The Central Bank of Nigeria (CBN) on Thursday said counterfeiting and hoarding were the reasons for redesigning and issuing new naira notes.
Amina Abdulmalik, Deputy Director, Currency Operations Department, CBN, said this at the apex bank’s special day, at the ongoing 36th Lagos International Trade Fair in Lagos.
“We have a huge challenge of counterfeiting; Nigerians have set up factories and are just chunning out bank notes because those bank notes don’t come back into the banking system.
“We are not able to fish out the counterfeits; and most central banks in the world redesign when they see the level of counterfeits growing. But if you don’t have confidence in your bank notes then there’s a problem.
“Also hoarding is another challenge; people simply love to keep this money at home, because of that hoarding, you find out that 84 per cent of our currency in circulation is outside the bank.
“Whoever does that is into illegal activities, like kidnapping. If you are afraid of taking your bank notes to the bank, then you have something to hide,” she said.
Ms Abdulmalik also said the apex bank’s major mandate, which was issuance of currency, was a serious challenge to the bank as it involved lots of activities.
She said, “before we issue currency we have to plan, we have to determine the volume of bank notes that will be appropriate for the economy.
“This we have been doing over the years and once this is done we have to send it to our Security Printing and Minting company to print.
“They are CBN’s sole printer. We have a printer in Lagos and Abuja, and that is where CBN does all the printing of currency.
“When printing is done we have to distribute, distributing the currency around Nigeria is lots of work which involves lots of logistics and costs.
“The bank notes we issued are meant to come back where they will be processed into fit and unfit. The unfit notes are meant to be withdrawn and the fit ones reissued.
“Unfortunately in Nigeria, once we issue, the notes disappear. These are the challenges around currency management that necessitated us to do a redesign,” she said.
She said redesigning of bank notes was a normal CBN process, and the responsibility of Central Banks around the world.
She said, “We’ve done it in the past, it did not generate concerns but because of social media, we seem to have a challenge.”
“We registered CIT companies, if you go to our website, you will see the requirements, you can move cash, that aspect of distribution, we can outsource to the private sector.
“So it’s something that we expect Nigerians that have the resources to do.
“You can also participate in processing, you can go to our website, you will see the requirements, if you have the required capital, we can outsource that to you.
“Banks can bring in the bank notes, you help them to sort clean and unclean. That will also help in currency management.
“There’s a need to reduce that cash in circulation so that we can use other channels.”
Dr Michael Olawale-Cole, president, Lagos Chamber of Commerce and Industry (LCCI), urged the apex bank to consider converting lower currency notes into coins.
“As regards issuance of new naira notes, the CBN should also consider converting the country’s lower currency notes into coins to facilitate highly repetitive retail transactions and avoid printing pieces of low-value notes with a short lifespan.
“We also appeal to the CBN to adopt more innovative ways, establish appropriate policies and take actions that will drive down the inflation rate and strengthen the value of our naira,” he said.
Mr Olawale-Cole was represented by Gabriel Idahosa, deputy president, LCCI.
The theme of the 2022 annual fair is, “Connecting Businesses, Creating Value.”