Naira Scarcity, Latest Central Bank of Nigeria, CBN News Today 5th May 2023

This article has Latest Central Bank of Nigeria (CBN) News Today, 5th May 2023, most recent and relevant news, developments, and insights from the CBN and its stakeholders.

From policy updates and regulatory changes to market trends and industry analysis, Fox Nigeria has compiled comprehensive and important news as well as events affecting the Nigerian financial system.

CBN's Naira Redesign Policy Causes Loan Repayment Issues for Nigerians

According to a survey by Successory Nigeria Ltd, Nigerian banks experienced high loan default due to a shortage of cash caused by the Central Bank of Nigeria's redesign policy of the Naira. The survey analyzed responses from top bank staff and found that loan approvals peaked between January and March 2023, but customers were unable to repay due to the scarcity of cash. This resulted in a sharp increase in loan defaults and overdue payments, which affected the banks' earnings and increased operating costs.

The CBN's introduction of new N1,000, N500, and N200 notes and withdrawal of the old notes caused a chronic cash crunch, leading to losses for businesses such as the Poultry Association of Nigeria (PAN) and frustration for banks trying to recover loans.

The survey revealed that financial institutions increased loan approvals and disbursements during the naira crunch, but faced challenges with rising corporate running costs due to inflation. The survey also highlighted the greed of some Nigerians who profited from citizens during the shortage of cash, and concluded that the policy was a deliberate punishment that made people poorer. The survey suggests that future policies and economic decisions should consider the impact on people's livelihoods to avoid further negative effects on the economy.

In March, the Central Bank of Nigeria (CBN) injected N701.4 billion back into circulation, resulting in a significant increase in currency in circulation to N1.68 trillion. This represents a month-on-month (MoM) rise of 71.4% from N982.1 billion in February. According to CBN figures, this injection of cash helped reverse the downward trend that had seen currency in circulation fall to a 14-year low in February. The increase in cash supply was due to a Supreme Court ruling ordering the CBN to continue using old banknotes in circulation until December 31, following a lawsuit filed by some governors against the implementation of the naira redesign policy.

CBN Speaks on Plans for New Naira Notes as Banks, Nigerians Complain of Scarcity

CBN Clarifies: No Plans to Phase Out Redesigned Naira Notes, Despite Reports of Scarcity

The Central Bank of Nigeria (CBN) has issued a statement to refute reports that it plans to withdraw the newly redesigned N200, N500, and N1,000 notes from circulation. The apex bank's clarification comes amid rising concerns about the apparent disappearance of the new notes, which have led to speculation and complaints from bank customers.

Acting director of corporate communications, Isa Abdulmumim, stressed that the speculation was unfounded and a strategy employed by certain groups to incite fear among the public. He also reiterated that both the old and new currency notes were being used concurrently and that the CBN was regularly receiving a substantial amount of updated banknotes from the Nigerian Security Printing and Minting Company (NSPMC) Limited.

Why CBN adds 7,552 BVN on its watchlist, to close lots of Bank accounts in UBA and other Banks

The Central Bank of Nigeria (CBN) has recently announced that they have added 7,552 account holders to their Bank Verification Number (BVN) watchlist due to fraudulent activities. This marks a 25% increase from the previous number of 6,045 as of June 2022.

The Director of the Payment Systems Management Department of the apex bank, Musa Jimoh, made this announcement on Tuesday, May 2, 2023, in Calabar.

Jimoh, who was represented by Adefuye Adeyemi, the assistant director in the department, stated that individuals investigated for various fraud risks could be excluded from the financial system.

Additionally, the use of BVN is becoming increasingly important in developing credit profiles for depositors and improving access to credit, as reported by Punch.

During the same event, Godwin Emefiele, the CBN Governor, was represented by the Director of Monetary Policy, Dr. Hassan Mahmud. Emefiele disclosed that the total number of BVN enrollments had risen to 57.43 million as of March 31, 2023.

He emphasized the importance of BVN in the bank's Know Your Customer (KYC) requirements and how it has been instrumental in tracking, identifying, and investigating fraudulent financial transactions.

Despite the benefits of the BVN system, Emefiele pointed out the challenges in implementing digital payment systems due to weak social infrastructure, such as unstable telecommunication networks and power infrastructure.

He also expressed concern about the nefarious activities of unlicensed entities in the payment value chain, exploiting access to information technology to engage in regulated activities without the appropriate licenses and authorization.

Emefiele added that the activities of fraudsters continue to threaten the resilience of payment platforms and impact public confidence.

