500 million new naira notes were to be printed, according to the Central Bank of Nigeria (CBNfirst )'s contract, which went into effect last week, on December 15, 2022.
This information was provided during a House of Representatives hearing on the implementation of the CBN cash-less policy and the new withdrawal limits by Aisha Ahmad, the deputy governor in charge of financial system stability.
She stated that as of October 2022, there were 31 Deposit Money Banks (DMBs) with 4,603 branches. There are 878 Microfinance Banks (MFBs) in the Other Financial Institutions (OFIs) category, with 1,966 branches, 1.4 million agents, 899,642 PoS terminals, and more than 14,000 ATMs.
This means that each of the 4,603 bank branches received 108,624.81 fresh naira when the 500 million was divided among them.
According to BusinessDay's research, commercial banks are restricting the
new naira notes they have received from the CBN since so many clients want to possess the newly designed notes.
In 2021, Nigeria had 122.3 million active bank customers, according to industry and consumer data provider Statista.
Ahmad claims that a review has it that over 90% of currency management expenditures are linked to the manufacture of banknotes. Cost of currency management from 2017 to 2021 showed an average increase of over N10 billion per year.
She claimed that the CBN and other actors in Nigeria's currency management industry are impacted by this (banknote production, storage processing, distribution activities and banknote destruction).
She claimed that recent issues with currency management in Nigeria have made it difficult for the CBN to effectively carry out its role of producing legal money (i.e. provision of an adequate volume of clean banknotes in the right denominational mix for members of the public).
“The challenges have continued to grow in scale, with the attendant consequences on the Bank’s policy effectiveness, if left unaddressed,” she said.
A few of the difficulties are the public's widespread hoarding of naira banknotes, the deteriorating lack of functional banknotes in use, the bank's high and rising costs, the possibility of counterfeiting, and non-compliance with worldwide best practices for currency redesign.
The present series of naira banknotes, according to the deputy governor, have been in use for 14 to 21 years, which is contrary to international best practice and puts the notes at danger of counterfeiting. Every five to eight years, it is customary to redesign or reissue currency that is already in use.
Despite the prevalence of extremely sophisticated payment methods, several nations redesigned their currencies to, among other things, stay ahead of counterfeiters, ensure longevity, combat corruption, and lower the cost of currency management.
“It is against the backdrop of the foregoing that the CBN in line with its statutory powers as enshrined in Section 2(b) and 19 of the CBN Act 2007, sought and obtained the approval of Mr. President to redesign and issue new series of Naira notes in the N200, N500 and N1000 denominations,” Ahmad told House or Representatives.
The CBN updated the cash withdrawal restrictions in response to growing public demand.
As a result, instead of N100,000 per week, individuals can now withdraw no more than N500,000, and corporate organizations can withdraw up to N5 million instead of N500,000.
This information was provided in a letter to all banks that was released on Wednesday and was signed by Haruna Mustafa, the CBN's director of banking supervision. According to the letter, there will be processing fees of 3 percent and 5 percent for private persons and business organizations, respectively, when cash withdrawals over the stipulated limitations are necessary for legal reasons.
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