Nigerian Banks Still Distributing Old Naira Banknotes as Demonetization Approaches

By: Dickson Arinze

Nigerian Banks Still Distributing Old Naira Banknotes as Demonetization Approaches

January 24, 2023 9:02 AM

With only a few days until old Nigerian naira banknotes are phased out, some banks have accused the Central Bank of Nigeria of failing to distribute enough new banknotes. Despite mounting demand to extend the time for surrendering old notes, the central bank maintains on the January 31 deadline.

As the Central Bank of Nigeria (CBN) deadline for returning old naira banknotes approaches on January 31, banks in various Nigerian states are still distributing the soon-to-be demonetized banknotes, according to a report. Furthermore, fewer automated teller machines (ATMs) — less than 40%, according to a Guardian study — were apparently issuing new banknotes.

According to the Guardian, several bank officials are sure that the shortages are the result of the CBN's failure to release enough new banknotes. According to one anonymous banker in Lagos, their branch received "just N1.5m new notes" in the previous week and had no new stock of the redesigned naira at the time of writing.

The banker, on the other hand, indicated that the CBN envisaged a huge distribution of the new banknotes in the last week of January. According to the banker:

"The deadline is closing quickly, however we are not receiving the desired quantity. We believe they will roll it out in full next week because there is no sign that the deadline will be extended."

While the CBN has refused to extend the present deadline, another banker from Nigeria's Ogun state believes that "a big rollout of the money" should have occurred by now.

CBN Refuses to Bend Under Pressure

Fears that many Nigerians may suffer as the old naira banknotes are phased out have spurred some lawmakers to push for a deadline extension. However, the CBN has so far refused to yield to pressure and has maintained that the deadline remains in effect.

Previously, the central bank refuted suggestions that the move to demonetize outdated currencies was made to penalize specific groups. Instead, the CBN claims that the operation is intended to assist it decrease cash management costs while also weeding out counterfeit banknotes.

Meanwhile, some Nigerian critics have claimed that the CBN may be purposely pumping insufficient banknotes in order to push inhabitants to move to digital alternatives, such as the central bank digital currency (CBDC). As a result of such conjecture, the Nigeria Governors' Forum (NGF) issued a statement cautioning the CBN.

The governors reportedly stated in the statement that, while they are not opposed to the currency reform program, the central bank should "consider the uniqueness of states, particularly as they pertain to financial inclusion and underserved places."