As a fallout of the cash swap policy of the Central Bank of Nigeria (CBN), the currency outside banks fell by 69.3 percent to N788.92 billion in January 2023, a unique threshold in the apex bank’s financial inclusion drive, the latest money and credit data from the CBN have shown.

The latest figure is the lowest currency outside banks in recent times, because in the last quarter of 2022, the total currency outside banks was N2.56 trillion in December 2022, N2.64 trillion in November 2022, and N2.83 trillion in October 2022. Throughout 2022, currency outside banks averaged N2.73 trillion.

On the other hand, the currency in circulation as of January 2023 was N1.38 trillion, representing a decline of 54 percent when compared to N3.012 trillion in December 2022, and N3.16 trillion in November 2022, as well as N3.29 trillion in October 2022. From January to December 2022, currency in circulation averaged N3.24 trillion, according to CBN data.

Further analysis of the CBN data showed that whereas the currency outside banks amounted to 85 percent of the total currency in circulation from October 2022 to December 2022, the share of currency outside banks in January 2023, relative to the total currency in circulation fell sharply to 57 percent, explaining the dire straits Nigerians currently face in search of new notes as naira scarcity bites harder across major cities.

The spontaneous reactions by some Nigerians have results in attacks on banks’ ATMs, branches leading to deaths, and destruction of properties across major southern cities.

It should be noted that the CBN, towards the end of 2022, initiated a naira redesign policy with the initial objectives, according to Bismarck Rewane, chief executive officer of Financial Derivatives Limited (FDC), being to curb inflation, as well as to reduce terrorism and counterfeiting. The objectives were later reviewed to include the prevention of vote buying during the 2023 general elections and to raise the level of financial inclusion in the country.

“Naira cash crunch hangs over Nigerians like the sword of Damocles! Squeezed consumers, confused suppliers, bewildered investors and helpless policy makers”, Rewane said.

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Rewane added that based on the available information, the CBN printed approximately N400 billion of new notes, indicating that the naira cash short fall was about 90 percent of the total cash in circulation, a development that explains the long queues in banking halls and ATM points.

He added that, Nigeria, being the hub of ECOWAS, 70 percent of transactions within the nation’s informal sector, that is, by small businesses mostly unregistered, are settled by cash, and a reduction in the velocity of money, which is the rate money is exchanged, will lower productivity in the country which is already plagued by high interest and unemployment rates.

And unless the Supreme Court rules otherwise today, businesses will continue to reject the old N500 and N1000 notes, anchoring their rejection on the CBN directive, which itself was based on the directive of President Muhamadu Buhari, who through a national broadcast, extended the validity of only N200 to April 10, 2023.

Meanwhile, the initial news making the rounds that the validity of old N500 and N1000 was extended has been denied by the authority of the CBN.

Through a statement approved by Osita Nwanisobi, director, corporate communications and Edward Adamu, deputy director, corporate strategy, both from CBN, the apex court reiterated its earlier position that the old N500 and N1000 notes are no longer legal tender in the country.

“The attention of the Central Bank of Nigeria has bee drawn to a fake press release purported too have emanated from the Bank to the effect that President Muhammadu Buhari has approved the reissuance and release of old N500 and N1000 notes as legal tender in the country.

“For the avoidance of doubt, the Central Bank of Nigeria reiterates that in line with the directives of Mr. President, only N200 old notes are to be reissued and to circulate concurrently with the new notes. Members of the public are therefore advised to ignore this fake news,” CBN said.