Market News

National newspaper recently came out with a searing front page lead, “Where are new Naira notes? The poser arose from the outcome of investigations by the publication across some major cities in the country which showed the new notes are virtually not in circulation several months after they became legal tender

They are neither being dispensed by the Automatic Teller Machines (ATMs) of depositors’ banks, nor are they available at the Point of Sales POS outlets across the country. The situation is even compounded by the near disappearance of the new currency notes from the daily commercial and other transaction activities of the citizenry.

That the scarcity of the new notes has persisted even as the currency in circulation is reported to have increased from N982.09 billion in February to N1.6 trillion at the end of March is even more confounding. Faced with this inexplicable situation, it was only logical for the publication to interrogate the whereabouts of the new naira notes.

The findings should also evoke the concomitant question of what has become of the Naira Redesign and Cashless Policy of the Central Bank of Nigeria, CBN.  Is it still on course or jettisoned overboard by the contradictions that trailed its faulty implementation?

This immediately throws up issues as to what has become of its high-minded objectives? What has become the fate of such policy objectives as the imperative to take effective control of the currency in circulation, address the hoarding of the Naira outside the banking system and check the increasing counterfeiting of the high denominations of the Naira?

The CBN had in October last year introduced the newly redesigned notes and gave January 31, 2023 as the deadline for the use of the old currencies. But President Buhari officially unveiled the new N1000, N500 and N200 currency denominations in November with the same deadline for the old notes to cease as legal tender.

Within that time frame, both the old and the new currencies circulated together. But as the deadline for the old currencies to cease as legal tender approached, the situation became chaotic as the new notes were nowhere to be found even as people made to deposit their old currencies to beat the deadline. Apparently sensing danger in sticking to the old deadline in the face of acute scarcity of the new notes, the CBN had to extend the deadline to February 10, citing the approval to that effect by the president.

But nothing substantially changed as the situation unleashed such excruciating hardship on the citizenry that compared with the sufferings and untold dislocations experienced only during war situations. People found it extremely hard to access basic necessities of life as the old notes were being rejected even when the redesigned currencies were virtually unavailable.

Soon, the Naira began to sell against itself at very ridiculously discounted rates. Faced with serious hardship, some governors went to court to challenge the Naira redesign and cashless policy even as allegations of political motives were freely traded. The timing of the policy close to the general elections was further touted as evidence of an agenda of a political hue.

The Supreme Court came to the rescue when it gave an injunction for the status quo to be maintained pending the determination of the substantive case. The implication of this was that both the new and old currencies should circulate contemporaneously until the final ruling in the case. Before the apex court gave the final ruling, President Buhari in a national broadcast countermanded the injunction.

Buhari had given approval to the CBN to release the old N200 bank notes back into circulation as legal tender with the new bank notes for 60 days from February 10, to April 10, when the old N200 notes will cease as legal tender.

The president’s directive only succeeded in injecting further confusion to a hopeless situation as the cash squeeze got to an alarming dimension. The reintroduction of the old N200 notes made a near zero impact on the biting cash squeeze.

 There was a heavy sigh of relief when the Apex court gave the final ruling directing that both the old and new currencies should circulate concurrently till December 31. But that was not the end of the matter as both the federal authorities and the CBN kept mute for days over the implementation of the court order.

Feeble attempts by some depositor’s banks to pay in the old currency notes were resisted by their customers on account of the inability of President Buhari and the CBN to come clear on the Supreme Court order. The situation lingered. But the citizenry were obviously at the receiving end.

It took accusations and counter accusations for the president to wash off his hands from the inability of the CBN to implement the apex court’s ruling. In the midst of this, allegations arose that the CBN was about to inject large quantities of the old naira notes into the banking system to mitigate the untold suffering unleashed by its policy.

But this did not come into full force until the Nigerian Labour Congress, NLC threatened to picket all the branches of the CBN across the country if the situation did not improve. Apparently fearing the warning by the NLC, the CBN began to release substantial funds to depositor’s banks. The NLC had to call off its scheduled occupation of CBN offices citing improvement in the cash situation.

But those who went to the banks to cash some money soon discovered that depositor’s banks were only paying out the old notes. Customers withdrawing money from the ATMs and POS were paid in the old Naira notes. Cash transactions across the country, as I write, are also virtually done in old notes. This has raised curiosity as to what has become of the new Naira notes-an integral part of the Naira redesign and cashless policy of the government. It was out of the puzzle generated by this development that the said publication embarked on investigations which revealed that the new currencies are not really in circulation. That is the unfortunate situation on ground.

So what happened? What of the December 31, deadline for the old currencies to cease as legal tender? Why are the new currencies not circulating with the old ones to make for ease of transition when the old notes eventually go into extinct? If it has taken these months without the impact of the new currency notes being felt, what guarantee is there that any magic will happen in the remaining months?

These questions and more point to the impending danger in the CBN having the old currencies circulate to the near exclusion of the new ones. It is not clear why the situation has remained so even as speculations abound.

There is the theory of hoarding of the new notes by the rich. There is also the dimension of a deliberate action by the CBN to control the cash flow outside the banking system. Sabotage has also featured as a possible reason for the scarcity.

Even as hoarding cannot be ruled out, the banks should be held liable if that is a major cause for the scarcity. At no point since the new policy did the commercial banks pay the new notes through the ATMs in substantial quantity. Had the banks been paying the new notes through the ATM galleries, acute shortage would have been a thing of the past.

It would appear the scarcity is a matter of deliberate policy by the CBN. It is part of the measures to achieve the objectives of the Naira redesign and cashless policy of the government. But it is a potent danger to allow the situation to persist.

There is the frightening prospect of the odious experiences faced at the earlier stages of the policy repeating. That prospect is very high unless substantial amounts of the new notes are injected into the system to circulate with the old ones to make for seamless transition.

But nothing should again be done to take the citizenry through the excruciating hardship they faced on account of poor conception and implementation of the policy. It is hard to fathom the positive impact of the policy so far, if all we are left with is the old Naira notes as the medium of transactions.