From Uche Usim, Abuja
The Central Bank of Nigeria (CBN) has further justified its reason for redesigning the naira and reducing the cash withdrawal limit, saying the cost of currency management from 2017 to 2021 reflected an average increase of over N10 billion per annum; just as over 90 percent of currency management cost is attributable to banknote production.
The apex bank said the development hurts it and other participants in Nigeria’s currency management sector (banknote production, storage processing, distribution activities and banknote destruction).
Deputy Governor, Financial Systems Stability (FSS) of the CBN, Mrs Aisha Ahmad, made the disclosure recently, while explaining the rationale behind its naira redesign and cash restriction initiatives to members of the House of Representatives.
Ahmad also listed the high risk of currency counterfeiting (as evidenced by reports from security agencies) as one of the reasons for deepening electronic banking.
She noted that the rise of counterfeit-related incidents in some states in Nigeria including the FCT has adverse implications for businesses and the economy at large.
“The current series of Naira banknotes have been in circulation for between 14 – 21 years, which is inconsistent with global best practice and exposes the notes to the risk of counterfeiting”, she added.
Ahmad explained that the naira redesign initiative will help control inflation as the exercise will help mop up currency outside the banking system, thereby ensuring more reliable data on money supply which will in turn facilitate better monetary policy formulation and effectiveness.
“It will boost appreciation of the Naira as the higher denomination and the volume of banknotes outside the banking system used to speculate on the currency would reduce. It will help fight banditry and terrorism as the large volume of cash used to pay ransom to bandits/terrorists would be reduced. It will assist in the fight against corruption as the exercise would rein in the higher denomination used for this purpose and the movement of such funds from the banking system could be tracked easily.
“Despite the dominance of highly advanced payment systems, many countries carried out currency redesign to remain ahead of counterfeiters, ensure durability, fight corruption, and reduce cost of currency management”, she added.
The CBN Deputy Governor further noted that the implementation of the cashless policy that took off in 2012 was a critical element that catalysed the transformation being witnessed in the Nigerian financial and payments system
“There has been an expansion in financial access points- ATM, PoS, Agents and mCash have recorded significant increases spurred by the cashless policy.
“Status as at October 2022: 31 DMBs with 4,603 branches; 878 MFBs with 1,966 branches; 5 PSBs that have contributed over 300,000 agents and financial service points; Total Agents Nationwide- 1.4million; PoS Terminals- 899,642; Number of ATMs – 14,058”, she revealed.
