New Naira Notes: Anxiety as CBN insists on January 31 deadline

As the old N200, N500 and N1, 000 notes are now being rejected across the country, CHIJIOKE IREMEKA writes on the agitation of Nigerians who are racing against time to swap the naira notes with the redesigned versions ahead of the January 31, 2023 deadline issued by the Central Bank of Nigeria (CBN), which has refused to grant extension of time despite pressures from different quarters in the society.

Nigerians, banked or unbanked, are currently racing against time to rid their purses and wallets of N200, N500 and N1, 000 notes, following the insistence by the Central Bank of Nigeria (CBN) on phasing them out as the country’s legal tender on January 31, 2023. But the redesigned notes meant to replace the old ones are yet to be seen or felt by a vast number of the citizens.

After the CBN Governor, Godwin Emefiele, on October 26, 2022 announced that new naira notes would be introduced to replace the current 200, 500, and 1, 000 notes, the apex bank also gave Tuesday January 31, 2023 as deadline for phasing out the old versions of the affected naira notes.

The apex bank, in its commitment to the deadline, also sent a reminder to Nigerians, insisting that January 31, 2023 deadline remained sacrosanct as long as phasing out of the old versions of the redesigned notes is concerned and, therefore, advised all Nigerians to return all the old N200, N500 and N1, 000 notes in their possession to their deposit banks for replacement before the deadline.

“The old series of N200, N500 and N1, 000 notes will cease to be legal tender by January 31, 2023. This is a reminder to the general public. You are advised to return them to your banks before the deadline,” the apex bank said.

In furtherance to this pursuit, the CBN launched Cash Swap platform, a programme intended to increase the speed of circulation of the new banknotes and increase awareness ahead of the deadline for demonetisation of the old notes. It also provides an opportunity for Nigerians to swap old notes with new ones at super agents centres across the country.

The intervention, which targets residents in rural areas and individuals with limited access to financial services to speed up the process of circulation of the redesigned notes and mopping up of the old ones, is a joint initiative of the CBN, Deposit Money Banks (DMBs) and super agents.

Despite these interventions, the desired outcome is yet to be achieved. There is an allegation of sabotage levelled against banks in recent weeks as most of them disregarded a regulatory directive to stop giving out old banknotes, especially through the automated teller machines (ATMs).

This prompted the Senate to call for an extension of the deadline for swapping of naira notes till the end of the first half of the year, but the monetary authority said there was no compelling reason to extend the deadline, with multiple channels, including agents operating in rural areas, for Nigerians to return the banknotes.

Emefiele also argued that the 100 days, from when the policy was announced till January 31, offered enough windows for Nigerians with legitimate cash in their homes to return the same. According to him, the programme enables citizens in rural areas or those with limited access to formal financial services to exchange old naira notes for the redesigned ones.

The CBN boss said it was worrisome that 85 per cent of the currency in circulation is being hoarded by Nigerians. He urged the citizens to proceed to their banks to deposit their naira notes, adding that the deposit fee would be waived for transactions below N150, 000.

Emefiele added that the redesigning of naira notes would help curb counterfeit notes, as well as hamper ransom payment to terrorists and kidnappers.

In a circular on cash swap signed by the Director of Banking Supervision Department, Haruna Mustafa, the CBN further explained that agents shall exchange a maximum of N10, 000 per person, noting that amounts above N10, 000 may be treated as cash-in deposit into wallets or bank accounts in line with the CBN’s cashless policy.

“Bank Verification Number (BVN), National Identification Number (NIN), or voter cards details of the customers should be captured as much as possible. To promote financial inclusion, this service is also available to anybody without a bank account. Agents may, on request instantly open a wallet or account, leveraging the CBN Tiered Know Your Customer (KYC) framework.

“This will ensure that this category of the populace are able to exchange or deposit their cash seamlessly without taking unnecessary risk or incurring undue cost,” the circular stated.

