Ending Naira Mutilation, Counterfeiting

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Obinna Chima writes on new measures against mutilated and counterfeit currencies in the country

From Lagos to Kano, Anambra, Rivers States, the Federal Capital Territory and cities across the country, Nigerians have continued to lament the challenges posed by dirty, mutilated and counterfeited currencies.

Apart from the clear health risk dirty notes pose to the people who use them, the country’s pride is greatly undermined in the eyes of the world when mutilated and counterfeited naira are used in the purchase of goods and services.

Studies have also shown that dirty money poses serious health hazard to those who handle it as trillions of such currencies in circulation are full of disgusting germs.

For instance, a study in the Journal of the American Medical Association studied bacteria from coins and notes had found potentially harmful germs like fecal bacteria, E. coli and Staphylococcus aureus on 13 per cent of coins and 42 percent of notes. A separate study by an Irish researcher at the Cork Institute of Technology (CIT), Emma Gabriel, that also tested banknotes for Staphylococcus Bacteria showed that 97 per cent of the sample notes tested positive for the presence of potentially dangerous bacteria on their surface. This may be even higher with the dirty and awful smell from most dirty naira notes. The five notes which tested negative were in mint condition, and the older the currency was, the more contaminated it was. The coins were less contaminated because they are made from bacteria-static metals, the study revealed.

Furthermore, the study showed that dirty money could specifically pose a risk to immuno-suppressed people — people whose defence against bacteria are already low.

According to Wiki, as currency changes hands constantly, one never knows where the money in one’s possession had been, particularly banknotes, which has the tendency to build up grime and may be loaded with bacteria.

Worried by this development, the Central Bank of Nigeria (CBN) recently vowed to impose stiff sanctions on commercial banks and individuals that dispense mutilated and counterfeit currencies.
The central bank also called for an increase in private companies participating in the currency management value chain to enhance its clean note policy. The CBN Governor, Mr. Godwin Emefiele, said this during the unveiling of the Bank’s Clean Notes Policy and Banknotes Fitness Guidelines in Lagos. The Clean Note Policy provides a uniform standard for the circulation of only clean and fit banknotes in Nigeria; while the Banknote Fitness Guidelines provide the industry with clear and acceptable criteria for determining the quality of banknote in circulation.

These documents were developed after extensive collaboration and engagements with key industry stakeholders under the auspices of the Nigerian Cash Management Scheme, a Bankers’ Committee initiative.

“The intention of the Bank is to ensure that unfit, dirty, mutilated and counterfeit banknotes are not in circulation in Nigeria. This is in pursuant to Section 18,20 & 21 of the CBN Act 2007, which prohibits the counterfeiting, sale and abuse of the naira.

“The Bank cannot achieve these objectives without the collaboration of deposit money banks, merchant banks, microfinance banks, government agencies, Cash-in- Transit (CIT), cash processing companies (CPCs), market associations, merchants/retailers, chambers of commerce and industry, security agencies, currency management equipment manufacturers, bank customers and the general public.

“The Bank has developed a mechanism to ensure full compliance with the documents by stakeholders. Compliant channels such as phone and emails would be provided to enable the general public provide information on infractions of the two documents,” a statement from the CBN explained.

Going Tough

Emefiele revealed that CBN branch controllers across the country have been empowered to work with security agencies in their respective states to ensure that cases of currency mutilation are addressed.
He noted that bank notes remain important for payments and settlement of commercial transactions in Nigeria, saying the central bank takes the state of the nation’s currency very important.

Emefiele added: “It is worth noting that the bank has the responsibility for preserving the integrity of the naira and sustaining public confidence in the national currency as enshrined in Section 2 of the CBN Act 2007.

“To attain these objectives, the bank strives to ensure an optimal supply of clean and quality banknotes in a balanced denominational mix to meet public demand, while also maintaining a balanced currency structure that is both efficient and cost effective.

“The responsibility for clean notes in circulation is not exclusively that of the central bank, rather a collaborative effort between the central bank, banknote suppliers, deposit money banks, manufacturers of currency management equipment, currency transportation and processing companies, security agencies, and the general public.

“I commend the existing collaboration between the CBN and the stakeholders in the currency management value chain, and wish to stress that this should be deepened and strengthened for the overall good of the industry.
“Currency management is vital to our daily lives because despite the improvements in electronic payments system, banknotes remain predominant for payment and settlement of commercial transactions in Nigeria.”

Cash-in-Transit/Cash Processing Companies

Speaking further, Emefiele said the central bank had registered eight companies to carry out cash-in-transit and two cash processing companies to operate in Nigeria.
He urged commercial banks to patronise only these registered companies for CIT and sorting services.
“It is expected, therefore, that more private sector participation in the currency management value chain would further strengthen the efforts toward ensuring availability of clean banknotes,” he added.

In addition, Emefiele revealed that the apex bank intends to embark on a project that would enable it mop-up mutilated banknotes from circulation.
He also said the central bank would continue to embark on sustainable institutional reforms and enact policies that would promote efficient currency management in Nigeria.

He said: “I will like to seize this opportunity to urge Nigerians to handle the naira properly, as it is a criminal offence to abuse the naira. Moreover, the naira is our identity as a country, so we need to respect it.
“I wish to bring to your attention that after this unveiling event, the bank would monitor and sanction any commercial bank/financial institution that contravenes the provisions of the two policy documents.”

On his part, the Deputy Governor (Operations), CBN, Mr. Folashodun Shonubi, said: “When people go around, they look at your currency and that represents the nation. And half the time we show them currency notes that are less than fit, it must tell on us in some shape and manner.
“The whole industry not just the central bank has committed to changing that image.

“The document unveiled today explains how it would be done; what everybody’s role and responsibilities are and how we can make it a reality.
“From the banks who actually handle the notes to ensure the notes they have are always fit for purpose. We also feel it would affect commerce because people would be more inclined to spend when they have new notes in their hands and merchants more willing to accept.

“So, we believe it would definitely help the economy and how money moves around.”
In her presentation, the Director, Currency Operations, CBN, Mrs. Priscillia Ejeme, said despite the huge volume of CIC and its attendant challenges, the CBN remained committed to ensuring that the nation has fit notes in circulation.

Also alluding to the incentives for banks to bring in bad notes, she said: “We would give a timeframe by which banks would need to bring all mutilated bank notes to us for replacements and we would do it in a way that they would be encouraged to bring them forward.”

She also added that ATMs are expected to have only mint and close to mints dispensed, which the guideline stipulates as Level 1 and Level 2.
She also urged banks to sort increase sorting of mutilated notes to the CBN to retrieve the cleaner notes.

On sanctions she also said: “There would a penalty for counterfeits from ATMs and it is currently N1 million for counterfeits detected via ATMs or across the counters.”
On his part, the Director, Banking and Payment System Department, CBN, Mr. Dipo Fatokun, said: “The clean note policy document provides the uniform standard of only clean and fit bank notes in Nigeria.”

However, despite efforts by the central bank, there is need for financial institutions to continue to create incentives for customers that adopt alternative banking channels, so as to reduce the dependency on cash. Digital financial services create employment opportunities, enhances commerce and supports microfinance. In fact, the potential of digital financial services are enormous if well exploited.