The Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, on Tuesday declared that the January 31, 2023 deadline fixed by the apex bank for the return of old N200, N500 and N1,000 banknotes will not be extended.
Emefiele, rather, urged those who might still be holding on to the old banknotes to turn them in, assuring them they would not be harassed by the anti-graft agencies.
The CBN Governor’s comment came just as the Senate and House of Representatives members urged the banking sector regulator to extend the deadline.
Both the red chamber and the green chamber requested for a six-month extension of the deadline. In addition, the House of Representatives set up an ad hoc committee to meet Managing Directors of banks and subsequently with the CBN over the public outcry on the cash withdrawal limit and scarcity of the redesigned naira. They also called on President Muhammadu Buhari to intervene in the matter.
However, addressing journalists at the end of a two-day meeting of the Monetary Policy Committee (MPC) in Abuja, the first in the year, the CBN governor insisted that the 100 days allowed for anyone to deposit the notes in commercial banks was more than adequate.
Emefiele also disclosed that to date, between N1.3 trillion and N1.5 trillion of the old naira notes had so far been returned, adding that the figure was expected to reach about N2 trillion at the end of the week.
He added that the central bank is currently printing more banknotes which would be supplied to banks to boost availability as the old notes would expire at the end of the month.
Emefiele’s declaration puts paid to speculations that the central bank may bow to public pressure and move forward, the deadline it set for the return of the old naira notes, after which they would no longer remain a legal tender.
In addition, MPC members yesterday resolved to raise the Monetary Policy Rate (MPR) otherwise known as interest rate by 100 basis points to 17.5 per cent from 16.5 per cent.
The MPR is the rate at which commercial banks borrow from the CBN and often determines the cost of lending in the economy. The MPC however, retained the Cash Reserve Requirement (CRR) at 32.5 per cent as well as the Liquidity Ratio at 30 per cent.
Emefiele pointed out that the decision to further tighten monetary policy was borne out of the need to address current inflationary concerns adding that the marginal drop in the headline index in December was not enough to loosen the monetary stance for now.
Emefiele, also commented on the recent N89 trillion stamp duty allegations against the apex bank, clarifying that records have shown that only N370.68 billion had been collected by banks between 2016 till date, and wondered where such a humongous amount had been culled from.
According to Emefiele, of the total stamp duty collected, the Federal Inland Revenue Service (FIRS) had disbursed N226.45 billion to the Federation Accounts Allocation Committee (FAAC) while the sum of N144.23 billion was the balance with the CBN. Emefiele further disclosed that First Bank of Nigeria Plc, collected the highest stamp duty, which he said amounted to N71.6 billion.
Nonetheless, Emefiele said an independent audit involving top audit firms including KPMG, PwC among others had been commissioned to get to the root of the matter.
The central bank governor also said the currency redesign programme of the apex bank had helped to reduce the incidences of kidnapping and ransom taking as bandits are well aware of the implications of demanding for the old naira notes for settlement.
Emefiele, also said the CBN’s exposure to the federal government by Ways and Means was a normal practice.
He explained that it would amount to irresponsibility and dereliction on the part of the central bank to ignore the government in time of need and allow the economy to suffer.
He said any responsible central bank, including the US Federal Reserve, would lend to the government in difficult times.
“Lending to the government as the banker of last resort is normal,” Emefiele said.
He urged those exaggerating the Ways and Means intervention to take it easy on the central bank, assuring, however, that it would soon securitise the debts.
Further justifying the need to tighten the monetary policy stance, Emefiele said, “We are happy that some of the policies we’ve introduced in the last couple of months in our attempts to rein in inflation are beginning to yield results, not just about platooning but beginning to drop.
“But MPC members feel that a 10-basis point drop from 21.47 per cent to 21.34 per cent is not just good enough as a reason to begin to celebrate. That is year on year. But on the basis of month-on-month CPI, we still found out that inflation was still going on both the headline and all that. On year-on-year basis, we saw food coming down but at the same time, we still saw core inflation moving up.”
Emefiele said, “For us, it is not time to celebrate yet…This is not enough sign to loosen but be aggressive.
