Latest CBN News Today 23rd May 2023 |FS News
1. Naira Redesign: Massive cash hoarding resumes
According to reports, t. are indications that Nigerians have resumed hoarding cash after the Central Bank of Nigeria (CBN) relaxed its currency redesign and cashless measures. Vanguard’s investigation reveals that the amount of currency outside banks (COB) has surged to N2.08 trillion.
The CBN had implemented monetary measures last year to reduce the amount of currency outside banks, resulting in COB decreasing to N1.45 trillion by March, from N2.56 trillion at the end of December 2022.
However, the CBN’s latest Money and Credit Statistics for April show a significant increase of 43 percent on a monthly basis, with COB rising to N2.08 trillion from N1.45 trillion.
The data also reveals that currency-in-circulation (CIC) experienced a month-on-month increase of 42 percent, reaching N2.37 trillion in April compared to N1.68 trillion in March.
It is worth recalling that in December of the previous year, the CBN introduced redesigned N200, N500, and N1,000 notes, setting January 31st as the deadline for the old notes to cease being legal tender. The CBN Governor, Godwin Emefiele, stated that this policy aimed to address various issues, including reducing the amount of currency held outside banks, which amounted to N2.83 trillion in October when the redesign was announced.
Within a span of five months (October 2022 to February 2023), the CBN successfully mopped up N1.14 trillion, resulting in a 135 percent decrease in currency outside banks, which reached N843.3 billion in February.
Furthermore, currency-in-circulation also experienced a significant decline of 235 percent, falling to N982 billion in February 2023 from N3.29 trillion in October 2022.
In March 2023, the Supreme Court ruled that the old N200, N500, and N1,000 notes would remain legal tender alongside the new notes until December 31st, 2023. This decision led to a 71.9 percent increase in currency held outside banks, reaching N1.45 trillion in March and N2.08 trillion in April.
Similarly, CIC witnessed a 71 percent rise, reaching N1.68 trillion in March and N2.37 trillion in April.
A report by SBM Intelligence reveals that 56.52% of businesses in Nigeria experienced fraud and theft during the cash scarcity caused by the naira redesign policy of the Central Bank of Nigeria. The report, titled ‘Strapped: Impact of the Cash Scarcity on Individuals and Businesses,’ examined individuals and businesses across five of the country’s six geopolitical zones. The findings showed that businesses, not just financial institutions, were affected by arson, looting, and various negative outcomes. Additionally, 36.96% of Nigerian businesses had to lay off staff or reduce working hours to cope with the cash shortage. The report highlights the significant impact on business owners, with 76.09% stating their enterprises were significantly affected.The Economic and Financial Crimes Commission (EFCC) has attributed the scarcity of currency and violence at certain polling centers during the 2023 elections in Nigeria to the naira redesign policy implemented by the Central Bank of Nigeria (CBN). According to the EFCC’s Head of Media and Publicity, Wilson Uwujaren, the naira redesign policy .ed a role in curbing electoral corruption by limiting the availability of cash for politicians to distribute as bribes. Speaking at a virtual event called ‘Corruption in Nigeria’s 2023 Elections: A post-mortem,’ Uwujaren mentioned that some politicians faced defeat in their strongholds due to their inability to provide money for vote-buying. He also highlighted the EFCC’s efforts in educating Bureau de Change agents to prevent the illicit movement of funds by corrupt politicians. Overall, Uwujaren emphasized that the naira redesign policy had positive effects, including the disruption of corrupt practices during the elections.