Nigerian Banks started issuing new naira notes today in conformity with directions from the Central Bank of Nigeria. Today, commercial banks started dispersing the eagerly anticipated, newly redesigned Naira notes from the Central Bank of Nigeria (CBN) to people around the nation.
The 100 Naira note's design was modified in 2014 to mark Nigeria's centennial anniversary, which was the last time the CBN changed the naira's appearance. Nigerian Banks started issuing new naira notes today in conformity with directions from the Central Bank of Nigeria.
For the greenback that is so widely in circulation in Zimbabwe, the 100 note was redesigned in 1996, followed by the $50 note in 1997, the $20 note in 1998, and the $10 and $5 notes in 2000. But poor George Washington, the face of the $1 bill, hasn’t gotten a makeover in more than 50 years.
On November 23, 2022, President Muhammadu Buhari formally introduced the new redesigned N1000, N500, and N200.
That gives Nigerians six to seven weeks to deposit trillions of naira in financial institutions. Additionally, the World Bank estimates that for every 100,000 Nigerians, there are slightly more than four bank branches. The banks will be swamped as a result, which is nearly an inevitability. They have been recommended to work on Saturdays to lessen this.
The Central Bank of Nigeria (CBN) cites several justifications for redesigning the banknotes, including the simplicity with which counterfeits are being produced, the fact that the naira hasn't undergone a redesign in the past 20 years, and, of course, the substantial amount of cash that is not in the banking system.
The trillions of naira that have been corruptly hidden away in people's houses appear to be the CBN's main goal when revamping the banknotes. Up to 80% of the N3.23 trillion in circulation, according to the central bank, is not kept in commercial banks' vaults. That is a significant sum, which helps to explain the central bank's plight and the pressing need for action. The fact that the Nigerian economy is gradually transitioning away from a cash-based one explains how this could happen without the banking system experiencing a cash shortage.
It is undeniable that some corrupt individuals are apprehensive to deposit the cash they possess in a bank since doing so leaves behind records and traces of the cash they have obtained fraudulently. This is the reason why millions of bank accounts are still unconnected to a Bank Verification Number (BVN).
Millions of rural, impoverished Nigerians who depend on farming for a living also remain, and they are forced to save and stow away cash under their beds. The percentage of currency in circulation that is kept in rural Nigeria is not accurately known. To put it another way, what percentage of the N2.73 trillion in circulation outside of commercial banks' vaults is found in rural areas and among the unbanked population? 50,000 corrupt individuals may be hanging onto more than N1 trillion in cash if I had to guess.
That would leave more than 100 million people in rural Nigeria with control of well over a trillion naira. But it is undeniable that the majority of people who reside in hamlets, villages, and small towns are unbanked. They also happen to be the most knowledgeable about government rules and regulations. Many of them are simply wary of anyone informing them the money concealed under their beds will no longer be legal tenders to use to buy and sell by January 31, 2023.
According to the World Bank, 45 percent of adults in Nigeria have bank accounts with some kind of financial institution. Additionally, based on the information at hand, Nigeria is thought to have 134 million bank accounts. However, data from the Nigerian Inter-Bank Settlement System indicates that there are only 52 million accounts connected to a BVN (NIBSS).
More than 150 million Nigerians fall into one of two categories: they are either too young to hold bank accounts or do not have access to them. People who reside in rural areas make up the majority of people in the latter category. The distribution of commercial banks' branches among the 36 states is the best example of this. Outside of the state capitals, where some banks have only one branch, many have no branches in other parts of the states.
Some banks have more locations in Lagos than they do in the entire country's north.
Therefore, the problem for those living in remote areas is not just that they have not yet been persuaded that the money in their possession would soon be useless, but also that exchanging it for fresh notes may be nearly difficult. Without bank accounts, a valid form of identification, or access to verified information, they are vulnerable to scammers.
Our opinion is that the government of Nigeria needs to come up with safe and credible ways for this group of Nigerians to exchange their old notes with new ones. It could prove to be a painstaking and time-consuming exercise because many, if not the majority, could have life savings that do not amount to much.
More significantly, the government, central banks, and commercial banks must launch a campaign to raise awareness that is not just for those who have access to the internet, mobile devices, and televisions.