Faces of New Naira Notes

Cashless Policy: Banks, consumers pressuring CBN to extend old Naira notes deadline

*Several stakeholders in economy lament scarcity of the redesigned Naira notes as they pressure the Central Bank of Nigeria to extend the January 31, 2023 deadline, especially for the underprivileged and consumers in rural areas with few banks and limited Point of Sale terminals

*But financial analysts, others also differ on CBN’s possible extension of deadline for old banknotes

Isola Moses | ConsumerConnect

As the January 31, 2023 deadline for use of the old Naira notes as legal tender in the West African country fast approaches, several stakeholders in the economy have been mounting pressure on the banking regulator to extend the timeline.

ConsumerConnect reports   that lawmakers, traders, company executives, marketers, vendors, bankers and other consumers, at differing times, have requested an extension to allow the new banknotes to circulate well and ensure the mop up of the old notes from circulation.

Though the use of old Naira notes are expected to end as legal tender by January 31, there is scarcity of the new banknotes as Deposit Money Banks (DMBs) predominantly keep dispensing old notes to consumers of financial products and services in the country.

Investigations revealed that different stakeholders had been mounting pressure on the CBN to extend the deadline in order to allow the new notes to circulate well towards mopping up of the old notes.

Prominent among the stakeholders were Managing Directors of banks and their Management teams, but a source close to the Chief Executive of a Tier-1 lender Friday, January 13, 2023, said that the banks’ Managing Directors (MDs) could not make the call for the deadline extension openly as the decision on the redesign of the Naira had their approval, Saturday Punch report said.

The source stated: “It is true that the bank MDs are not comfortable with the fact that the new notes are not circulating the way they had anticipated.

PoS and mobile payment channels

“But they can’t publicly ask for an extension of the deadline as they were part of the decision to redesign the currency and withdraw the old notes from circulation.”

The source also noted: “However, because of the failure of the CBN to supply enough new notes and the pressure this is putting on their banks, the Managing Directors are lobbying the apex bank to consider the extension of the deadline through the backdoor via the auspices of the Bankers’ Committee. It is a sensitive issue.”

Possibility for extension of January 31 deadline

In view of the flurry of requests for extension of the deadline from various quarters, a senior CBN official Friday reportedly disclosed that the Bankers’ Bank might yield to the pressure for extension of the deadline.

A new date may be announced before or during the CBN Monetary Policy Committee (MPC) meeting holding Wednesday, January 25, said he.

The source further stated: “It is clear that the CBN has not supplied sufficient new currency notes to the banks.

“Even many of us in the CBN have not seen the new notes.

“The absence of the CBN governor has also clouded the issue, and that is why no statement has been made regarding the extension of the deadline.”

According to him, “from the look of things, most certainly, a new deadline may be announced before the end of the month, or during the MPC meeting coming up between January 24 and 25.”

Similarly, a bank manager in Ikeja, Lagos State, who preferred anonymity stated: “We have been mandated to load all our machines with the redesigned Naira notes, but we still don’t have much of the notes in circulation to load in all the machines across the country.

“What we have agreed is that at least one machine must be loaded in all locations with the new Naira notes, because CBN officials have started moving around banks to confirm the level of compliance.”

The bank official also said: “Two of the CBN officials visited one of our branches today (Thursday) and asked questions if the bank ATMs were dispensing new notes.

“They also joined the custodians in the ATM room in loading the machines and confirmed that the new notes were being dispensed to customers; they went ahead to ask why some machines were still dispensing old notes.

“The response given was that the new notes supplied were not enough.”

The Bank Manager as well explained: “They requested the evidence of cash supplied from our bullion team and ensured that the same was loaded in the ATMs as we have been mandated not to pay any single note across the counter.”

NUBIFIE seeks extension

Likewise, Anthony Abakpa, National President of the Nigeria Union of Banks, Insurance and Financial Institutions Employees (NUBIFIE), stressed the need for the CBN to extend the deadline for use of the old notes.

Abakpa was quoted to have said, “we would have loved for an extension on the deadline that the CBN has issued for those who are underprivileged and those who live in rural areas where there are no banks and they have to travel a distance before they can carry out banking transactions even on the PoS.

“We will also love it if they can extend it for every individual to be able to deposit their old notes.

“We advise that there should be a little extension like a month so that everybody can deposit the old notes.”

He noted to a large extent, most of the Automated Teller Machines in Lagos had started dispensing new notes.

However, when informed him that ATMs, in Abuja, were dispensing old notes, Abakpa described the situation as abnormal and said NUBIFIE should be notified about such banks so that necessary action could be taken, report stated.

Consumers lament scarcity of new banknotes

Recent findings indicated some of the Deposit Money Banks (DMBs) had not received sufficient new Naira notes to satisfy their customers’ demands.

Customers at the GTBank, Sauka Branch in the Federal Capital Territory (FCT) expressed dissatisfaction with the continued circulation of the old notes despite directives by the CBN to load the new notes in ATMs, according to report.

