September 30, 2012

Naira restructuring suspension: Whither Sanusi’s coin ATMs


Obviously, the on-going reform in the banking sector has taken a new dimension with the current move by the Central Bank of Nigeria (CBN) to introduce Automated Teller Machines (ATMs) capable of dispensing coins in order to encourage the culture of spending coins in the country. The initiative according to some financial experts is in line with the monetary policy on currency restructuring, designed to imbibe the use of coins by people for goods and services in the economy.

This is happening only two weeks after President Goodluck Jonathan gave the apex bank a standing order to suspend the introduction of N5,000 bank note, which generated heated controversy in the last one month, until Nigerians are well enlightened on the need for the currency in the country. What happens to the coin ATMs will unfold when government takes a final decision on the currency restructuring.

Meanwhile, the apex bank has prohibited deposit banks from disbursing new credit facilities to about 113 companies owing huge debts ranging from N85billion to about N192.4billion.  The ban affects two airlines doing business in Nigeria . The CBN explained that the affected organisations are yet to pay their debts even after the 2009 financial crisis, which prompted the intervention of the apex bank and injection of $4billion into about nine weak banks to prevent collapse in the financial system.

The Head of Shared Services of CBN, Mr. Chidi Umeano, explained that when successfully implemented, the coins dispensing machines would fast track acceptability of coins by the citizens for all forms of businesses in the economy. To implement this policy successfully, the apex bank is putting measures in place to facilitate a process described as (add-on) to all newly deployed ATMs to various banks.

Some branch managers of commercial banks visited by Sunday Business in Lagos explained that ATMs already in use in the country are configured to easily accept the add-on device, for easy adaptation to coins dispensing for daily transactions. A branch manager with Zenith bank branch at Ajose Adeogun Street , Victoria Island, who spoke under anonymity, said, “Coins is used in advanced countries. For instance, people use coins in America . So, what works in America can also work in Nigeria . Deploying ATMs for dispensing coins is realisable because the machines are configured with features that can easily be aligned to the use of coins.”

At First Bank branch, Acme road, Ogba, one of staff said, “The apex bank has the capacity to activate the add-on process and other features on the ATMs. Aside from that, the issue is that the machines are not even manufactured here in Nigeria . So, the management of CBN has a lot of work to do in order to ensure efficiency in the system”.

A female manager with Diamond bank branch at Ojodu Berger added, “The cashless money policy and currency restructuring could be implemented simultaneously but the issue is acceptability. Some depositors are already accepting cashless economy but the problem is with coins. For instance, most customers who come to make withdrawals on daily basis from our bank often request for bank notes like N500 and N1,000. Some customers usually reject lower denominations like N200, N100, N50 and others. They would simply tell you they need bank notes they could carry easily. So, it may take time for people to imbibe the culture of spending coins in our economy”.

The use of coins will reduce inflation in the economy- Economics expert and Director General, West African Institute for Financial and Economic Management Professor Akpan Ekpo:  The initiative by CBN to encourage the use of coins for business transactions is a welcome development because it will curtail inflationary situation in the economy. For example, the prices of goods in the market may be cheaper because people will not put too much emphasis on paper money anymore. Also, there will be some items that people can purchase with coins.

It simply means that we can use coins in the super market, in open markets and even in petrol stations to buy fuel. For instance, coins are used in places like South Africa , Malaysia , Singapore , America , Kenya , Britain and even in Ghana very close to Nigeria . I do not know why we are not using coins in Nigeria ?  I will advise the Central Bank to do a test-run for the entire process because the ATMs are not manufactured in Nigeria .

CBN is trying to use monetary policy to influence holistic economic growth and development: The former Director General, Nigeria Institute for Social and Economic Research (NISER), Prof. Olu Ajakaiye: The CBN is doing its best in reforming the banking sector for greater productivity. If you are following the trend, you would realise that the apex bank is trying to use monetary policies to influence the process of reactivation to encourage interaction among various sectors of the economy. The monetary authority is prepared to balance and ensure stability in the financial system.

For our country to achieve holistic growth and economic stability, there should be collaboration between the CBN and Ministries of Agriculture, Commerce and other relevant agencies of government to ensure that they support and deliver on their own aspects. Doing this would enable the monetary policies to have broad areas of influence in the whole economy.