Moreso, the bank stressed that agents shall sensitise customers on wallets/ bank account opening and other channels for conducting electronic transactions, noting that designated agents are to collect the redesigned notes from DMBs in line with the Revised Cash Withdrawal Limit policy.

It noted that while the agents are permitted to charge cash-out fees for the cash swap transactions, agents are prohibited from charging any further commissions. “Principals (super agents, mobile money operators (MMOs) and DMBs) shall be held accountable for their agents’ adherence to the guidelines. Cash Swap agents will be readily identifiable in all local governments, particularly those in the rural area,” the circular read.

The apex bank also said any commercial bank that refused to dispense the new notes either at ATM or counter would be sanctioned. The circular ‘BSD/DIR/PUB/LAB/15/022, was addressed to DMBs, Mobile Money Operators (MMO), Super Agents and Agent Naira Redesign Policy.

The CBN said: “In furtherance of its Naira Redesign policy, the CBN has sustained its nationwide awareness/sensitisation programmes, enforced speedy collection of the new notes at CBN branches by the DMBs and mandated issuance of the new notes through Automated Teller Machines (ATMs) to ensure distribution is fair, transparent and evenly spread across the country.”

The bank also suspended charges on above-limit cash deposits and called on commercial banks to extend operations till weekends to enable individuals to return cash in their possession, but there appears to be sabotage on the part of banks in recent weeks as most of them have disregarded a regulatory directive to stop giving out old banknotes.

The Guardian learnt that part of the reasons the new notes are not in circulation is that the commercial banks take money from certain politicians, fraudsters as well as money vendors and give them the new notes, which should have been stocked in their ATMs. It was also learnt that the banks use the new naira notes to compensate and reward their mega customers.

A businessman, who has collected over N5 million of the redesigned naira notes from one of the new generation banks in Lagos, confirmed that the new notes are in the commercial banks but the banks use them to favour their VIP customers, as alleged by the CBN.

It was further learnt that many people who stacked money in their houses for future use are now spending them on capital projects, especially building materials.

During The Guardian’s visits to a number of ATM machine galleries around Mushin, FESTAC, Egbeda and Lagos Island Lagos State, among other places, the machines were seen dispensing old naira notes as at Monday and Tuesday this week. Some ATMs were dispensing both new and old banknotes on Tuesday.

A woman, identified as Juliana Ogundipe, who withdrew N5, 000 at an ATM in Mushin told The Guardian that she got N2, 000 of the new notes and N3, 000 old notes. She was also angry that she wanted to withdraw N50, 000 but was only paid N20, 000 while the message that popped up read, “You have reached your maximum daily withdrawal limit.”

Bank customers who are worried about the scarcity of the redesigned N1, 000, N500 and N200 notes in DMBs and Other Financial Institutions (OFIs), questioned the rationale for continuing to supply their customers with the old notes, which would cease to be legal tender by Tuesday if there is no extension of the deadline.

According to a civil servant, Ibrahim Abbas, the banks have no reason to load their ATMs with the old notes after customers have deposited them in their accounts as advised by the CBN.

“They said they are redesigning some denominations of the Naira, and that Nigerians should take their old notes to the banks and start getting the redesigned ones. But what we still get from the ATMs, and even from the bank counters are the old notes. This is not right,” he said.

Another bank customer, Mr. Suleman Aliu, said the delay in flooding the banks with the new Naira notes close to the deadline meant that some people would lose some of their money. “If the deadline is January 31, which is three days from today, and the banks are still supplying the old notes, it means they want some people to lose their money, ” he said

A Point of Sale (PoS) operator, Gabriel Asika, said the CBN needed to do better in its supply of the new notes. “CBN is telling us that there are enough redesigned notes in vaults of the DMBs, but the banks are saying that they do not have enough supply of the notes. Something is not adding up,” he said.

