How CBN’S Extension For New Naira Notes Is Falling Short
Nigerians, including experts, have expressed concerns about the CBN’s demonetisation policy, its timing, among other issues in the wake of the apex bank’s extension of the deadline for the new naira notes.
When President Muhammadu Buhari unveiled the new naira banknotes on November 23, 2023, he said that they had been strengthened with security features that would make them challenging to forge.
The new banknotes, in the president’s opinion, would improve the collective memory of Nigeria’s history and assist the Central Bank of Nigeria in developing and implementing better monetary policy objectives.
Thus, it was anticipated that the new notes would go into circulation on December 15 and circulate side by side with the old notes until January 31, 2023, when the latter would no longer be considered legal tender.
Following the scarcity of the new notes, Nigerians expressed their concerns about the deadline the CBN gave for the expiration of the old notes.
The CBN insisted that the old 200, 500, and 1,000 naira notes’ validity deadline of January 31 would not change.
Various groups were pleading and demanding that the apex bank change course and extend the deadline so that Nigerians will have more time to return their old notes to deposit money banks, amid a wave of calls from various quarters.
Deadline Extended
While Nigerians hoped and prayed that the deadline would be extended, Buhari announced on Saturday that there would soon be an abundance of new naira notes. He added that commercial banks and the Central Bank were collaborating to find solutions to the problems.
“Several initiatives by the Central Bank and all commercial banks are underway to speed up distribution of the new notes and do all that is necessary to forestall cash squeeze and chaos,” the President said in a statement by his Senior Special Assistant on Media and Publicity, Garba Shehu.
However, in the early hours of Sunday, hope was restored when the CBN extended the deadline for exchanging old naira notes for redesigned ones until February 10, 2023.
This was stated by the CBN in a statement on Sunday.
According to the apex bank, “a 10-day extension of the deadline from January 31, 2023, to February 10, 2023, to allow for the collection of more old notes.”
The CBN stated that Nigerians would be able to deposit their old notes directly with the CBN until February 17, 2023, a period referred to as the “grace period.”
“Based on the foregoing, we have sought and obtained Mr President’s approval for the following, a 10-day extension of the deadline from January 31, 2023, to February 10, 2023; to allow for the collection of more old notes legitimately held by Nigerians and achieve greater success in cash swap in our rural communities, after which all old notes outside the CBN loses their Legal Tender Status,” Emefiele said.
“Our CBN staff currently on mass mobilisation and monitoring together with officials of the Economic and Financial Crimes Commission and the Independent Corrupt Practices and other Related Offences Commission will work together to achieve these objectives.
“A seven-day grace period, beginning from February 10 to February 17, 2023, in compliance with Sections 20(3) and 22 of the CBN Act, allowing Nigerians to deposit their old notes at the CBN after the February deadline when the old currency would have lost its Legal Tender status.”
Reactions
While some traders have reportedly refused to accept old Naira, consumers have been forced to make transfers to purchase goods. “There was no one willing to collect the old Naira notes on my street,” said Bola Adeleke, a resident of Lagos Island. I had to make a transfer at the mallam’s shop where I bought things yesterday (Saturday).”
Interactions with POS operators in Ikeja on Monday revealed that the distribution of the new naira notes had been halted. Following the deadline extension, some customers were willing to make do with old notes, but none were available. Banks and ATMs were not dispensing old or new naira notes.
“We haven’t seen the new naira notes yet, so I can only give out old ones for the time being. By next week, I’ll make certain that I only transact when I have access to the new naira notes,” said a POS operator in Ogun State.
A business owner in Nigeria, Mr Matthew Eromosele, said “If you ask me, I see this as a political strategy to target those who have saved money to campaign in the upcoming election. However, I have nothing to back up my claim.
“The current issue is that some market women are refusing to collect old naira notes, which is understandable given the stress of converting them to new ones. The deadline is approaching, and the new notes have not yet been distributed. I only hope they extend it so that the new note can circulate as quickly as possible because these challenges have not been easy.”
