January 30, 2023

Naira Notes: Buhari, Reps heading for clash over CBN’s 10-day extension

Naira Notes: Buhari, Reps heading for clash over CBN’s 10-day extension

•Different strokes for PoS operators; widespread rejection of old notes

By Babajide Komolafe, Emma Ujah, Peter Egwuatu, Yinka Kolawole, Nkiruka Nnorom, Johnbosco Agbakwuru, & Elizabeth Adegbesan 

The President Muhammadu Buhari and the House of Representatives  are on collision course over the deadline for the withdrawal of old naira notes.

The CBN had before now, given January 31 deadline for the exchange of old naira notes of N200, N500 and N1000 with the new ones.

But the President yesterday, on the request of the Central Bank of Nigeria, CBN approved  a 10-day extension of the deadline  for the withdrawal of old naira notes  to February 10, 2023.

A seven-day grace period, beginning on February 10 to February 17,2023, was also approved to enable Nigerians deposit their old notes at the CBN after the February deadline when the old currency would cease to be recognised as legal tender.

But the House of Representatives in a swift reaction yesterday, rejected the extension, insisting that the CBN complied with its resolution that the deadline be extended by six months. 

Buhari approves  deadline – Emefiele

The 10-days extension of the deadline was approval was given  by  the President after meeting with the apex bank’s governor, Mr. Godwin Emefiele, in Buhari’s country home in Daura, Katsina State on Sunday.

The President consented to Emefiele”s request, urging more time, discretion and order to enable Nigerians successfully change their currencies to the redesigned notes, and reduce the risk of loss, especially among the underserved in rural areas.

Emefiele briefed correspondents after the meeting, revealing that 75 per cent of the N2.7 trillion held outside the banking system had been recovered, with evident drop in the rate of inflation, more stability of foreign exchange rates, and noticeable impact on security, especially in banditry and kidnapping figures.

He said: “First, I will like to thank Mr. President for giving the CBN the approval to embark on this ambitious programme because, like I said, in the past, the CBN has not had the opportunity to embark on such currency redesign programme in last 19 years.

“Let me emphasize that only an incorruptible leader of the President’s stature can give such approval to the CBN.’’

The CBN governor, who noted that currency redesigns were supposed to be every five to eight years, said:  “Our aim is mainly to make monetary policy decisions more efficacious and as you can see, we have started to see inflation trending downwards and exchange rates relatively stable.

“Secondly, we aim to support the efforts of our security agencies in combating banditry and ransom taking in Nigeria through this programme and we see that the military is making good progress in this important task.

“We are happy that so far, the exercise has achieved a success rate of over 75 per cent of the N2.7 trillion held outside the banking system. Nigerians in the rural areas, villages, the aged and vulnerable have had the opportunity to swap their old notes; leveraging the Agent Naira Swap initiative as well as the CBN Senior staff nationwide sensitization team exercise.

“Aside from those holding illicit/stolen Naira in their homes for speculative purposes, we do aim to give all Nigerians that have Naira legitimately earned and trapped the opportunity to deposit their legitimately trapped monies at the CBN for exchange.

“Based on the foregoing, we have sought and obtained Mr President’s approval for the following:

“10-day extension of the deadline from January 31, 2023, to February 10, 2023; to swap Naira legitimately held by Nigerians and achieve more success in cash swap in our rural communities after which all old notes outside the CBN losses their Legal tender Status.

“Our CBN staff currently on mass mobilization and monitoring together with officials of the EFCC and ICPC will work together to achieve these objectives.

“A 7-day grace period, beginning on February 10 to February 17, 2023, in compliance with Sections 20(3) and 22 of the CBN Act allowing Nigerians to deposit their old notes at the CBN after the February deadline when the old currency would have lost its Legal Tender status.

“We, therefore, appeal to all Nigerians to work with the CBN to ensure a hitch-free implementation of this very important process for program.”

N1.9trn collected

The head of the apex financial regulator said available data had shown that currency-in- circulation in 2015 was only N1.4 trillion, while as at October 2022, currency in circulation had risen to N3.23 trillion, out of which only N500 billion was within the banking industry.

He said N2.7 trillion was held permanently in people’s homes.

“Ordinarily, when CBN releases currency into circulation, it is meant to be used and after effluxion of time, it returns to the CBN thereby keeping the volume of currency in circulation under the firm control of the CBN.

