Reps Order CBN: Withdraw Old Naira, Circulate New Notes Now

CBN Ordered to Circulate New Naira Notes

The CBN's naira redesign policy, initiated in October 2022, aimed to curb inflation...

Nigeria's House of Representatives directs CBN to withdraw old Naira notes, ensure seamless transition to new currency by January 1, 2025 deadline.

The House of Representatives has directed the Central Bank of Nigeria (CBN) to start gradually withdrawing old naira notes from circulation and replace them with new ones in denominations of N200, N500, and N1,000. This move aims to ease the transition to the new currency and address the current scarcity of new notes.

The House also urged the CBN to instruct commercial banks to transact with customers using the new naira notes, speeding up the withdrawal of old ones. This resolution was passed after Victor Ogene, representing Ogbaru Federal Constituency in Anambra State, sponsored a motion of urgent national importance during Thursday's plenary session.

The CBN's naira redesign policy, initiated in October 2022, aimed to curb inflation, reduce illicit funds, and promote digital transactions. However, its implementation has faced challenges, including cash scarcity and disruptions to economic activities. The House's directive seeks to address these issues and ensure a smoother transition to the new currency.

Directives:

Withdrawal of Old Notes: Gradual withdrawal of old naira notes from circulation.

New Notes Availability: Make new notes in N200, N500, and N1,000 denominations available.

Bank Transactions: Direct banks to transact with customers using new naira notes.

By implementing these measures, the CBN and commercial banks can alleviate the current cash scarcity and promote economic stability.

The Central Bank of Nigeria (CBN) introduced new N200, N500, and N1,000 notes in October 2022 and began circulating them in December of the same year. However, the bank's decision to withdraw the old notes without providing enough new ones caused significant hardship for Nigerians, leading to a prolonged cash crisis.

The crisis prompted litigation, and the Supreme Court ultimately set a deadline of December 31, 2024, after which the old notes would cease to be legal tender. Labour Party lawmakers recalled the challenges Nigerians faced during the naira redesign, criticizing the CBN's failure to circulate sufficient new notes, which made life extremely difficult for citizens.

Pointers:

Introduction of New Notes: CBN introduced new N200, N500, and N1,000 notes in October 2022.

Withdrawal of Old Notes: The bank's decision to withdraw old notes without adequate provision of new ones caused hardship and a cash crisis.

Supreme Court Deadline: December 31, 2024, is the deadline for old notes to cease being legal tender.

Lawmaker's Concerns: Labour Party lawmakers criticized the CBN's handling of the naira redesign, citing insufficient circulation of new notes.

Nigerians may face another chaotic situation come January 1, 2025, when the old N200, N500, and N1,000 notes will no longer be accepted. This prediction stems from the Central Bank of Nigeria's (CBN) handling of the naira redesign policy, which previously led to a cash crisis in February 2023. To avoid a repeat, the CBN should have started public awareness campaigns three months prior to the deadline, utilizing various channels such as jingles, TV and radio announcements, social media posts, flyers, and newspaper publications.

The CBN's current approach has raised concerns, as it continues to release old notes alongside new ones, rather than gradually withdrawing the old ones. This has led to uncertainty among citizens and businesses. For a smoother transition, the CBN can draw lessons from countries like India and Sweden, which have successfully implemented similar policies.

Recommendations for the CBN:

Gradual Withdrawal: Gradually withdraw old notes from circulation to avoid scarcity.

Public Awareness: Implement comprehensive public awareness campaigns to educate citizens on the new notes and digital alternatives.

Digital Infrastructure: Develop robust digital infrastructure to support fintech adoption and promote cashless transactions.

By implementing these measures, the CBN can mitigate the potential chaos and ensure a more seamless transition to the new currency.

The following resolutions were adopted by the House:

According to Victor Ogene, “Going by the Supreme Court's subsequent ruling and order, the N200, N500, and N1,000 notes shall cease to be legal tender, medium of exchange for goods and services in Nigeria, and shall also cease to be in circulation as from January 1, 2025.” He expressed concern that with only two months left before the deadline, the Central Bank of Nigeria (CBN) hasn't shown enough effort to inform and prepare Nigerians for this significant change.

In essence, Ogene is emphasizing the urgent need for the CBN to take action and ensure a smooth transition to the new currency. This includes increasing the circulation of redesigned notes and gradually withdrawing the old ones to avoid another chaotic situation like the one experienced in February 2023. The House of Representatives has also called on the CBN to complete the withdrawal of old notes before the January 1, 2025 deadline.

“Urge Central Bank of Nigeria (CBN) to issue more new N200, N500 and N1,000 notes and begin the gradual withdrawal of the old notes from circulation before the deadline of December 31, 2024.

“Urge the Central Bank of Nigeria to order commercial banks to forthwith stop cash payment to their customers with old N200, N500 and N1,000 notes but instead, engage in gradual mopping up of the old notes.

“Urge the Central Bank of Nigeria to kick- start awareness programmes for Nigerians to be aware and prepare for the deadline of December 31, 2024.”

The House has taken the next step by referring the motion to its Committee on Banking Regulations, where it will undergo further review and deliberation to shape the country's banking policies. This move indicates that the House is actively engaging with the issue, seeking expert input and thorough examination before making any legislative decisions. The Committee on Banking Regulations will now scrutinize the motion, potentially gather feedback from stakeholders, and refine it to ensure alignment with the nation's financial goals.