“With inflation at 21.34 per cent, it is already hurting growth and it’s moderating the level of output we would have seen if inflation was within our own target range of between 7 and 10 per cent.
“And that at 21.34 per cent, there was no way we were going to celebrate but it is good for us to begin to taper and the rest.”
On the central bank’s reluctance to shift the timeline for the return of the old notes, Emefiele said, “I must say here that unfortunately, I don’t have good news for those who feel that we should shift the deadline. My apology.
“The reason is that just as the president had said on more than two occasions, and even to people privately, that for us 90 days – in fact, we feel it’s 100 days – is enough for anybody who has money or the old currency to deposit the money in the banks.
“And we took every measure to ensure that all the banks were open or remain still open to receive all old currencies. 100 days we believe is more than adequate.”
He said, “We called on the banks and we said, not only are we requesting you to extend your working hours so that you can receive old currencies but that we are also asking you to keep your doors open on Saturdays.
“The banks did not have any reason to even keep their banking halls open on Saturday, neither did they see the kind of rush, it was normal people who came to deposit money in the bank.
“So, we do not see any reason to begin to talk about a shift because people could not deposit their old monies into their banks.”
Also, addressing the concerns around the shortage of the new naira banknotes, the CBN governor, further stressed that the, “currencies are available; we hold at least, three meetings every week with the banks. When we first started, we saw that the banks were paying more of the new currencies over the counter to their priority customers rather than giving it to some of the weak or small customers or those you can call vulnerable customers.
“But we mandated them, we said, no, from now on, don’t make any payments of new notes over your counter which gives the opportunity for you to give it to your friends – pay all new notes into your ATMs – the ATM is a robot and everybody queues and then you take whether it is N10,000 or N20,000 or N30,000 that is programmed, everybody collects the same amount.
“That has worked…our mint is producing and we are supplying to the banks and so it will continue to circulate into the system.”
He said, “I had a meeting with the Nigerian Governors forum last Thursday and some of them raised issues about oh, they are in the riverine areas, there are no banks in some of those riverine areas; even in the non-riverine areas there are some places where there are no banks.
“We also heard from governors from Borno and Kebbi states and we told them that look, we have 1.4 million points of our super agents, those agents are going to be available to conduct cash exchanges. Let’s not forget, the super agents are like kiosks, shops, and stalls in your community.
“So, whether it is a riverine or upland area, they are there, they are selling sweets, selling kolanuts but they have been appointed as agents that will do cash exchange and cash swap for you. These we have put in place.”
Emefiele, however, said that the central bank would continue to remain focused on the weak and vulnerable in the country, adding, “We will do everything even after January 31st to make sure that we are available to serve them and making sure that this new naira permeates every nook and cranny of the country.”
Senate Asks CBN to Extend Deadline to July 31
Meanwhile, the Senate yesterday, urged the central bank to extend the deadline for the exchange of old naira notes to July 31, 2023.
Worried by the insistence of the apex bank that there would be no such extension, Senator Sadiq Umar, moved a motion on the floor of the red chamber yesterday, demanding the extension to July 31.
Most senators who contributed to the debate overwhelmingly embraced the extension, citing scarcity of the new notes both in the banks and at the various ATMs across the country.
The president of the Senate, Ahmad Lawan, put the prayers in the motion to vote and the lawmakers voted in support of the extension of the deadline from January 31 to July 31.
Senators during debate on the motion by Umar said the new notes were not enough in circulation, warning that if the deadline was not extended, there would be chaos in many parts of the country.
The lawmakers also expressed dismay that the CBN had insisted on the January 31 deadline despite public outcry.
George Sekibo (Rivers) and Adamu Bulkachuwa (Bauchi) urged the parliament to devise means to force the CBN to extend the deadline.
Sekibo said the CBN governor had repeatedly shunned the National Assembly against the extant law directing him to brief the parliament periodically on its monetary policies.
Adamu Aliero (Kebbi) and Hassan Hadejia (Jigawa) said the deadline, if allowed to stand, would crumble rural economy, as millions would lose their money.