“So far and since commencement of this programme, we have collected about N1.9 trillion; leaving us with about N900 billion (N500 billion + N1.9 trillion),’’ the CBN governor said.

According to him, to achieve effective distribution of the new currency, the CBN has taken some steps.

He said several meetings were held with Deposit Money Banks who were provided with guidance Notes on processes they must adopt in the collection of the old notes and distribution of the new notes, including directives that new notes should be loaded in ATMs nationwide for equitable and transparent mechanism.

The CBN governor explained that the regulatory body worked with the media, (print and broadcast), and the National Orientation Agency for sensitization of citizens, while 30,000 super agents were deployed nationwide, particularly in rural areas, regions underserved by banks and to reach the weak and vulnerable for currency swap.

To ensure compliance, Emefiele said staff members, mostly assistant directors, deputy directors and directors in Abuja were sent to all CBN branches nationwide to join the mass mobilization campaign and monitoring programmes.

EFCC, ICPC officials deployed in banks 

The CBN boss also said operatives of  anti-graft agencies, such as the Economic and Financial Crimes Commission, EFCC, and Independent Corruption Practices and other Related Offences Commission, ICPC had been deployed to CBN branches and banks’ branches across the country to monitor the excise.

His words:  “We have received some reports of some breaches by some banks’ branches; we have agreed with the executive chairman of EFCC and ICPC to assist us by sending their staff to all CBN and DMBs’ branches nationwide to join in monitoring the implication of these guidelines.’’

Reps kicks, say law must be duly followed

Recall that last week  the House via a resolution, demanded an extension of the deadline by six months. The House further constituted an adhoc committee, headed by the Leader of the House,  Ado Doguwa, to interface with the governor of the CBN, Godwin Emefiele, and the Chief Executive Officers of commercial banks on the scarcity of the notes.

In a statement rejecting the 10 days extension of the deadline approved by President Buhari yesterday, Doguwa  said:  “The 10-day extension for the exchange of the old naira notes is not the solution. We as a legislative committee with a constitutional mandate of the House, would only accept clear compliance with section 20 sub 3, 4, and 5   of the CBN act and nothing more.

“Nigeria as a developing economy and a nascent democracy must respect the principle of the rule of law.”

Doguwa said under his chairmanship, the committee would continue its work until it got the demands of Nigerians addressed in accordance with the laws of the land.

Describing the extension as a mere political gimmick to further deceive Nigerians and worsen their economic and social livelihood, Doguwa said the policy was capable of frustrating the forthcoming general elections, insisting that the House would issue a warrant of arrest on the CBN governor, if he failed to appear before the committee, which is expected to wind off its activities tomorrow.

“Security agencies and their operations, especially at the state level, are generally funded through cash advances and direct table payments of allowances to operatives during elections,” he said.

Minority caucus hails apex bank over deadline extension

In a related development, the minority caucus of the House applauded the CBN for listening to Nigerians and extending the deadline for swapping of the old naira notes for new ones by 10 days.

Speaking through a statement signed by the minority leader, Ndudi Elumelu, the caucus also hailed President Buhari for heeding the advice of the presidential candidate of People’s Democratic Party, PDP, Alhaji Atiku Abubakar.

“The 10 days extension of deadline from January 31, 2023 to February 10, 2023 is a welcome decision to ease the suffering as well as social and economic discomfort being faced by many Nigerians in accessing the new naira notes within the earlier stipulated deadline.

“As lawmakers and representatives of the people, our caucus commends the CBN for being considerate towards the well-being of Nigerians; which is the essence of democratic governance all over the world.

“Our caucus applauds the presidential candidate of Peoples Democratic Party, PDP, Atiku Abubakar, for his intervention in persuading   President Muhammadu Buhari and CBN to extend the earlier deadline in the national interest.

“Atiku Abubakar’s patriotic intervention at this time further shows him as a compassionate leader who is always concerned and committed towards the wellbeing of Nigerians. He has again demonstrated his experience, capacity, and competence to get the system to work in the interest of Nigerians at a very critical time.

“Our caucus calls on Nigerians not to rest on their oars but take maximum advantage of the 10 days extension to swap their old naira notes for the new ones.

“The minority caucus also urges the CBN to remain focused and intensify its sensitization efforts, while putting every measure in place to assist Nigerians, especially those in the rural areas, to access the new naira notes,” the statement read

Old Naira notes forced on customers

Meanwhile,  Financial Vanguard  findings from many banks in Lagos and Abuja last weekend show that the banks are still disbursing the old notes. They have also claimed they have not received enough new notes to meet customers’ demand.

