★As Reps Adjourn Sitting To Wednesday, 28 To Pass 2023 Budget
The Central Bank of Nigeria (CBN), on Thursday disclosed that it ordered for 500 million pieces of the newly redesigned Naira notes to be printed by the Nigeria Security and Minting Company limited for onward circulation to deposit money banks and other financial institutions in the country.
The Deputy Governor of the CBN in charge of Financial System Stability, Mrs. Aisha Ahmad who represented the governor, Godwin Emefiele stated this while briefing lawmakers in the House of Representatives on the possible Impacts of the new monetary policies of redesigning the higher denominations of the Naira and the new cash withdrawal limits set by the apex bank.
Mrs Ahmad also debunked speculations that the new cash withdrawal limit is aimed at stifling opposition parties in favour of the ruling party ahead of the 2023 general electios, saying that the apex bank does not embark on policy initiatives based on political considerations.
“We have to make it very clear that the CBN is an independent institution. Our decisions are taken base on research, data and it is the work of many teams working together across the different directorates. At no time, do we make decisions based on any political consideration and I think it’s important that I state that,” she said.
On the new notes, she said: “We ordered 500 million pieces of currency from the Mint. That is what has been ordered. They asked how much did we order from the Mint.”
Mrs Ahmad also addressed the peculiarity of the Nigerian currency policy situation compared to what obtains in the UK in terms of timing, as pointed out by a lawmaker during the question and answer session, adding that the apex bank remains open to constructive engagements on issues surrounding the policy.
“Your first comment is well noted and well taken. We remain open to continue to engage and do better. When the House convenes these hearings, it is the responsibility of us to show up and we look forward to you doing so.
“You talked about comparing our situation with what just happened with the Bank of England. I think when we are making the comparison, consider all the factors. Global best practices says you need to redesign your currency every five to eight years. We have not done that in two decades. So the Bank of England routinely does this. The amount of cash outside circulation in the UK is much lower than what we have today. We have about 80 outside circulation. So our issue here is very dire in that respect and very urgent.
“In terms of the timing, it is neither here nor there. I think we felt that 90 days based on what we know of official access points, availability of points for people to go and pay in their funds and the fact that we actually released the new notes earlier than planned, we felt that we were in a good position to conclude at the timelines that we gave. We are open to feedback and people’s views on that,” she added.
On the cash withdrawal limits and the stated benefits of going cashless to ensure more protection for the economy, the apex bank said they outweigh any perceived negatives in terms of cash availability and financial inclusivity drive of the bank.
“I thought it was important Mr. Speaker, to give some justifications as to why this limits are required now and why it is time for us to go cashless nationwide. The data available to us shows that 94 percent of all cash transactions falls below the N500,000 limit and this includes in areas in the country that are not part of the cashless policy. 82 percent of corporate transactions also are below this limit. What does this mean? It means that 94 percent of all individual transactions will not be affected by this fees that we have talked about. I have seen some misconceptions about the fees, that we are charging the fees on the entire amount that they want to be withdrawn, no. The fees are to be charged on any withdrawal above the limit. For example, if you are withdrawing N550,000, the fee will be on the N50,000.
“We also looked at transactions for agents. So, transactions by Nigerians that go to the agent’s location and transactions by the agent’s themselves, the average cash transactions of agents is N2,184,000 which is clearly within the current limit. The average transaction per individual that walks up to an agent is about N18,000. What the policy is trying to do is to encourage more people to come into the formal payment system because of the numerous benefits that accrue. It means opening up our rural areas, the underserved areas to economic opportunity, to payment opportunity and connecting them into the formal system.
“During the COVID-19 period, we saw the negative impact of physical cash. No one could go anywhere. We couldn’t go to the banks. People couldn’t leave their homes. It was the electronic banking system that protected and served those below the poverty lines that had their livelihood at risk.
“It appears that the leadership agrees with the general benefit of cashless. Now what we should be looking at is ensuring that these policies do not affect well meaning hard working Nigerians in a negative way. So then transactions that are above the threshold, you would agree with me, are not by people that do not have electronic access. The transactions above those thresholds where they are not covered are those that willfully decide for whatever reason not to use electronic channels. So our focus is to make sure you have access for alternatives. We have already talked about the fact that cash is actually fraught with problems and challenges. So if you decide that you want to take a large amount and expose it to the physical risk there must be a reason. We cannot make a decision that would benefit the entire populace based on just a few that decide they would,” she explained.
The House Speaker, Femi Gbajabiamila in his opening remarks reminded colleagues of the reasons the CBN was summoned for explanations, urging colleagues to pay attention and ask questions accordingly.
“We had invited the CBN to brief the House in accordance to the extant laws of the federation on the new monetary policies as it affect cash policy and I believe the new redesign. We have with us today after the considered explanation of the CBN governor who is unable to be here because he is out of the country at the moment attending to his health and he had graciously asked that he be represented by the deputy governor who is in charge of Financial System Stability in the CBN and she is here with her team. We will take her briefing and ask questions if necessary,” he said.
Gbajabiamila, after listening to the apex bank’s deputy governor said the House having taken her brief would sit and deliberate with a view to taking a resolution to that effect and communicate same to Nigerians.
Gbajabiamila also announced that the House would be reconvening on Wednesday to consider and pass the 2023 Appropriation Bill, having failed to do same before the Christmas break.
The House as at Thursday, December 22 was yet to consider and pass the 2023 Finance Bill which will set the tone for the implementation of the budget.
