•Says currency redesign’ll reduce tax evasion
By Chinwendu Obienyi
Amid nationwide outcry and frustrations over new Naira notes scarcity, the Central Bank of Nigeria (CBN) has ordered all Deposit Money Banks (DMBs) across the country to ensure 24/7 service availability and and to promptly address any customer dispense errors arising from service failures.
This was even as the apex bank has reiterated that its currency redesign policy will improve tax collection and reduce tax evasion and avoidance.
Governor of CBN, Godwin Emefiele, who spoke to newsmen in Lagos at the weekend, reiterated that the availability of appropriate amount of currency (redesigned N200, N500, and N1,000 denominations and current N100, N50, N20, N10 and N5 denominations) will support economic activities across the country.
He disclosed that the bank is collaborating with entire financial ecosystem DMBs, OFIs, MMOs, Super Agents, MFBs Payment System Providers and EFCC, ICPC and other law enforcement agencies to ensure that Nigerians have a variety of options for financial transactions either through electronic channels or in exceptional circumstances, cash.
“We are mindful of the challenges some citizens have faced and are addressing them. There have been reports of occasional failures in e –channel platforms. Our monitoring suggests that whilst there has been an expected surge in electronic transactions, these have not risen to unprecedented levels and the payment system is well equipped to handle even higher transaction volumes.
Whilst transaction failures are bound to occasionally occur, the public is encouraged to have full confidence in Nigeria’s globally recognised payment system infrastructure. Banks have also been instructed to ensure 24/7 service availability and promptly address any customer refunds arising from such service failures”, He said.
Emefiele while speaking on the benefits of the currency redesign policy, said it is designed by countries to strengthen the performance of key macroeconomic parameters and equally combat social improprieties.
He said, “Chiefly, it is expected to reduce the amount of cash in the underground or illicit economy, truncate the activities of racketeers, and obliterate rent-seeking businesses in the black market. By reducing currency outside banks, it will shrink money stock and accordingly lower the long-run path of inflation. The ensuing deflationary pressure could elicit interest rate cuts that will in the short- to medium-term boost economic activities, spur aggregate demand, and enhance output growth.
In addition, the short-term decline in cash holding and the increased formalization of business activities as the cashless policy forces more economic agents to open bank accounts, will also boost fiscal policy. With more transactions going through e-channels and bank accounts, more agents come within view of the government’s tax net. This enlarges the base of taxable activities and increases the possibility of more tax receipts by various tiers of government”.