Rather than resorting to blame games and counter accusations, stakeholders in Nigeria’s market value chain have been urged to discharge their various responsibilities to create an enabling market. Raheem Akingbolu reports
The push by the Federal Government of Nigeria, through the apex bank -Central Bank of Nigeria (CBN) to replace the paper money with newly designed currency notes has continued to create shortage of cash.
While many experts have insisted that the apex bank and its management should be blamed for poor logistics, some experts and analysts have accused operators in the financial sector of sabotaging the effort of CBN. A few have also expressed their dissatisfaction over the way members of the public are not playing by the rules, thereby creating problems where there is none.
According to CBN, the redesigned denominations of N200, N500 and N1,000 naira notes and new limits on large cash withdrawals would help curb money laundering and make digital payments the norm in Africa’s biggest economy.
But as observed by Ayokunle Olubunmi of Nigeria’s main ratings agency, Agusto and Co., the process to replace the old currency notes is “rushed,” and commercial banks don’t have enough new cash to give to customers, pushing demand higher than supply.
“The central bank “doesn’t want us to be spending cash; they want us to be doing transactions electronically, but you can’t legislate a change in behavior. You have to make people see reasons and ensure those channels are reliable,” Olubunmi said.
CBN’s Stand
Against the backdrop that the financial sector regulatory authority should be blamed for not releasing enough currency to the circulation, the CBN has denied scarcity of the new naira notes as alleged by some Nigerians.
Speaking in Jos, Plateau State recently, the CBN Governor, Godwin Emefiele, represented by Musa Jimoh, Director, Payment System Management Department of the bank, denied the allegation during a news conference
“The CBN has massively supplied the new notes to commercial banks to dispense both at counters and ATMs. This is to enable quick circulation and we want to advise commercial banks to desist from keeping the cash away from the public or face the stiffer sanction,” he said
Emefiele advised citizens to deposit their old notes at any commercial bank and acquire new ones with immediate effect, insisting that the Jan. 31 deadline remained sacrosanct. The date has since been extended to February 10.
The CBN governor explained that the decision to redesign the currency shows that the apex bank is in tandem with global standards, adding that currency notes ought to be redesigned within five years.
He, however, regretted that it took Nigeria nine years since such changes were last effected.
Speaking during a monitoring and sensitisation exercise held in some locations in Jos, the CBN governor said that the decision to redesign the country’s higher denominations of currency was a national project aimed at addressing problems related to cash circulation.
He added that it would also solve the challenge of prolonged savings in piggy banks, cash hoarding and incidences of fake currencies.
“The monitoring and sensitisation project was activated by the apex bank for investigation of the attitude of banks toward the spread of the new currencies.
“We are equally using it to create awareness on the use of agents to circulate the cash in communities with few or no bank branches available,” he explained
He advised that faulty currencies be returned to banks for replacements and cautioned people entertaining the thought that the CBN might extend the deadline to desist as they could face losses.
Spending Habit Reset
Speaking to THISDAY on Tuesday in Lagos, the Chief Executive Officer of Ladybird Ltd, Mrs. Bunmi Oke said the scarcity of currency is causing ‘a spending habit reset.’
She said; “We are seeing the result of “demand outstripping supply. The good news is that everyone is more conscious about spending the cash at hand and more cashless transactions are taking place. This will be a trend going forward. Also, we are happy that we as citizens can finally get some mint crisp Naira notes from the few ATMs disbursing that are clean enough to put in our wallets, purses and bags. These ‘scarce mint notes’ are disbursed only when absolutely necessary.”
Speaking further, Oke pointed out that the downside was the unnecessary queues and time wasted at ATM points.
“As the lower denominations of N100, N50 and N20 notes are not changing their designs, the average Nigerian can still use these denominations to purchase everyday necessary food items and are now giving lower denominations as tips and gifts. I think we should avoid the” blame game” as it will change nothing. All parties must share their side of making responsible implementation of this policy. CBN must ensure demand is met on time, banks must disburse responsibly (not just to ‘Owambe party mint money changers’. All of us, as the customers and citizens collecting cash, should have a rethink about how much cash we really need at hand and use more cashless payment options for all transactions as much as possible. When we use cash, also use lower denominations, (which would further encourage more people to go cashless) as the volume of cash needed with lower denominations to make a basic business transaction in corporate and open market environment, is cumbersome and will fast track more people to be encouraged to go cashless in operations.”
