Cash at Hand, Cash at Bank?

Nigeria has redesigned its currency notes but the big question is how the government will recall the old notes, as cash is still king despite efforts by the Central Bank of Nigeria and fintech companies.

Written by Hillary Essien

Dec 1, 2022

Photography from Twitter

On October 26 2022, the Central Bank of Nigeria announced plans to recall ₦200, ₦500 and ₦1,000 banknotes from circulation and replace them with redesigned notes.

Godwin Emefiele, governor of the CBN, disclosed that President Muhammadu Buhari approved the exercise, and that the apex bank will begin the distribution of the new notes by December 15 2022. He also said the notes will be available for withdrawal by the public from commercial banks.

The old notes will be used for transactions until January 31, after which only new notes will be legally recognized and used for transactions. Banks have been instructed to keep their deposit centres open from Monday to Saturday for collections. No constraints have been placed on how much individuals or corporate entities can deposit, and bank customers will not be charged for cash returned/paid into their accounts during the implementation.

On November 23 2022, President Muhammadu Buhari revealed the redesigned naira notes before the federal executive council meeting at the state house, Abuja. The naira had changed from the multicoloured notes in circulation to distinct red, blue and green tones similar to the 10, 20, and 50 polymer naira notes.

Countries recall, redesign and reissue their legal tender for multiple reasons. These include improving the security of banknotes, mitigating counterfeiting, preserving the collective national heritage, controlling currency in circulation, and reducing the overall cost of currency management. The CBN expects the currency recall to encourage a cashless economy, stave-off cash hoarding, and lower kidnapping rates and terrorism as there will be no notes in circulation for ransom payments.

At a press briefing last month, Emefiele had disclosed that 85 per cent of the naira in circulation were outside the vaults of commercial banks.

‘At the end of September 2022, available data at the CBN indicate that ₦2.73 trillion out of the ₦3.23 trillion currency in circulation, was outside the vaults of Commercial Banks across the country; and supposedly held by the public,’ he said.

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About the Author

Hillary Essien

was a Senior Associate Editor at The Republic.

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Cash at Hand, Cash at Bank?