The Central Bank of Nigeria, has announced its decision to release re-designed 200, 500, 1,000 naira notes with effect from December 15, 2022.
Though, the CBN governor, Godwin Emefiele, who disclosed this during a press briefing in Abuja on Wednesday said that existing notes would be operating simultaneously with new ones until January 31, 2023, when old currency would seize to be regarded as legal tender.
He said that the action was taken in order to take control of the currency in circulation, stressing that the bulk of the nation’s currency notes were outside bank vaults and that the CBN would not allow the situation to continue.
Emefiele, in his briefing said that there have been continued apprehensions with the management of current series of banknotes, and currency in circulation, particularly those outside the banking system in the country.
His statements read, “As you all may be aware, currency management is a key function of the Central Bank of Nigeria, as enshrined in Section 2 (b) of the CBN Act 2007. Indeed, the integrity of a local legal tender, the efficiency of its supply, as well as its efficacy in the conduct of monetary policy are some of the hallmarks of a great Central Bank.
“In recent times, however, currency management has faced several daunting challenges that have continued to grow in scale and sophistication with attendant and unintended consequences for the integrity of both the CBN and the country.”
He added that the worsening shortage of clean and fit banknotes with attendant negative perception of the CBN and increased risk to financial stability as well as, increasing ease and risk of counterfeiting evidenced by several security reports were reasons for redesigning the notes.
The CBN boss noted that although global best practice was for central banks to redesign, produce and circulate new local legal tender every 5–8 years, the Naira has not been redesigned in the last 20 years.
He said, “On the basis of these trends, problems, and facts, and in line with Sections 19, Subsections a and b of the CBN Act 2007, the Management of the CBN sought and obtained the approval of President Muhammadu Buhari to redesign, produce, and circulate new series of banknotes at N200, N500, and N1,000 levels.
“Customers of banks are enjoined to begin paying into their bank accounts the existing currency to enable them withdraw the new banknotes once circulation begins in mid-December 2022. All banks are therefore expected to keep open, their currency processing centers from Monday to Saturday so as to accommodate all cash that will be returned by their customers.
“For the purpose of this transition from existing to new notes, bank charges for cash deposits are hereby suspended with immediate effect. Therefore, DMBs are to note that no bank customer shall bear any charges for cash returned/paid into their accounts.
He also said, “Although global best practice is for central banks to redesign, produce and circulate new local legal tender every 5–8 years, the Naira has not been redesigned in the last 20 years.
Recall that on February 28, 2007, as part of economic reforms, N20 was issued for the first time in polymer substrate, while the N50, N10 and N5 banknotes; as well as N1 and 50 kobo coins were reissued in new designs, and the N2 coin was introduced.
Also, on September 30, 2009, the redesigned N50, N10 and N5 banknotes were converted to polymer substrate following the successful performance of the N20 (polymer) banknote. Finally, the CBN, as part of its contribution towards the celebration of the 50th anniversary of Nigeria’s Independence and 100 years of its existence as a nation, had issued the N50 Commemorative polymer banknote on September 29, 2010; and the N100 Commemorative banknote on December 19, 2014.
According to Section 2 (1) of the Money Laundering Act 2022, “No person or body corporate shall, except in a transaction through a financial institution, make or accept cash payment of a sum exceeding— (a) N5, 000,000 or its equivalent, in the case of an individual; or (b) N10, 000,000 or its equivalent, in the case of a body corporate.”
However, we insist that before the old currency is completely phased out, a genuine question is how the transition would help stabilise the foreign exchange (FX) market. This is even as the country is currently faced with FX crisis, affecting key sectors in the country.
We are also concerned with the cost of printing the new series of banknotes would be an additional burden on the country’s fiscal strength.
CBN had said it spent N58.618 billion to print naira notes, valued at N1.06 trillion in 2020. And, this cost is outrageous and a healthy expenses for the nation at this trying period.