In Abuja and Lagos, massive crowd of customers seeking to carry out last minute transactions (deposits and withdrawals) in order not to be caught in the trap besieged the banking halls across the various banks.

Also, people who, hitherto, were not in the formal financial system, queued to open bank accounts to enable them to deposit their old notes.

As part of the process to replace the old notes, the CBN had directed that cash can only be accepted from customers with bank accounts and full KYC (Know Your Customer) requirements, while cash must only be deposited into the customer’s account. Financial Vanguard’s  checks in some banks showed that the banks disbursed only old notes across the counter.

Further checks revealed that most  Automated Tella Machines,  ATMs, of all the banks visited were not dispensing, as they were not loaded with cash. The situation further led to increase in the number of customers in the banking halls who wanted to make ATM withdrawal  but couldn’t do so.

Banks in Abuja, the nation’s capital city had a hectic time trying to meet the ATM needs of their customers at the weekend.

A banker told our correspondents that they could not provide enough   new notes to meet customers’ demand because they didn’t have.

Customers’ frustrations, threats

Most of the customers left the ATMs frustrated that they could not withdraw any new note or enough to meet their needs.

They also expressed frustrations as they had to queue for a long period and ended being unable to withdraw new notes.

One of them said he had visited several ATM locations and had to give up in frustration.

According to him, even after queuing for a long period, there was no guarantee of being able to obtain cash, as the machines had to be restocked from time to time.

“If those in front of the queues exhausted the money in the machine, you are left with the option of going away or remaining on the queue until the bank officials come to put more money in the machine.   It is very frustrating,” he said.

A visit to some branches of banks across Lagos showed that customers of these banks were expressing their anger over their inability to change the old notes for new notes.

Most customers said: “We came here to the bank to change our old currency for new ones but they are saying no new notes available. They told us to deposit the old notes in the bank but we cannot deposit all the money as we need money for day-to-day transactions. Many traders have started refusing to collect the old notes as banks are not giving out new notes.

“We want to get the new notes as we do not really know if the CBN would extend the deadline for submission of old currency.”

Continuing they queried: “Why is the bank treating customers this way when the CBN said it has given the banks enough of the new notes. Who are we going to believe?

“So we think the monetary authority should come out boldly and clear the air on what is exactly happening with the new notes. Nobody would like to be trapped with the old notes especially in this hard economic situation of the country.”

Some of the customers also threatened: “If by Monday this week we come here again and the same thing happens we won’t leave until we get the new notes. There is no where we can get the new notes except bank”.

Some of the customers suspect that banking halls would be too crowded today and tomorrow as old notes not deposited in banks before these two days could be lost.

Why we are still dispensing old notes – Banker

Meanwhile, a staff of one of the banks who spoke on the condition of anonymity, told  Financial Vanguard  that payment of old notes to customers making cash withdrawal over the counter was in keeping to a directive from the CBN, which barred banks from disbursing new notes over the counter.  

“The CBN has not permitted us to pay new notes over the counter. We are only allowed to load the ATMs with new Naira notes, but any customer that wishes to withdraw money from the banking hall would be paid with old notes. We cannot go against the CBN’s directive,” he said.

Another bank official in Kubwa area of Abuja, Victor Ochayi, said, “as of today, banks are still giving out old notes over the counter. And I am sure they will still be dispensing the old notes till 31st  January, so we can still give out old notes on the counter.”

Speaking on the reason for still giving out new notes, Ochayi said, “The new note in circulation is very small, and we are trying to adopt the cashless policy; we don’t really have much new notes to give out, but our ATM machines stop dispensing old notes this week”, he added.

Banks limits ATM withdrawal of new notes

While the counter cash dispensing was solely on old notes the banks have also imposed a N20,000 limit on cash withdrawals from ATMs for new notes.

Moreover, most of the ATMs were without cash as at last weekend as the banks claimed they have loaded what they have in their stock of new notes.

Despite the unavailability of cash in the ATMs of banks visited by  Financial Vanguard, it emerged that the CBN has directed the banks to effect a downward review of the daily cash withdrawal limit through the ATMs.

A notice by some banks to their customers showed that the limit is now set at N20,000, from N100,000 previously allowed.

