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

Commercial banks in Nigeria are complaining about the short supply of new naira notes Central Bank of Nigeria (CBN) is under increasing pressure to circulate old notes ahead of the January 31 deadline, bank officials and security sources told PREMIUM TIMES on Saturday.

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

However, sources privy to the details of the CBN operation told PREMIUM TIMES on Saturday that the supply of new notes from the Apex bank has been grossly inadequate, making it difficult for commercial banks to meet customer demands.

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

“The cash required for ATM operations alone at this place is about N25 million, and that is apart from other cash transactions in the bank,” the source said. “Bankers are afraid to complain openly.”

Security agencies, particularly the State Security Service, are monitoring the implementation of the new note policy and have questioned bank officials, including those of Apex Bank, PREMIUM TIMES has learnt.

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

“CBN has lied to Nigerians. Even I, as a branch manager, have no new notes and customers keep calling me to help them get it,” said the branch manager of a new generation bank in Lagos.

The bank boss said his branch usually needs about N10 million to fill its ATMs for customers to use.

“But during last week, we only got N2 million of the new note. That is why our ATMs have been idle without dispensing anything because we have been instructed not to use the old notes,” the source added.

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

“We don’t get enough money. Our ATMs are not working as we don’t have cash to top up,” the bank official said.

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

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

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

“I have to say here, unfortunately, that I don’t have good news for those who think we should change the deadline. Apologies,” Mr Emefiele said.

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

However, despite the CBN giving about 100 days notice, the shortage of new notes has hampered the smooth transition, leading to calls for an extension.

On Saturday, President Muhammadu Buhari acknowledged that many Nigerians ‘facing difficulties‘ due to the new note policy.

“Considering that the poorest sections of the society are facing hardships as they often keep money at home for various expenses, President Buhari gave strong assurances that the government will not leave them to their fate,” Buhari’s spokesman, Garba Shehu, wrote in a statement.

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

Background

Last November, weeks after the apex bank announced the plan to redesign the three notes, President Muhammadu Buhari unveiled the redesigned N200, N500 and N1,000 notes as the apex bank set a deadline of January 31 to validate the old notes.

Since the introduction of the notes, many Nigerians on social media have expressed reservations about the circulation of the new notes. Many say they are yet to see the new naira notes, while others complain of deposit money banks despite the approach of the January 31st deadline to discard the old notes.

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

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

The CBN recently directed commercial banks to stop over-the-counter payment of old notes and load automated teller machines (ATMs) with redesigned naira notes to encourage circulation.

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

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

Uncertainty comes

As the January 31 deadline approaches, many Nigerians have continued to wonder how the apex bank plans to regulate the amount of money in circulation and deepen the rollout of new notes. Analysts say that a large number of old naira notes remain in circulation as the sole form of exchange for goods and services among people in many parts of the country.

Checks by PREMIUM TIMES earlier in the week showed that the old notes in circulation in major cities in Nigeria outnumber the new redesigned notes. However, in some local shops and traders in big markets, the old notes are being rejected as a monetary service.

On Friday, PREMIUM TIMES gathered that many ATM points in Lagos were besieged by frustrated Nigerians who lamented the scarcity of new notes and complained of bank tellers handing out old notes.

On the head, the CBN insisted that its term remains sacred. On Saturday, amid growing concerns about the impact of the naira redesign policy on the state of the economy, the CBN in a tweet stressed that the deadline for the return of old notes remains January 31.