Banks defy directive of CBN, continue to receive, churn out old notes to customers

The directive issued by the CBN that the old naira notes of 200, 500 and 1000 were to be exchanged for new ones appears to be dead on arrival as customers continue to take the old notes to the various banks only to receive the old naira notes in return after over 15 days of commencement of the exchange of the old naira notes.

Investigation carried out by Gentechnews at some banks in Lagos and Delta states indicated that there are some underpinning of either the banks trying to hoard the new notes to be exchanged for the politicians and the affluent who may be coming to exchange their stacks old naira notes.

At a generation bank along Ikorodu road in Lagos, customers were only given two pieces of one thousand note on every transactions.

The question on every lip is that the CBN has giving deadline for the old notes to stop being used as a legal tender, but has not taken the same step to monitor the banks and to know that customers are not getting the new naira notes.

One customer who identified herself as Charity at the new generation bank lamented that government policies are made to hoodwink the poor masses, hence the new note has not be seen, touched or used by many Nigerian up until now.

But with about 33 days to phase out the old notes and 16 days into circulation of the new ones, most Nigerians are yet to set their eyes on the redesigned legal tenders.

  When the reporter disguised as a bank customer to withdraw the new notes from an old generation bank on Nnebisi Road, Asaba, one of the staff at the counter, said: “It depends on the amount you are collecting, because we have limited new naira notes. We can only add two 500 or 1000 notes to the old naira notes during withdrawal transactions.”

An operation manager of one of the new-generation banks, along Okpanam Road Asaba, said she had been receiving complaints from customers, asking why his branch continues to dispense the old notes.

She explained that those who have collected the new notes also complained that the texture of the money looks inferior to the old one.

“We have exhausted the new naira notes that the CBN gave to the bank and looking forward to getting more. In the interim we will continue to issue the old naira notes,” she emphasized.

Gentechnews correspondent’s visits to several commercial banks, POS operators, ATM and business centres in Lagos and Delta States showed that old notes were still being used to transact business.

Meanwhile, it was also discovered that many people in possession of the new notes were reluctant to spend them, deciding instead to hoard them in order to get more new naira notes.

A bank customer, Maxwell also alleged that the currency was being diverted to politicians and bureau de change operators.

Investigation, however revealed that some residents bought the redesigned notes from black market operators, who had acquired them from unofficial channels at commercial banks, only to sell to end users for a fee.

It was also revealed that some the operators sold the new notes to people as a status symbol for them to spray during social events, like parties or wedding receptions.

However, the World Bank has cautioned that the new policy would negatively impact Small and Medium Enterprises (SMEs) and the vulnerable poor in the North.

According to the financial institution, redesign of the notes could have negative effects on the local economy of rural areas.

   The World Bank raised the alarm  in its 2022 new report, titled: “The Nigeria Development Update,” released in Maiduguri, the Borno State capital.

It said: “The naira redesign might harm SMEs and the vulnerable poor; due to its timing and short transition period, slated for January 31, 2023.”

  The report warned that the timing of and short transition period for the demonetisation might have negative impacts on economic activities.

It added that the most affected of the naira redesign are the poorest households living in rural and urban centres.

 While citing international experience, the report disclosed: “The rapid demonetisation can generate high short-term costs,” stating that small-scale business operators and vulnerable poor households will be most affected by liquidity squeezes.

“The SMEs and vulnerable poor heavily rely on the day-to-day transactions with cash,” said the Report.

“At present, households and firms already face increased financial pressures from the lingering high costs of food and fuel,” it noted.

The report added that inflation has also hit 24 per cent in six months.

Recall, the CBN Governor, Godwin Emefiele had on October 26 announced plans to redesign N200, N500 and N1, 000 notes.

He said it would take effect from December 15 and Nigerians have till January 31, 2022, to exchange their old naira notes.

Emefiele explained that the redesign of the local currency became necessary to tackle inflationary problems, currency counterfeiting, insecurity and other issues plaguing Nigeria.

The apex bank boss also stated that the naira redesign was targeted at controlling currency in circulation as well as ransom payments to kidnappers and terrorists.

Now that there is paucity of the new naira notes in Banks for customers to exchange for old notes, coupled with the election slated for February 2023, pundits are of the view that the CBN has no choice than to extend the deadline.