The Mutilated Naira Notes & the Central Bank of Nigeria

Nigerians are beginning to get worried about the filthy and tattered note especially the ₦100 denomination in circulation. More worrisome is the fact that it appears nothing is been done to stop widespread circulation of the mutilated notes, and so it seems.

Naira
Centenary ₦100 Note
Naira
Mutilated Centenary ₦100 Note
The naira notes, no doubt can also be equated as an image making instrument especially when foreigners come in contact with it. The currency of any nation is as good as the country in question. So, how should a foreign national perceive the nation called Nigeria looking at the naira notes, especially the ₦100 note denomination in circulation today? What does it portray about Nigeria?

Some have argued that as a nation we also need to deal with currency abuse as Nigerians handled naira notes carelessly. While others felt the ₦100 naira denomination in particular, spread faster due to it’s high velocity of circulation. Health experts have also warned of health risks posed by filthy notes to the populace. So, what should be the role of the apex bank, i.e., the CBN in withdrawing this mutilated cello-taped ₦100 note?

CBN
Central Bank of Nigeria (CBN)
The worst part of it is that, the commercial banks rejects them when you mixed them with other notes when trying to make deposits. The gas station also rejects. Worst still, is when the bus conductors gives the passengers as change, you won’t imagine the drama, all in the name of rejecting filthy naira notes.
Is it true that banks hoard the new notes? Is it true that the CBN charges for the total amount of money taken for exchange? Should Nigerians be taught how to better handle the naira notes? Who takes the blame for the cello-taped naira notes in circulation?

Reasons Behind Mutilated Naira Notes in Circulation

  • Rough handling of the Naira Notes:

As this concerns all of us, as much as we talk about the economy going cashless, i.e., online transactions, we still have to handle the naira notes. The president of the National Association of Nigerian Traders, Ken Ukaoha, was speaking on Raypower current affairs program, “FACTFILE”. 

President National Association of Nigerian traders
President, National Association of Nigerian Traders, Ken Ukaoha
He stated that, it is not only in Nigeria that currency notes are roughly handled. 
 
“I think this has to do with essentially developing countries. It is the trading constituency that are guilty of this, because these are the people who are handling naira every time due to daily transactions. Also, there has not been enough education from the elites, government, central bank of Nigeria, national orientation agency, the banks themselves saddled with the responsibility of currency handling” He confirmed. 

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  • High Cost of Production of New Naira Notes:

 

The president of the national association of Nigerian traders recommends that the CBN or the research institutes in Nigeria should go in to research on how to clean up naira notes, in order to mitigate the effects of the cost of production.

The regulation agencies had not been stable in their policies. The cashless policy should have reduce the volume of naira in circulation. The traders decided to pocket their money to avoid numerous bank charges and keep using the money, that is why this mutilated notes are still in the market place.

Trading constituency handles naira every time due to daily transactions
“How many traders are using the POS? Why are there not using it? It is because of the charges. The CBN should interfere in the reduction of the numerous commercial banks’ charges, so that the Nigerian traders would be carried along.” The president said.
To activate the cashless policy nationwide, the network should be reliable, i.e., all ATMs should always be active.

 

Bank's customer
Customers dispensing cash from the ATM

 

  • Quality of Naira Notes:
As money is passed from hand to hand, it should not easily deteriorate as a result of wear and tear. The Naira is not complying to that. The central bank of Nigeria should improve the quality of naira notes.

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Extinction of some Denomination of Naira Notes

It is a big challenge for the nation. Even, the #100 notes appeared to be heading in to extinction and of course, this has economic implication. The economic implication is:
  • The Purchasing Power Declines:
If the central bank does not replace this mutilated currency note, therefore goods would not be valued at the initial rate.

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Total Amount of Money Taken for Exchange

The former managing director of the citizen bank, Chika Mbonu said that the CBN has been charging for the lower denominations or the polymer naira notes, such as the ₦50, ₦20 and ₦10 notes to sort them out.

 

Former Managing Director, Citizen Bank
Former Managing Director of Citizen Bank, Chika Mbonu
“Initially, it used to be ₦12,000 per box. A box has ₦10,000 notes. However, the CBN had reduced the charges. In January, it was reduced to ₦1000 per box and that rate was applied till March 28th. Then afterwards, the new rates of ₦2000 was applied. Therefore, a box of ₦50 denomination containing ₦500,000 notes would be charged at the rate of ₦2000, likewise a box of ₦20 denomination containing ₦200,000.” He confirmed.

 

Nigerian Polymer Notes; ₦50, ₦20 and ₦10
Mr Chika also said, the reduction was done with the intention of encouraging the commercial banks to bring their old notes to the central bank of Nigeria (CBN) in exchange for new notes.
Moreover, Mr Mbonu said he is not aware of any bank’s policy in hoarding new notes officially.
However, Nigerians should get their purse or wallet to prevent squeezing and rough handling of money, i.e., Nigerians should take pride in the naira notes. A currency of a country is it’s national symbol.

This is the cleanest 100 Naira note I’ve laid my hands on this July

Smile at it for goodluck 😁 pic.twitter.com/LNi62jOWTp

— Uche Onwuemeli (@UchennaNG) July 2, 2018

Thanks to the the former managing director of the citizen bank, Chika Mbonu and the president of the national association of Nigerian traders, Ken Ukaoha. 

 

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Produced by Abiola Aberuagba @ Raypower Radio Network 100.5 FM

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