On Monday, March 13, 2023, the Central Bank of Nigeria (CBN) finally decided to obey the Supreme Court, when it issued a directive to the effect that old Naira notes are now legal tender and should co-exist with the new until December 31.
“In compliance with the established tradition of obedience to court orders and sustenance of the rule of law…Deposit Money Banks operating in Nigeria have been directed to comply with the Supreme Court ruling of March 3, 2023.
“Accordingly, the CBN met with the Bankers’ Committee and has directed that the old N200, N500 and N1000 banknotes remain legal tender alongside the redesigned banknotes till December 31, 2023,” the apex bank’s Director of Corporate Communications, Isa AbdulMumin, announced in a press statement.
The CBN’s directive arrives amid a severe cash crunch and shortage in Nigeria, Africa’s biggest economy, after deadlines were hastily imposed on the use of old banknotes by President Buhari and CBN Governor Emefiele, following a currency redesign policy.
The deadlines on use of old banknotes have unleashed suffering on the land and businesses are still counting their losses, because not enough new banknotes were printed for circulation.
Markets across Nigeria have also assumed the status of ghost towns and many businesses have been crippled.
Does the CBN directive now mean that the suffering has ended and the queues at banks would disappear?
Not so fast.
You see, what the CBN won’t tell you is that a chunk of the old N500 and N1000 banknotes had been destroyed…by them of course.
So, there’s never going to be sufficient old Naira notes to alleviate the suffering of the masses and ensure liquidity.
On February 11, QUEST TIMES exclusively reported that the CBN could not implement the advisory from the National Council of State on old Naira notes, because the CBN had of course destroyed these old notes.
“QUEST TIMES can authoritatively report that the old notes are already being destroyed.
“Unknown to members of the Council of State who were at yesterday’s meeting, the option of recirculating the old notes which some of the State Governors, Senate President, Speaker of the House and other former leaders suggested at the meeting to the President, was no longer very viable because the old notes are already being dispensed with.
“Inside sources at the CBN confirmed that at least 75% of old Naira notes returned by Nigerians since the new notes have been released, have already been destroyed as at yesterday when the Council met,” our story had read.
We had also exclusively reported, long before the cash shortages became noticeable and hit every home in Nigeria hard, that the Nigeria Security Printing and Minting Plc (NSPMC), the company that prints banknotes for the CBN, doesn’t have the capacity to meet up with demand in the short term.
“The capacity of the MINT to print new Naira notes is less than one trillion Naira but the amount of Naira notes to be replaced is much more than that. This is the challenge,” a highly placed source had told QUEST TIMES at the time.
MINT only printed a quarter of the cash required to ‘wet the Nigerian market’–a recipe for disaster and chaos any day.
So, what now?
MINT would of course continue printing more money to meet demand but don’t expect the long queues and the bedlam at banks to disappear overnight.
There’s just not enough old Naira notes for the banks to dispense to customers, and that’s the plain truth no one else may tell you.
The good news is that you can now spend the old Naira notes you’ve been trying to deposit at the banks without much success. ‘Mama Put’, traders, commercial bus drivers etc, now accept the old Naira notes.
It’s just that the horse has long bolted from the stable and the pain may take awhile to ease.