The Head, Inclusion for all Initiative, Chinasa Collins-Ogbuo, said: “ About 54.2 per cent of Nigeria’s unbanked poor indicated their preference for saving their money in a safe place at home or carrying it around, indicating that more than 50 per cent of this segment of the population could lose their savings if they are unable to exchange old notes for new notes.”

On the other hand, the Chief Executive Officer of Diary Hills Limited, Kelvin Emmanuel, said CBN’s insistence on the deadline shows a premeditated stance by the apex bank. “The insistence of the CBN Governor on the January 31 deadline is an indication that there is an ulterior motive for making notes that are currently in circulation illegal from February 1.”

An economic analyst, who is also the Lead Director of the Centre for Social Justice (CSJ), Eze Onyekpere, said the CBN governor seemed to be insensitive to the yearnings of Nigerians with his insistence on no deadline extension if three days to the deadline, people are still carrying about old notes due to the scarcity of new ones.

Also reacting, National Coordinator, Human Rights Writers Association of Nigeria (HURIWA), Emmanuel Onwubiko, said the January 31 deadline was not workable and feasible under any condition.

He, therefore, sought a one-year extension deadline by the CBN for all Nigerians, especially those in remote and unbanked areas to exchange their old notes for the new ones, citing the example of the United Kingdom (UK), which unveiled its new notes on December 20, 2022 but gave the deadline of 2024 for banks to still swap old pound sterling for the new ones.

A former Senate Leader, Ali Ndume (APC, Borno) lamented the poor supplyof the redesigned notes, saying that as a serving member of the upper legislative chamber, he had not seen the new notes.

“I, as a senator, have not seen the new notes. I only saw the new note once in December when I moved the motion and I said I have not seen the money. That was when one of my colleagues showed me the N1, 000 note. I have been withdrawing money from the bank since then, and have never got new notes from the bank.

“Even last Friday, I made withdrawal from the bank, and they gave me old notes. And then surprisingly, now I heard that in some places, they are rejecting old notes. In other words, the CBN’s deadline has actually been implemented in remote places over fear of people losing their money. This panic is going to cause economic chaos.”

On the chaos already on the streets, Bayo Olorunpoda, a media executive, said on Tuesday: “I visited five banks today and none of the ATMs dispensed cash. The explanation was that banks didn’t want to load old naira notes in obedience of CBN instruction, yet they didn’t have enough new notes.

“Furthermore, most ATMs dispense N500 and N1, 000 notes, either old or new. How will CBN ensure the circulation of the new N200 notes, which will be in high demand for cash transactions, when it doesn’t dispense from the ATM?”

The House of Representatives held a meeting with the chief executive officers of commercial banks. The meeting came six days to the deadline issued by the CBN to end the validity of the old notes.

The House set up an ad hoc committee chaired by the Leader, Ado Doguwa. The resolution followed the consideration and adoption of a motion moved by Sada Soli under Matters of Urgent Public Importance, urging the CBN to extend the deadline on the use of the old notes to six months. The Speaker of the House, Femi Gbajabiamila said the House needed to interface with the heads of commercial banks to understand the real situation.

The Senate also called for extension of the deadline following the adoption of a motion moved by Sodiq Umar (APC, Kwara), who argued that the policy was affecting the people negatively.

Speaking in support of the motion, Abiodun Olujimi (PDP, Ekiti) stated that most Nigerians had not got the opportunity to touch the new notes, adding that the timeline for the implementation of the policy was too short.

But the CBN governor insisted on Tuesday that there were no compelling reasons or plans to shift the January 31, 2023 deadline.

Supporting the CBN’s position, Rammel Onodele said: “There is no reason for any extension, anybody who has genuine notes by now has had the opportunity to change them. Making comparisons with global currencies like Dollars, GPS and Euro does not make any sense because it would take years for such currencies in the hands of people worldwide to be called back.

