Currency notes issued by the Central Bank of
Nigeria, CBN, in the denominations of N200,
N100, N50, N20, N10 and N5 are currently
not readily available on demand in banks in
the Lagos area. Even the currency notes in
denominations of N500 and N1000 given out
by the banks are not clean and do not have a
few new notes in the packs as has been the
practice in the past.
When one enters a banking hall and asks for
currency notes in denominations of N200,
N100 or N50, the usual answer is that the
bank has not seen such notes from the CBN
recently. One bank advises that one should
come on a Monday because that is when the
bank receives deposits having currency notes
of denominations of N200, N100 and N50
from churches.
In one instance, a bank was rationing N200
currency notes in lots of 5 per person. At
another bank, I was able to obtain ten units of
N200 currency notes which I subsequently had
to share with two other persons who needed
change for their customers. I recall that on the
last occasion that I obtained N100 currency
notes from a bank, I was given a pack of 100
units from which I retrieved about 60 units
which were presentable.
My experience shows that while the CBN is
withdrawing old currency notes from
circulation new currency notes are not being
issued as replacement. The cash-lite policy is
meant to encourage the use of electronic
means and cheques in financial transactions.
There are a number of platforms for making
payments by electronic means and it would
appear that each platform has it own
telecommunications service. The result is that
there are situations in which a bank branch is
unable to access a payment platform and the
person making the payment is advised to come
back the following day in order to obtain a
receipt of the transaction.
In the case of one particular payment
platform, it appears transactions are initiated
at the central offices of the banks and there is
a definite time-lag between when the sender
approaches a bank branch and when the
payment reaches the receiving bank. This leads
to a situation in which it is preferable to
withdraw cash from one bank and make a
payment directly into an account at another
bank.
The difficulties with our telecommunications
system centre on the disappearance of local
telephone services provided by Nigerian
Telecommunications Plc, NITEL. The cable
systems which NITEL had in place should be
the backbone of our data transmission.
However, even before NITEL went out of
business, parts of the underground cable
system linking the telephone exchanges in the
Lagos area had been vandalised and telephone
services lost in some neighbourhoods. The lack
of telephone lines would delay the deployment
of point-of-sale terminals in our local shops.
For example, it should be possible for one to
buy, say, N320 worth of medicines at a local
pharmacy and have the payment made by
electronic means.
However, the greater part of our transactions
are outside of banks and shops and for which
transactions currency notes of denominations
of N200, N100, N50, N20, N10 and N5 are
needed. For example A4 size photocopy is
readily available at N5 per page. Also, a
newspaper vendor would find it difficult selling
his consignment if most customers come along
with N500 currency notes to purchase a N150
newspaper.
Significant economic activities that are affected
by a lack of currency notes are the payment of
fares on public transportation, the purchase of
cooked food from food vendors and the
purchase of foodstuffs. The tendency would be
for transport fares to be rounded up to the
value of notes that are readily available and a
N120 fare may go up to N150 as N50 notes
are still available. Food vendors have always
adjusted the size of a food unit as the cost of
their inputs rise. They may now be able to
increase prices with smaller size increases in
food units.
The CBN has talked about the cost of printing
currency notes and of managing their
distribution. However, we should also talk
about the cost to individuals when the CBN
does not make currency notes available. As
indicated above, personal expenditure on food
and transportation will increase which will
eventually lead to increases in other goods and
services.
The suspicion is that all of these difficulties are
linked with the desire of the CBN to print
currency notes of N5, 000 denominations. If
the public is against this CBN proposal, is it
not because the N5,000 currency note would
pave the way for devaluation of the naira
against the US dollar? Is it not possible to run
the Nigerian economy without further
devaluation? The CBN should ease the burden
on the public and make currency notes in
denominations of N200, N100, N50, N20, N10
and N5 readily available.
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