“The demonetisation policy announced by the CBN Governor is a nice plan that is ill-timed,” said finance expert Ovie Ogidiaka. The policy’s goals are to promote a cashless society, reduce fraud, and combat the country’s inflationary trend by bringing unbanked cash into the CBN’s cash net, which is a brilliant idea. They are overlooking the fact that the infrastructure required for cashless policies to thrive is not evenly distributed, particularly in rural areas.
The irritating aspect of the policy, according to Ogidiaka, who is also a PhD candidate at the Nigerian Defence Academy, is the blame game between bank representatives and the CBN.
He pointed out that the CBN claimed the banks were sabotaging its policy, while the banks complained about a lack of new notes. “These have put many citizens in a panic as the deal’s deadline approaches. “The banking hall is now overcrowded with account holders who want to withdraw or deposit money,” Ogidiaka said.
Oluwayemi Ezekiel, an accountant, commented on the CBN’s guidelines for the new naira notes, saying the cost benefits, time frame, and including the same notes in different colours should all be considered.
“First and foremost, the current state of the country’s economy cannot support the printing of new notes. The cost of printing the new notes outweighs the benefits envisaged.
“It is clear that the decision was made with a specific group of people in mind for political reasons. However, this is done at the expense of citizens who are unaware of their cruel benefits in the political governance drama.
“Secondly, identical notes were printed with just a colour change; does that make up for the trouble we are going through? No, it is wholly incorrect.
“Thirdly, the time frame is too brief, and I have never seen or read about this country’s history of currency changes with this kind of short notes, short time frames, and restrictions as to the amounts that can be deposited in old notes and collected in new notes. As a result, this policy and decision have not met their objectives; the notes are reaching the wealthy and politicians, but not the common man.
“I don’t think this policy is a good one.”
“We must trust the decision of CBN Governor Godwin Emefiele,” investor and trader Levi Godwin said. If we’re being honest, after the announcement of the new naira note. The value of the naira increased.
“And, for the time frame, I believe it’s more than enough, but they went about it incorrectly. We have all been aware of the new naira currency since November, but banks have so far refused to release funds. week, banks and ATMs that are supposed to distribute new notes continued to pay old notes.
“Anyway, I applaud the Central Bank of Nigeria for directing all banks to extend their working hours over the weekend to receive old note cash deposits from clients of the 200, 500, and 1000 naira notes, which will cease to be recognized as legal money on February 10, 2023.”
Our reporter gathered that the only way for people to spend their old naira notes without much difficulty has been through commercial vehicles. Commercial vehicle operators are part of the few groups of people who have provided services without necessarily demanding new Naira notes.
“There are positive aspects of Nigeria’s new currency design,” said Nigerian economist Hamzat Adams.
“Increased economy formalization: The re-design initiative made many individuals and companies switch to formal banking channels, which resulted in greater economy formalization.
“Due to the decrease in the maximum amount of cash that can be withdrawn from ATMs and tellers points in Nigeria, many people begin opening bank accounts, particularly those who are involved in point of sale businesses.
“The decline in corruption and black money: With the notes gone, there was a significant drop in the amount of black money floating around, which in turn brought about a decrease in corruption and tax evasion.
“The Naira redesign forced people and businesses to use cashless payment methods, which increased digital transactions.
“As the economy becomes more formalized, more people and businesses will pay taxes, increasing the amount of money collected by the government through taxes.
“However the harmful effects of the redesigned Naira in Nigeria includes abrupt Naira redesign drive which resulted in a cash shortage, preventing the economy from functioning normally. Particularly true were daily wage workers, small businesses, and the agricultural sector.
“There were long wait times at banks and ATMs as a result of the lack of new currency notes, which was annoying for people and had a detrimental effect on productivity.
“Economic slowdown: The short-term slowdown in economic growth brought about by the cash crisis and other economic disturbances are seen in the drop in inflation.”
“The unorganised sector is affected: The Naira redesign effort had a considerable negative impact on the unorganised sector, which depends heavily on cash transactions.
“Yes, it’s an excellent concept. But the political aspect of it is terrible. It’s nice to bring this up right before an election, but they should allow adequate time to dispose of the outdated notes. The governor of CBN is not a guy of integrity because of this. He is prepared to make some decisions thanks to his political interests and the support of his political bigwigs. I am certain that all of his friends will have unlimited access to the new notes.”