“Many people, especially in states could not get their old notes exchanged for the new ones. The suffering is excruciating. People are spending long hours queuing in banks without success,” Aliero said.
Biodun Olujimi (Ekiti) said the policy seemed to be targeted at addressing the influence of money in elections, urging the CBN to look beyond the 2023 polls.
The Senate, therefore, asked the CBN to extend the deadline by six months to allow Nigerians especially those in rural areas more time to change their old notes.
The Red Chamber also urged the CBN to compel deposit money banks to open a naira exchange windows for those without bank accounts.
The Senate President assured that the National Assembly leadership would ensure that the resolution was implemented by the CBN.
He said, “There are no banks in many local governments. Most people transact business in cash. The CBN should look at the hues and cries of ordinary Nigerians who have laboured hard to earn legitimate money.”
House of Representatives Members to Meet Bank MDs, CBN
In a related development, members of the House of Representatives would today meet with the Managing Directors of banks and subsequently with the CBN over the public outcry on the cash withdrawal limit and scarcity of the redesigned naira.
The lawmakers urged the CBN to extend deadline for phasing out of old naira by six months, and as well expedite action on making the redesigned 200, 500 and 1,000 notes available to Nigerians
They called on Buhari to intervene in the insistence of the CBN on the deadline. The resolutions of the lawmakers were sequel to the adoption of a motion of urgent public importance, sponsored by Hon. Sada Soli at the plenary yesterday.
Moving the motion, Soli noted that pursuant to Section 2, paragraphs (a) and (d) of the Central Bank of Nigeria (Establishment) Act, 2007, the objective of the apex bank shall be to ensure monetary and price stability, and promote a sound financial system in Nigeria, respectively.
The lawmaker while noting that the cashless policy was in tandem with global best practices, however said for such a policy to be successful, it should not be overbearing on the people and the economy.
He expressed concern that financial institutions in Nigeria lacked the infrastructure to handle a sudden increase in customer base as well as adequate employees to handle any challenges that could arise in the process of implementing the cashless policy within the limited time given by the CBN.
He also expressed concern that banks and point of sale (PoS) outlets were struggling with shortage of the redesigned notes ahead of the deadline, consequently making it difficult for them to comply with the CBN directives as regards availability of the new notes for customers.
Soli lamented that most part of the northwest was affected by this policy, adding that the CBN needs to slow down as if they continue like this they will exclude certain segment of the society in participating in the macro activities of this country.
He said, “Further concerned that despite several concerns and appeals by the National Assembly, the Governors Forum, the Bank Customers Association of Nigeria, and a host of other stakeholders in the country for the CBN to extend the period for the currency swap of the new naira notes as well as review of the cashless policy, the CBN has remained adamant on the given deadline.
“Worried that due to inadequate sensitisation and the rush in the implementation of the policy, the country is exposed to a situation whereby businesses or rejecting the old currency even in the face of unavailability of the redesigned new naira.”
In his comment, the Speaker, Hon. Femi Gbajabiamila, while commending the spirited efforts to try and educate people on the policies, however said there was need to meet with banks executives and the CBN to find out the truth about the availability of the new naira notes.
He thereafter set up a 14-man ad-hoc to be chaired by the House Leader, Hon. Alhassan Ado-Doguwa for the meeting today.
Gbajabiamila said, “CBN has been making spirited efforts to try and educate people out there. I was in the Central mosque in Lagos last week and they came into the mosque to sensitise some people.
“But I’m not sure it’s enough, the problem seems to be hydra-headed. Certain things would be put in place before the policy was rolled out. As good as it is, the modus and timing is what we have a problem with.
“Based on what we are hearing all over the place in newspaper publications, there’s a need to review the policy, there’s nothing wrong with reviewing a policy. Banks are saying they don’t have the money, CBN is saying ‘you have the money, we will penalise you if you give out old notes.’
“We need to invite bank managing directors to brief an ad hoc committee to find out the truth about this new notes are available. Somebody is not telling us the full story, is it the banks or CBN.”
James Emejo, Sunday Aborisade and Udora Orizu in Abuja
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