It was also observed that customers, who as early as 9a.m. Friday, were in a queue but could only obtain the new notes, while several customers trooped into the banking halls to deposit old notes.

A customer, Mohammed AbdulKadiri, disclosed that he expected to withdraw the new notes but got dirty old notes when he visited the ATM gallery.

“The current situation is disheartening, it has never been like this.

“Normally, when you want to produce new notes, on the day of launching, all the banks will have the new notes to give out.

“By now, I thought we would have more of the new notes in circulation, but unfortunately, I withdrew old notes today, said AbdulKadiri.

He further lamented: “Honestly, I still don’t know why they changed the notes.

“I feel more for traders in the markets because what this means is that by January 31, people will still be spending the old notes.”

As regards the rationale behind the development, an official of the bank branch asked the correspondent to direct all enquiries to the corporate communications team of the financial institution based in Lagos, report stated.

Another customer, who did not want her name in print, said it was frustrating as a merchant to deposit the old notes and still withdraw the old notes.

The concerned consumer declared: “I am tired of this new policy.

“I no longer keep large amounts of the old notes, but when I make withdrawals, I still get the old notes.

“It is frustrating. I hope that they will make the new notes surplus next week or at least extend the deadline.”

Visits to ATM galleries of Access Bank, United Bank for Africa and Wema Bank located at the Federal Secretariat, Abuja, FCT, as well indicated the ATMs were still dispensing the old Naira notes in N500 and N1,000 denominations.

In the GTB banking hall as of Friday, report showed that cashiers were yet paying customers with the old Naira notes.

At the Access Bank ATM gallery, a customer who did not give his name lamented the scarcity of the new notes.

However, he questioned the security personnel, asking why the ATM was still dispensing old notes despite the directive of the CBN for the banks to flood the machines with new notes.

Similarly, the UBA ATM at the Federal Secretariat, in Abuja, dispensed the old notes.

A customer, who gave his name simply as Godswill, remarked, “If the government wants to approve the new Naira, let it do that once and for all so that everyone can conveniently start getting it from the ATMs.”

It was learnt that the situation, however, was slightly different in Lagos and some parts of Ogun State Friday, January 13, as some ATMs dispensed new notes, while others dispensed old notes and a mixture of both.

Senate proposal for extension of deadline

ConsumerConnect had reported the Senate, in the National Assembly (NASS), Abuja, had urged the CBN to extend the withdrawal date of the old notes to June 30, 2023.

The Senate resolution was sequel to a point of order raised by Senator Mohammed Ndume during  plenary.

Raising orders 41 and 51 of Senate Standing Rule, Senator Ndume said the call for extension of the date should be considered as a matter of urgent national importance in order to forestall imminent hardship on Nigerian consumers.

CBN reminds consumers January 31 deadline stays

In all of this, the Central Bank of Nigeria is standing firm on the issued deadline for the use of old Naira notes as legal tender in the country.

Mr. Osita Nwanisobi, Director of Corporate Communications at CBN, had explained that the release of new notes to banks was ongoing, adding that the process was still at the initial phase.

The CBN also through its verified Twitter handle @Cenbank, urged bank customers to return old notes to the banks before the deadline.

The Bank has tweeted: “A reminder to the general public that the old series of N200, N500 and N1000 notes cease to be legal tender by January 31, 2023.

“You are once again advised to return them to your bank before the deadline!”

In terms of the volume of cash in circulation, it is recalled the CBN, December 2022, announced that it had withdrawn over N1trillion out of the N3.23trillion from circulation since the launch of new Naira notes November last year, in a bid to move cash back into the banking system.

‘Don’t extend deadline,’ say analysts

Despite the rising number of Nigerians and organisations seeking an extension of the deadline, Mr. Johnson Chukwu, a financial analyst and Managing Director of Cowry Asset Management, said banks were not overwhelmed with the new currency demand if the CBN had given them enough new currencies to disburse.

Chukwu contended that the apex bank has the number of banking customers in the financial ecosystem.

The analyst stated, “I don’t think the banks are overwhelmed with the demand if the CBN has given them enough new currency notes.

“The limits for withdrawals are only N500,000 per week per individual and N5million per organisation per week.

“So, the CBN has the number of bank customers.”

The Cowry Asset Management Chief Executive also said: “The basic thing I would have expected them (CBN) to have done is to look at the history of the banking customers and see the people who are cash-oriented and those who come to withdraw money.

He explained: “Let’s assume you have 12 million bank customers or thereabout, and you take it that six million will come and withdraw cash and you assume that 50 percent are individual customers and not corporate.

“Calculate the figures and have an estimate on how cash will be demanded.

“If the CBN has actually released enough new currency notes to the banks, there is no reason why the banks should not be able to meet their customers’ demands.”

Chukwu as well noted “if there is no queue at any bank where people want to withdraw the new notes, it simply means that people are served with the currency given to the commercial banks by the CBN.

