By Akintola Omigbodun
Currency notes issued by the Central Bank of Nigeria, CBN, in the denominations of N200, N100, N50, N20, N10 and N5 are currently not readily available on demand in banks in the Lagos area. Even the currency notes in denominations of N500 and N1000 given out by the banks are not clean and do not have a few new notes in the packs as has been the practice in the past.
When one enters a banking hall and asks for currency notes in denominations of N200, N100 or N50, the usual answer is that the bank has not seen such notes from the CBN recently. One bank advises that one should come on a Monday because that is when the bank receives deposits having currency notes of denominations of N200, N100 and N50 from churches.
In one instance, a bank was rationing N200 currency notes in lots of 5 per person. At another bank, I was able to obtain ten units of N200 currency notes which I subsequently had to share with two other persons who needed change for their customers. I recall that on the last occasion that I obtained N100 currency notes from a bank, I was given a pack of 100 units from which I retrieved about 60 units which were presentable.
My experience shows that while the CBN is withdrawing old currency notes from circulation new currency notes are not being issued as replacement. The cash-lite policy is meant to encourage the use of electronic means and cheques in financial transactions. There are a number of platforms for making payments by electronic means and it would appear that each platform has it own telecommunications service. The result is that there are situations in which a bank branch is unable to access a payment platform and the person making the payment is advised to come back the following day in order to obtain a receipt of the transaction.
In the case of one particular payment platform, it appears transactions are initiated at the central offices of the banks and there is a definite time-lag between when the sender approaches a bank branch and when the payment reaches the receiving bank. This leads to a situation in which it is preferable to withdraw cash from one bank and make a payment directly into an account at another bank.
The difficulties with our telecommunications system centre on the disappearance of local telephone services provided by Nigerian Telecommunications Plc, NITEL. The cable systems which NITEL had in place should be the backbone of our data transmission. However, even before NITEL went out of business, parts of the underground cable system linking the telephone exchanges in the Lagos area had been vandalised and telephone services lost in some neighbourhoods. The lack of telephone lines would delay the deployment of point-of-sale terminals in our local shops. For example, it should be possible for one to buy, say, N320 worth of medicines at a local pharmacy and have the payment made by electronic means.
However, the greater part of our transactions are outside of banks and shops and for which transactions currency notes of denominations of N200, N100, N50, N20, N10 and N5 are needed. For example A4 size photocopy is readily available at N5 per page. Also, a newspaper vendor would find it difficult selling his consignment if most customers come along with N500 currency notes to purchase a N150 newspaper.
Significant economic activities that are affected by a lack of currency notes are the payment of fares on public transportation, the purchase of cooked food from food vendors and the purchase of foodstuffs. The tendency would be for transport fares to be rounded up to the value of notes that are readily available and a N120 fare may go up to N150 as N50 notes are still available. Food vendors have always adjusted the size of a food unit as the cost of their inputs rise. They may now be able to increase prices with smaller size increases in food units.
The CBN has talked about the cost of printing currency notes and of managing their distribution. However, we should also talk about the cost to individuals when the CBN does not make currency notes available. As indicated above, personal expenditure on food and transportation will increase which will eventually lead to increases in other goods and services.
The suspicion is that all of these difficulties are linked with the desire of the CBN to print currency notes of N5, 000 denominations. If the public is against this CBN proposal, is it not because the N5,000 currency note would pave the way for devaluation of the naira against the US dollar? Is it not possible to run the Nigerian economy without further devaluation? The CBN should ease the burden on the public and make currency notes in denominations of N200, N100, N50, N20, N10 and N5 readily available.