“This is not the case with Nigeria; it does appear that there is a deliberate efforts by people with looted naira to frustrate every government effort. There will be no extension. The CBN should stand its ground irrespective of what the Senate and House of Representatives are saying. Nigerians have suffered great tribulations because of these people.”

History Of Nigeria’s Currency Designs
IN the pre-colonial era, different cultures used a variety of items as means of exchange. These included cowries, manilas, beads, bottles and salt.

The first major currency issued in Nigeria was undertaken sequel to the colonial ordinance of 1880, which introduced the Shillings and Pence as the legal tender currency in British West Africa. The units of coins managed by the Bank of England were one shilling, one penny, 1/2 penny and 1/10 penny and were distributed by a private bank, the Bank for British West Africa till 1912.

From 1912 to 1959, the West African Currency Board (WACB) issued the first set of banknotes (insert hyperlink) and coins in Nigeria, Ghana, Sierra Leone and the Gambia. The highest banknote denomination was one pound, while the one-shilling coin was the highest coin denomination.

On July 1, 1959 the CBN issued Nigerian currency banknotes, while the WACB-issued banknotes and coins were withdrawn. It was not until July 1, 1962 that the currency was changed to reflect the country’s republican status.

The banknotes, which bore the inscription, Federation of Nigeria, now had ‘Federal Republic of Nigeria,’ inscribed at the top. The notes were again changed in 1968 following the misuse of the currency banknotes during the civil war.

Sequel to the decision by the government to change from the metric to decimal, the name of the Nigerian currency was changed in January 1973. The major unit of currency which used to be £1 ceased to exist and the one naira which was equivalent to 10 shillings became the major unit, while the minor unit was called the kobo, a hundred of which made one naira.

On February 11, 1977, a new banknote with the value ₦20 was issued. It was the highest denomination introduced at the time as a result of the growth of the economy, the preference for cash transactions and the need for convenience.

The banknote was the first in Nigeria to bear the portrait of a prominent Nigerian citizen, the late Head of State, General Murtala Ramat Muhammed (1938-1976) who was the torchbearer of the Nigerian revolution in July, 1975. The note was issued on the 1st anniversary of his assassination as a fitting tribute to him. He was declared a national hero on October 1, 1978.

On July 2, 1979, new currency banknotes of three denominations – ₦1, ₦5 and ₦10 – were introduced. These notes were of the same size i.e. 151 X 78 mm as the ₦20 note issued on 11th February, 1977. To facilitate identification, distinctive colours were used for the various denominations.

The notes bore the portraits of three eminent Nigerians, who were declared national heroes on October 1, 1978. The engravings at the back of the notes reflected various cultural aspects of the country.

In April 1984, the colours of all the banknotes in circulation were changed with the exception of the 50 Kobo banknote to arrest the currency trafficking prevalent at the time. In 1991, the 50K and ₦1 were both coined.

In response to the expansion in economic activities and to facilitate an efficient payments system, the ₦100, ₦200, ₦500 and ₦1000 banknotes were introduced in December 1999, November 2000, April 2001 and October 2005.

On February 28, 2007, as part of the economic reforms, ₦20 was issued for the first time in polymer substrate, while the ₦50, ₦10 and ₦5 banknotes as well as ₦1 and 50K coins were reissued in new designs, and the ₦2 coin was introduced.

On September 30, 2009, the redesigned ₦50, ₦10 and ₦5 banknotes were converted to polymer substrate following the successful performance of the ₦20 (polymer) banknote. Thus, all lower denomination banknotes were now printed in the polymer substrate.

Finally, the CBN, as part of its contribution towards the celebration of the nation’s 50th anniversary of Independence and 100 years of its existence as a nation, issued the ₦50 commemorative polymer banknote on 29th September 2010 and the N100 commemorative banknote on 19th December 2014.

Today, the CBN is bent on phasing out the three redesigned notes in three days time to stem the tide of insecurity in the country, help the general elections and save the dying economy.