“If the banks don’t have, they will give them the old currency.

“So, I think clearly it’s all about what’s available.”

Chukwu added that the volume of transactions done with cash had significantly dropped, adding that cash was no longer a significant standard of payment in the country.”

According to him, “in as much as there may be some discomfort and challenges in the very rural areas, I don’t think it will cause any major hiccups in business transactions, because I don’t know anyone that is buying anything for N2m that will carry cash around unlike what we used to have in the past.”

He dropped the clincher, that  “most Nigerians have moved to other means of payments that are more efficient.

“The shortage (of new notes) will not affect economic activities.”

Unlike others, he noted that the deadline should not be extended.

Chukwu restated: “No, I don’t think that the CBN should extend the deadline because, if you look at some of the motivations for that timeline, an extension will defeat some of those primary objectives.

“This is a new currency design and it will reduce the volume of cash that people can withdraw, so I don’t see the possibility of an extension.”

How CBN should address insufficient new Naira notes supply to banks

The financial analyst stated: “I think it’s a design, not an accident; it’s clearly a design by the CBN to ensure that the volume of cash in circulation is checked.”

How senior lawyers differ on possible extension of timeline

Meanwhile, some senior lawyers have expressed divergent views on the possible extension of the deadline for the old notes to cease as legal tender effective January 31.

While Babatunde Ogala, SAN, noted that the CBN might have to extend the deadline, Kemi Pinheiro, SAN, urged Nigerians to embrace the cashless culture as too much cash in circulation could be used for vote-buying, report said.

Ogala also stated: “Today, (Friday), it is becoming inevitable with the scarcity of the new currency that there may be a need for an extension of time for the old notes to cease to be legal tender.

“But in a situation where the banks’ Automated Teller Machines are still dispensing the old notes, how can you now achieve the mop up?

“The banks are only taking in the old notes and circulating them back to the public.

“What this tells us is that we are not ready yet.”

He observed “the CBN probably needs some more time to achieve this task, because I don’t see that happening within the time frame.

“It is obvious that we still do not have the new notes.”

Ogala added: “We understand that we want to go as cashless as possible, but there is no country where we do not have at least some cash in circulation.”

However, Pinheiro described the move by the CBN to implement the cashless policy as a welcome development.

He said the process had been subverted by illegality and lawlessness.

He also said the January 31 deadline should be sufficient time.

“I think Nigerians will adopt the cashless arrangement.

“There has been legislation in place for more than 10 years for this cashless policy and it is not being implemented. Insisting on implementing it now – you know we’re not just told about it; we were told three months ago – 90 days should be sufficient time.”

Pinheiro declared that “people took bundles of Naira with wrappers of banks that have ceased to exist to the bank; they were keeping money at home.

“No modern society operates that way.”

He further stated: “If we adopt the cashless policy, it will allow the flow of legal funds, and that is why people are kicking against it.

“People want to buy votes, but this process will make it difficult for them.”

According to him, “the CBN is not as foolish as many think, so I think that at the end of the day, it is a policy that is long overdue.

“As for the availability (of new notes), I think the government is trying to mop up funds so that they don’t spend it recklessly. “How do you go to a party and say give me your account and let me transfer money; the money is simply not there for you to spray.”

“What is unfortunate is that we thrive in illegality.”

But Edet Akpakpan, a Professor of Economics at the University of Uyo, said, “I can’t understand why they insist that it has to close on a certain date.

“We need to find out why because, as things stand, there will be problems.”

The University don noted: “Since I got some new notes about two weeks ago, I have not been able to see any till now.

“I think it will be dangerous for the CBN to insist on withdrawing the old notes on a particular date. They should extend it.

“And if they are not extending it, what efforts are they making to make it available?

“The idea of changing the notes is good, but they should implement it properly so that citizens are not hurt in the process.”

The Chief Executive Officer, Centre for the Promotion of Private Enterprise, Dr. Muda Yusuf, also said it was increasingly becoming clear that the deadline set by the CBN was not realistic and the National Assembly had advised the apex bank on its postponement till around June.

“The House of Representatives spoke in a similar manner that this thing requires a lot more consultation to ensure that necessary flexibility is introduced to the implementation.”

Yusuf stated: “That it doesn’t disrupt economic activities, especially among the rural dwellers, the informal sector and the larger economy generally.

“So, with what we have seen, obviously, there are capacity problems on the side of the CBN to implement this.

“It is evident that they don’t have enough, because if the banks in Lagos up till now are still dispensing old Naira notes, that means there is a production capacity problem because the Nigeria Minting and Printing Company is in Lagos, so the challenges of logistics are out of it.

“So, if Lagos is still experiencing this, what will happen to other states around the country and all the local government areas?

“Many of them are in remote locations that don’t have banks and ATMs.

“And there is a lot  of cash in those locations because many of these rural people are the ones who are really in agribusiness and trading in commodities.”

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