CBN Naira Policy That Brought Hardship to Nigerians Failed to Achieve Aim as 93% of Currency is Now Outside the Bank | #NwokeukwuMascot


Central Bank's Naira Redesign Policy Falls Short: 93% of Currency Now Outside Banks | #NwokeukwuMascot

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In 2022, Nigeria's financial landscape was shaken when the Central Bank of Nigeria (CBN), led by then-Governor Godwin Emefiele, announced an ambitious plan to redesign and reintroduce new versions of the N200, N500, and N1000 banknotes. This policy aimed to address concerns about the large volume of naira notes circulating outside the banking system, setting a deadline for the old notes' validity to January 31, 2023.

The announcement triggered a heated national debate, as the public and stakeholders scrutinized the policy's potential impact and execution. Emefiele justified the decision by highlighting the urgent need to curb the naira's rampant circulation outside the formal banking sector, which posed significant economic and security risks.

However, over a year later, an investigation by SaharaReporters has revealed that the CBN's naira redesign policy, which reportedly cost over N74 billion, has largely failed to achieve its intended goals. Point of Sale (PoS) machine vendors across the country have voiced their frustrations, citing severe cash shortages that hinder their operations.

Data analysis from January to May 2024 paints a bleak picture of the policy's effectiveness:

- January 2024: Currency in circulation stood at 3.65 million naira notes, with 3.28 million (89%) outside the banking system.

- February 2024: Circulation increased to 3.69 million notes, with 3.41 million (92%) outside banks.

- March 2024: Circulation reached 3.86 million notes, with 3.62 million (93%) outside banks.

- April 2024: Circulation hit 3.92 million notes, with 3.60 million (93%) outside banks.

- May 2024: Circulation was 3.96 million notes, with 3.7 million (93.4%) outside the banking system.

For context, in October 2022, just before the policy was announced, the currency in circulation was 3.2 million notes, with 2.8 million (84%) outside the banks. By November 2022, these figures had slightly declined to 3.1 million in circulation, with 2.6 million (83%) outside the banking system.

Over the 18 months following the policy's introduction, the proportion of currency outside commercial banks' vaults has increased by 9.4 percentage points, from 84% in October 2022 to 93.4% in May 2024. This significant rise highlights the policy's failure to reintegrate the naira into the formal banking sector, leaving the country grappling with the same issues it sought to resolve.

The CBN's naira redesign policy has thus not only strained the nation's financial infrastructure but also exacerbated cash flow problems, leaving Nigerians questioning the efficacy of such high-stakes monetary interventions.


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