A notice by a commercial bank to its customers cited by  Financial Vanguard  titled: “Downward Review of Daily Withdrawal Limit on ATM”, reads: “Please be informed that the Central Bank of Nigeria has revised its daily cash withdrawal limit on ATM from N100,000 to N20,000 effective 23rd January, 2023.

“This means that you can only withdraw a cumulative daily amount of N20,000 from your account across all ATMs irrespective of the bank.”

Speaking on the difficulty in obtaining   withdrawal has been, Margaret said, “We can’t withdraw from the bank, even if we do, we can’t withdraw more than 20,000 per day which is quite frustrating”.

Widespread rejection of old notes

Meanwhile, many traders/ businesses and individuals have already started rejecting old notes since Friday on fears that they would not be able to deposit such notes in the banks or swap them before the deadline.

One Mrs Margaret Obey, a business woman said,  “Many people are rejecting the old money, meanwhile the new money is not available.

“It is really affecting our business, we cannot buy things from the market, they won’t accept transfer, they won’t accept the old cash, those women in the market who don’t normally go to the bank, they will tell you they need the new money, instead of the old one, so it is affecting me”.

A hotel in Ikeja Lagos, who rejected our correspondent’s payment with old note on Saturday explained that the management of the hotel has said that they evacuated their last old notes to the bank on Friday with instruction that no payment should be received on old note with effect from that Friday.

There was also a conflicting report on the date allowed for deposit of old notes by different bank officials.

Contrary to the January 31 2023 deadline set by the CBN, some staff of most of the banks visited by  Financial Vanguard  said that their banks would cease the collection of old notes from customers on Monday or Tuesday (today or tomorrow) another bank said they would likely collect the old notes after January 31st, maybe till Friday, February 3, 2023, subject to CBN’s allowed date of transmission of all old notes to the apex bank’s vault.

However, some Point of Sales (PoS) operators were heard assuring their customers that they (PoS operators) would still be able to deposit old notes even on Tuesday, January 31.  

Different strokes for PoS operators Meanwhile at the backdrop of the crises in the banks over access and circulation of the new Naira notes, many banks customers had turn to the Point of Sales, PoS, operators for rescue.

However,  Financial Vanguard  findings show that the PoS operators were also destabilized over the inadequate supply of the new notes.

But some of the operators took advantage of the situation to make brisk business as customers who could neither withdraw from the ATM nor wait in a long queue used PoS at extra charges.

However, like the deposit money banks, the operators dealt only on old notes.  

“What we are doing is that we are helping banks to mop up the cash and deposit it in the banks afterwards.

“We still collect old notes and give out the same thing because that is what we have for now,” said Nkechi, a PoS operator at Abulado, Lagos-Badagry Expressway in Lagos State.

In the banking halls, the PoS operators were also seen depositing their cash collections for the day.

A PoS attendant, Adekunle Adebimpe, said, as of today, inside the banking hall, they were giving old notes. But the ATM is dispensing new notes which is not much, I have been there since 7am, I couldn’t even withdraw anything, I had to come back home.

“Today, my sales have not been moving fast because customers are rejecting the old notes, saying that when they collect from me, they won’t be able to spend them.   So market for today has been very down,” she said.  

Another PoS Agent, Miss Tope Eniola, who expressed displeasure on the scarcity of the new naira notes said, “People are still depositing old notes, I am not suppose to collect, but I won’t want to loose my customers, so I just take their money and go to the bank on Monday to see if I would be able to pay it into the bank, before doing any transfer.

“In front of the bank, people are transacting, some charge N1000 instead of N400 for the sum of N20,000 new note. The money is not there, I have been there since morning to get the new notes, I am just returning to my shop.  

“So many people came looking for me, to make transactions, I am out there looking for new notes. For now it will attract an extra charge to get the new notes from me, but for the old note, it is still the same charge,” she said.

Speaking on how it has affected her business, Tope said, “People are not happy with the way I added an extra charge for withdrawal, except for those who understand the problem.”

Another PoS operator, Kabiru Enterprises, told our correspondent who demanded to withdraw N5000 of new Naira notes, “If you want to withdraw new Naira notes the charge is N500 but if it is old notes the charge for N5000 is N200.”

He also explained that most people were still withdrawing the old Naira notes because the new Naira notes   could not be obtained  over the counter. He said, “New notes can only be received through the ATM, so there is nothing we can do with the way things are going.”