Old notes are passing away
As the window for the phasing out of the old banknotes closes, the Central Bank of Nigeria (CBN) has stepped up an aggressive awareness…
As the window for the phasing out of the old banknotes closes, the Central Bank of Nigeria (CBN) has stepped up an aggressive awareness programme to sensitise the public on the security and other issues about the new notes. Officials of the regulatory bank started visiting markets across the country, assuring market people that the naira redesign is aimed at combating counterfeiting. They also urged them to deposit the old notes they had kept, assuring them that the current scarcity of the new notes would soon be over. They also encouraged those without bank accounts to visit banks of their choice to open accounts.
The CBN’s approach to rolling out the new banknotes (only the higher denomination ₦1000, ₦500, ₦200 notes are being changed) has been all shades of wrong. From an anaemic public sensitisation campaign to the patchy circulation of the new notes paired with a mostly lax retrieval of old naira notes, the management of the new currency onboarding has been shoddy and scatter-gun. Utterances from the CBN, including from its governor, indicate that its key success metric is halting the usage of the old naira notes by 31 January, but the regulator has paid lip service to the processes that will help achieve this target. It was first announced in October 2022, with the President shepherding a glitzy launch in November. In other words, Africa’s largest economy only allowed two months to overhaul half of its banknotes. There is no precedent for a tight turnaround on a major policy thrust of this kind anywhere in the world, and it is spooking major stakeholders. Retail banking agents, who have quickly risen to be the dominant financial services contact point for most Nigerians, have complained of a constrained supply of the new notes. The bank responded by launching a last-minute cash swap programme across as many of the country’s 774 local government areas as possible — 12 days before the deadline. The National Assembly, packed with politicians acting as elected representatives and election candidates who have stockpiled cash to secure re-election, have asked the regulator to consider extending the deadline to the end of July. The CBN has refused. Observers have said that the ostensible aims of the redesign — enhancing currency security, limiting the appeal of cash in favour of electronic bills payment and curbing corruption — can be better achieved by less disruptive mechanisms. The regulator has acted like those concerns are nonexistent. Governor Godwin Emefiele may have vehemently denied the possibility on numerous occasions but we foresee the CBN will extend its deadline as it is unlikely that total circulation of the notes alongside sensitisation on the new notes, specifically in the area of counterfeit note identification will be attained before the deadline. Yet again, public institutions in Nigeria keep rolling out campaigns without a well-thought-out implementation roadmap. For the CBN, it is increasingly becoming par for the course.