On how to resolve the current crisis, Oke said it was high time Nigerians embraced the need to change fully to cashless payments in both urban and rural areas (as being done in Kenya, South Africa and Rwanda) as it will result in fast-tracking the emergence of a Smart Nigeria. She also stated that the development would help Nigerians to be better educated on fiscal policy matters and operation and make Nigeria and Nigerians more prudent as a people and respected as a country in the commity of nations.
This is also the position of the President of the National Institute of Marketing of Nigeria (NIMN) Mr. Idorenyen Enang, who emphatically frown at those who are blaming the relevant authorities in the financial sector. According to him, the current ‘scarcity of currency’ is a reflection of who Nigerians are as a people.
“I honestly don’t believe in the blame game philosophy in any form or shape. The current ‘scarcity of currency’ is a reflection of who we are as a people. The fundamental construct of responsible leadership lies in a culture of responsibility and accountability. Can any Nigerian honestly say we have this locked in at the individual level? If self leadership which is the cradle for societal transformation is lacking, how do you expect governance to be right in any form? Indiscipline is our major undoing baked with the oil of impunity and disregard for the rule of law. Tell me with these missing items, why should anything be in abundance or surplus, you must get the opposite.
Opposing Views
In view of the current crisis, some analysts have insisted that the apex bank and the operators of the commercial banks cannot be absolved from blame. A Marketing Communication expert, Kayode Olagesin in his reaction concluded that the CBN is facing logistics challenges.
Olagesin said, “The new notes are printed locally and it is possible that the the Nigerian Security Printing and Minting Plc, has not printed sufficient quantities to meet current needs. They are unlikely to admit this publicly but the fact that no bank is yet to be sanctioned lends credence to this. That’s my take. As more Naira is printed, we will see an improvement in supply but it will take a while. They put themselves in this situation for political rather than economic reasons. The President is clear in his objective of reducing the effect of money in the electioneering process. This is the reason why they have not given sufficient time for the new notes to find their ways into the market. The economic benefit of this move however is that it will force more people to use electronic channels and also improve the infrastructure for electronic transactions over the next few weeks and months.”
On its likely effect on consumption pattern, Olagesin pointed out that in the absence of the new notes and with the old ones ceasing to be legal tender by February 10, most consumers would be careful how they spend except for those payments that can be done electronically. “So, we will witness a reduction in trade activities and this will impact GDP in the first quarter negatively. The fuel scarcity is another level of hardship Nigerians have to go through for a while. I doubt that is going to ease off soon. It will certainly impact the cost of goods and services and we can expect that inflation rates will equally go up. It is certainly not the best of times for most consumers but, hopefully, things will ease up after the election,” he said.
In a similar way, another analyst, Temitope Ajayi also blamed the situation on poor logistics. “This policy is good but non availability of the new currency notes is killing the informal market and creating unnecessary social and economic tension in the country. Small and informal sectors are most affected. You can imagine going to the market, neighbourhood store, taking a commercial bus and commercial motorcycle and you don’t have cash to pay. Most people in the informal sector that this disruption has caught up with don’t use POS or bank accounts.
“For days now people have been spending long hours queuing at ATM points and can’t get the money. Banks are not paying the new currency over the counter. It is a whole mess and unnecessary stress on Nigerians. The most annoying are the banks who are colluding with currency hawkers to sell these new notes. You get to parties and see tonnes of new notes with currency hawkers. How are they getting the new notes and banks can’t pay their customers? The DSS and EFCC must now deal with the criminal and economic sabotage that are now obvious from the side of the banks,” Ajayi stated.
A Journalist and Public Affairs analyst, Mr. Remi Adelowo, blamed banks and the greed of some Nigerians for the current hardship and called for sanctions where necessary.
“I would have expected the CBN to supply the banks adequate notes immediately after the launch last year. By this, once a customer walks into a bank either for withdrawal or for deposit, he or she would be given the new notes. But that never happened, thus giving room for speculations and hoarding as we are currently experiencing.
Concluding, Adelowo said the way out would be for the CBN to improve on its monitoring and regulatory roles of the banks, adding that erring banks must be sanctioned heavily while law enforcement agencies should clamp down on hoarders.
