Nigerian Banks Still Distributing Old Naira Banknotes as Demonetization Date Approaches

With just a few days left before old Nigerian naira banknotes are removed from circulation, some banks have accused the Central Bank of Nigeria of failing to distribute enough new banknotes. Despite growing pressure for it to extend the period for returning the old notes, the central bank insists the Jan. 31 deadline still stands.

As the Central Bank of Nigeria (CBN)’s Jan. 31 deadline for returning the old naira banknotes approaches, banks in several Nigerian states are still distributing the soon-to-be demonetized banknotes, a report has said. In addition, fewer automated teller machines (ATMs) — less than 40% according to an investigation by the Guardian — were reportedly dispensing new banknotes.

According to the Guardian report, some bank insiders are adamant that the shortages are caused by the CBN, which has not distributed enough new banknotes. One unnamed banker from Lagos claimed that their branch got “just N1.5m new notes” in the previous week and had no new stock of the redesigned naira at the time of writing.

The banker, however, suggested that the CBN planned to do a massive rollout of the new banknotes in the last week of January. The banker said:

The deadline is fast approaching, but we are not getting the expected quantity. We are suspecting that they will roll it out massively next week because there are no indications that the deadline will be extended.

Another banker from Nigeria’s Ogun state said while the CBN has refused to extend the current deadline the increased anxiety suggests that “a massive rollout of the money” should have been done by now.

The fears that many Nigerians will lose out when the old naira banknotes are phased out has prompted some politicians to call for an extension of the deadline. However, the CBN has so far refused to bow to pressure and has insisted that the deadline still stands.

In the past, the central bank has dismissed claims that the decision to demonetize the old banknotes is aimed at punishing certain groups. Instead, the CBN insists that the exercise is designed to help it reduce expenditure on cash management as well as to weed out counterfeit banknotes.

Meanwhile, some Nigerian commentators have suggested that the CBN may be deliberately injecting inadequate banknotes as part of an attempt to force residents to switch to digital alternatives including its central bank digital currency (CBDC). Such speculation has in turn prompted the Nigeria Governors’ Forum (NGF) to issue a statement cautioning the CBN.

In the statement, the governors reportedly said that while they are not against the currency redesign policy, the central bank should “consider the peculiarities of states especially as they pertained to financial inclusion and under-served locations.”

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