBN distribute them.
“We’re certain that it has them in stock, and when it does that, it should bring the distributable ones, not the ones that have been damaged. That should be possible, or at least help to reduce the tension a little.
No issues – CBN
The NSPMC has the ability and resources, according to the CBN, to produce the necessary amount of indented naira notes.
The top bank added that it was working to spread the new notes more widely across the nation.
In a statement dated Friday but released on Saturday, the director of corporate communications for the apex bank, Osita Nwasinobi, claimed that the governor of the bank, Godwin Emefiele, had been misquoted regarding the Mint’s ability to print the necessary banknotes.
Emefiele reportedly acknowledged that the Mint did not have enough supplies to print the new notes, which explained the current scarcity, according to some news outlets.
At no point, according to Nwasinobi, did the CBN governor make this claim during his presentation to the National Council of State on Friday.
For the record, Mr. Emefiele stated at the meeting that the NSPMC was working to print all naira denominations to satisfy Nigerians’ transaction needs.
While acknowledging the concerns expressed by all parties regarding the distribution of the naira, the CBN said, “We are alarmed at the extent to which vested interests are trying to manipulate the facts and turn the public against the bank.”
Nwasinobi added that the CBN was committed to carrying out its monetary policy duties in accordance with the CBN Act, 2007. (as amended).
“We also wish to reiterate that the NSPMC has the capacity and sufficient resources to produce the necessary indent of the naira,” he continued.
As we work diligently to increase the circulation of the new notes in the nation, the bank therefore wishes to appeal to the public to disregard the said reports and exercise more restraint.
The CBN director responded to a voice note that was trending on social media and claimed that the CBN intended to shut down some banks, particularly in a geopolitical area of the country, by denying the claims and claiming that they were illogical and inconsistent with how the banking system operated.
Niger sues the FG
Regarding the naira redesign policy, the Niger State Government has filed a lawsuit at the Supreme Court against the Federal Government.
The case with suit number SC/CV/210/2023 was reportedly filed on Friday, according to a statement made on Saturday by the state’s attorney general and commissioner for justice, Nasara Danmallam.
According to the statement, the state government was requesting, among other reliefs, an extension of the CBN’s deadline for the currency swap and the elimination of the old N200, N500, and N1,000 notes from circulation.
According to the statement, the Federal Government’s three-month deadline for the nationwide withdrawal of old notes was unreasonable and in violation of sections 13, 14(2)(b), and 17(1)(c) of the 1999 Constitution as amended.
The state government claimed in the affidavit supporting the originating summons that the lack of the redesigned notes had caused untold hardship and suffering to state residents, particularly those living in rural areas.
In the statement, the state government expressed its concern for the hardships the policy had caused the populace and promised to keep working within the bounds of the law to lessen their suffering.
Lawyers and economists respond
Cletus Agu, a professor of economics, claimed that the Supreme Court decision was irrelevant and that the problem of naira scarcity was an artificial community-imposed problem fueled by banks and the public.
It’s a problem that the public and politicians have imposed on the commercial banks, not the central bank, according to Agu. Pure economics is involved; it is not a legal issue. Bank managers are busy selling the naira outside of the banks, and customers keep withdrawing cash without depositing it. Politics has been inserted into the economics debate.
“You can tell that something is wrong when there are persistent lines at Automated Teller Machine galleries every day. If the money were moving around, things would be easier. People are taking out and storing the money, and bank managers are giving it to prominent businessmen and politicians. Why are the wealthy not moaning and only the poor experiencing pain?
He added that the Supreme Court would not resolve any issue by imposing sanctions, adding that one of the CBN’s goals is to return money to the system to enable cash flow.
“The Supreme Court shouldn’t have taken a position on the matter. What do they hope to accomplish? Only a five-day extension is possible; what happens after that? Let’s wait until they bring up the next judgment, he continued.
Samuel Igbatayo, an economist and professor at Afe Babalola University in Ado-Ekiti, Ekiti State, characterized the implementation of the cashless policy as a plan to bring the economy to its knees.
According to him, the military strategy had wrecked the economy, leaving Nigerians stranded and unable to access their money.
Igbatayo stated that even though he agreed with the cashless policy, he thought it should be implemented gradually to have the least negative effects on the economy.
“It is hardly surprising that the Supreme Court has ruled in the litigants’ favor given that it has given proper consideration to the effect on the masses,” he said. The economy will suffer from the new notes’ limited supply and the transitional period. For those who live in areas with a lack of financial services, it will be worse.
“Most rural areas lack banks and other financial services, and some locals there lack bank accounts. When putting the policy into practice, these individuals must be considered. The need for a cashless society and its implementation are undeniable, but there is a need for a gradual approach.
“I believe the CBN needs to go back to the drawing board to implement the plan over a fairly long period of time to ensure that there is enough currency in circulation to support economic activity throughout the entire nation. That sounds reasonable, and I have faith that the CBN will understand the significance of its actions as well as their inherent danger.
He claims that the lack of naira and high fuel prices have led to social unrest, which has resulted in bank robberies and other acts of vandalism as well as the outbreak of riots everywhere. He urged the government and those in charge of making policy to take all of this into consideration and to carry out the plan for a long enough time.
Nnamdi Aduba, a professor of international law and human rights at the University of Jos, claimed that the CBN’s cash withdrawal cap would encourage vote-buying during the general elections.
Aduba claimed the policy was counterproductive and added that the pain it had caused the populace was enough to cause them to fall for cheap inducements during the elections.
Politicians, he said, would access the money from the comfort of their homes and would come up with other ways to sway voters.
“The CBN and the banks are just out to punish poor Nigerians,” Aduba declared. I don’t see how the circumstances we’ve found ourselves in will allow for a free and fair election. It is impossible because people now get up early to go to gas stations or banks to wait in line for their own hard-earned money. When you say that people should cast ballots, who will they choose?
Who are you keeping from using this money, I ask you? There are issues with buying food, paying for transportation, and purchasing other goods. If you claim that it will stop vote-buying, could you please explain what you mean by that? Is it just about the money?
“Imagine yourself in a poor person’s position; when the election is just a few days away, someone will provide you with food and cover your transportation costs. Tell me, will you vote against that candidate during the election?
“If they’re going after politicians, they know that most of them will stay in their homes and collect the money; it’s the common Nigerians who line up. Therefore, if the goal of the policy is to catch politicians, it has not succeeded in doing so.
“So why all the hurry? You have had seven years to consider this; why are you acting so quickly now and setting an impossible deadline?