The Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, yesterday told holders of the old N200, N500 and N1000 banknotes that in line with the provision of Section 20(3) of the CBN Act, they would still have the opportunity to redeem the face value of their cash only at central bank offices nationwide after the February 10, 2023 deadline, when the currencies would have lost its legal tender status.
Also, the CBN governor assured Nigerians that nobody would lose their legitimately earned money due to the naira redesign project, saying the exercise was in the overall interest of Nigerians and the economy.
Emefiele said this during a meeting with the House of Representatives Ad-hoc Committee on the Review of the CBN’s Cashless Policy and Extension of the Timeframe of the Currency Swap programme, held in Abuja.
Emefiele who was accompanied to the meeting by all the four Deputy Governors of the CBN, before responding to the questions thrown at him by the lawmakers, apologised for his inability to appear in previous summons.
He said he was on vacation and later on a trip to Senegal with President Muhammadu Buhari.
He told the parliament that the value of old naira notes of N200, N500 and N1000 would still be redeemed even after they have ceased to be legal tender after the February 10 deadline, at the CBN.
He said the redemption was in tandem with the law, precisely section 20 (3) of CBN act, noting the essence was to mop up the old notes in circulation.
While reeling out the steps taken by the central bank to ensure the effective distribution of the new banknotes, he disclosed that about N1.9 trillion of the old banknotes had so far been collected since the commencement of the exercise.
According to him, the currency redesign policy has so far recorded about a 75 per cent success rate given the fact that many of those in the rural and underserved locations across the 36 states of the country have had the opportunity of swapping their old banknotes for the new series of the banknotes.
He noted that one of the reasons for the naira redesign was to bring in the N2.7 trillion outside the banking system which is currently being held in people’s homes.
Emefiele explained, “Besides, the general practice across the globe and that practice is that every five to eight years, the CBN is supposed to redesign or do some form of changes do its currency.
“The reason is because CBN has to be in the position from time to time to have control of money supply in the country. Unfortunately, we have not had the luxury of carrying out this important aspect of our mandate in the last almost 19 years to the extent in 2015, the currency in circulation was N1.4 trillion. “In October 2022, currency in circulation had risen to N3.23 trillion. More than double in seven years. It’s very unfortunate that it more than doubled in eight years. Out of the N3.23 trillion, more than N2.7 trillion was outside the banking system. More than N2.7 trillion is held in people’s homes.
What that does is that it makes our mandate of monetary policy very difficult. When we are not in control out of N2.3 trillion, what we see in the banking system is just about N500 billion. There is no how our law which you the lawmakers have made for us to carry out, our work can be effective and that is the reason.
“I thank the president that in 19 years, we have had an opportunity to carry out this important aspect of our mandate. We are grateful to him because he listened after we provided him the needed explanations about what we have been going through in the monetary policy.
“Now, the president graciously gave approval on October 6, 2022, and we had expected that around December 15, the currency circulation will begin, but we were lucky that we moved forward the circulation in November when the president launched the currency.”
Speaking further, Emefiele accused commercial banks of breaching the apex bank guidelines, with the way the new naira was being sprayed in parties.
He told the lawmakers that the apex bank was working closely with relevant agencies of the federal government to ensure full compliance with the CBN guidelines issued to the banks for the seamless distribution of the new banknotes.
While anticipating more benefits of the policy in the future, he appealed to Nigerians for their support, stressing that the naira redesign was good of Nigerians.
“I addressed the bankers on Sunday and I expressed to them my disappointment and in fact, the disappointment of the president, the disappointment of leaders in the country with the way this has gone on because many of us have unfortunately seen the new naira instead of being used for the purpose it was meant, the new naira is being used in parties, in celebrations.
“Some of them (bank CEOs) said well, maybe it’s money from the ATMs and I said no, money from the ATMs are already broken. They are in leaflets but what we saw being stamped on people at parties were packages of the new naira notes which means they had breached certain aspects of the guidance note we gave to them.
“And when I met President Buhari, I told him that we have met with the EFCC, the ICPC and NFIU and that we are now going to bring EFCC, ICPC, NFIU to join us in monitoring the flow of this currency to our people. I must say that I am even delighted that even yesterday, I read that the DSS has started that, which is what we want so that everybody knows that we are conducting this activity to the best of our ability.
We are doing this for the good of Nigerians. We are doing this so that the Nigerian economy can be better than it is today and I am saying that we are beginning to see some of the benefits.”
Continuing, Emefiele said: “Inflation last month is not rising, not stagnating but somehow moderating. We are expecting that it will continue to moderate. The exchange rate to be stable and we are hoping that with this exercise, the naira can even get stronger.
We know in the process that some will be hurt, I will say temporarily. But it’s a pain that I will appeal to all of us to please show some understanding because the overriding benefits to Nigerians is what we are interested in which is about making our economy stronger then combatting the high incidence of insecurity.
“Yes, we saw a few failings on the part of the banks and we appealed to EFCC, ICPC, NFIU; they are currently working with our officials nationwide to make sure that this process goes on seamlessly.
“We are happy they the exercise has achieved a success of over 75 percent in our villages, etc. It is on the basis of that we now have a 10 days extension for the more and more of this to be collected and then we make more disbursement,” Emefiele said
However, in a statement after the meeting with lawmakers, following news making the rounds on the redemption of the old banknotes, the Director, Corporate Communications Department at the CBN, Mr. Osita Nwanisobi, explained to journalists that the old notes would cease to be legal tender after February 10, 2023, and could no longer be used for any form of transaction afterwards.
However, he reiterated that in line with the provision of Section 20(3) of the CBN Act, Nigerians would have the opportunity to redeem the face value of the naira only at the central bank, after the currency had lost its legal tender status, subject to meeting certain conditions.
Reiterating the pledge of the Emefiele, at the meeting with the House of Representatives Ad-hoc committee, Nwanisobi said Nigerians would not lose their money, even as he urged citizens to take advantage of the extended deadline of February 10, 2023 to deposit the old banknotes currently in their possession at their banks or through mobile money agents.
Citing instances in other climes, Nwanisobi explained that banknotes that cease to be legal tender are only redeemable by the monetary authorities of such jurisdictions upon demand subject to conditions /processes as may be prescribed by that Central Bank.
Nwanisobi also used this opportunity to encourage Nigerians to adopt other payment channels for their transactions, saying that Nigeria’s payment system is robust enough and ranks amongst the first in the world.
Meanwhile, reacting to the presentation by Emefiele during the meeting with the lawmakers, the chairman of the committee, Hon. Ado Doguwa, who was elated by the CBN governor’s remarks thanked him. Doguwa said had Emefiele given the lawmakers the assurance earlier, there wouldn’t have been any need for the meeting.
Thanks for this wonderful presentation. I call it wonderful because absolutely, you can see the wisdom in what people say in every engagement, communication matters.
“It only when you interface, you have an opportunity to understand the policy of government. So, this is a welcome submission, but unfortunately at a belated point. If you had communicated this much earlier, this crisis would not have come up at all. Nigerians will go home to sleep without any fear at all. “I want to thank you for coming up this submission most especially your last submission about the position of the law; that the bank will at all times respect the position of the laws of the land.