It is clear that there is a need for tighter regulations to prevent fraudulent activities in the banking sector, particularly given the increase in the number of individuals on the BVN watch list for fraudulent activities.

CBN tells Nigerians to spend new naira notes without fear

The Central Bank of Nigeria (CBN) has reacted to reports that it plans to remove the newly redesigned N200, N500, and N1,000 notes from circulation.

The clarification follows rising concerns around the seeming disappearance of newly redesigned notes which led to the speculation.

Isa Abdulmumim, CBN's acting director of corporate communications, issued a statement refuting the false claim that the bank is considering withdrawing the newly redesigned N1000, N500, and N200 banknotes from circulation.

The statement reads:

“We would like to emphasise that the speculation is baseless and a strategy employed by certain groups to incite fear among the public.”
“It should be noted that both the old and new currency notes are being used concurrently, and the bank is regularly receiving a substantial amount of the updated banknotes from the Nigerian Security Printing and Minting Company (NSPMC) Limited.”

Abdulmumim also stressed CBN's commitment to supply the approved indent for the smooth running of the economy.

He, therefore, urged members of the public to disregard any report suggesting a phase-out of the redesigned currency, Punch reports.

Continuing, AbdulMumim said:

“For the avoidance of doubt, the redesigned and old notes will continue to be accepted as legal tender.
“They will circulate side-by-side for transactions ahead of the December 31, 2023 deadline, when the old N1000, N500 and N200 banknotes will eventually be phased out. Please be guided accordingly.”

CBN says Nigerians are keeping N1.4trn at home; scarcity of new notes continue

Currency outside the banking system increased Month-on-Month by 66% to N1.4 trillion in March from N843 billion in February.

The increase shows the impact of the Supreme Court Order that returned the old N200, N500, and N1,000 notes into circulation until December 31, 2023.

The now botched implementation of the naira redesign policy of the CBN sucked in about N1.81 trillion from outside the bank and crashed currency in circulation to N1.4 trillion in January 2023.

Nigerians returned over close to N2 trillion to the banks in January

Vanguard reports that CBN data for January revealed that Nigerians deposited about N1.81 trillion into the banking system in response to the initial January deadline for depositing the old currency notes.

Due to the then CBN deadline, currency outside banks dropped month on month by 70% to N788.9 billion in January this year from N2.6 trillion in December 2022.

Currency in circulation had dropped month-on-month by 54% to N1.38 trillion in January this year from N3 trillion recorded in December 2022 amid a scarcity of naira notes.

CBN stated that part of the reason for the naira redesign policy was to mop up excess cash outside the banking system and rein inflation.

Ex-NNPC boss sues CBN, EFCC, others to court over N4.5bn

The erstwhile former Group Managing Director (GMD) of the Nigerian National Petroleum Company Limited (NNPCL), Andrew Yakubu, has sued the Central Bank of Nigeria (CBN) and the Economic and Financial Crimes Commission (EFCC) over their refusal to release the sum of $9.8 million which he says belongs to him.

Andrew sued the apex bank, the anti-corruption body, and a commercial bank for not refunding the money.

In a suit, FHC/ABJ/CS/231/2023, brought before Justice Inyang Ekwo of the Federal High Court in Abuja, Yakubu is seeking an order asking the CBN, EFCC, and the commercial bank to release his monies immediately to him because of the court judgment.

The suit marked: FHC/ABJ/CS/231/2023 is before Justice Inyang Ekwo of the Federal High Court Abuja.

In the suit filed on March 8, the former NNPCL boss asks the court if the EFCC should still have seized funds in its custody after a judgment in his favor on March 31, 2022.

The EFCC in a notice of preliminary objection, the EFCC asked the court to dismiss the suit.

The anti-graft agency said the suit was an abuse of the court process and that the court lacked the jurisdiction to hear the claim.

It informed the court that two other appeals arising from the case are pending at the Supreme Court between the Federal Government and Yakubu and between Yakubu and FG.

The EFCC noted that an appeal regarding the judgment is before the court of appeal in Abuja.

The Punch reports that the EFCC said that while it is for the Supreme Court to fix a date for the hearing, Yakubu brought an application asking the Apex Court to direct it to deposit the monies in a bank account managed by the Supreme Court's registry.

The EFCC asked the court to throw out Yakubu's application and uphold its earlier objection in the interest of justice.

At the resumed hearing on April 28, 2023, Yakubu's counsel A. A Usman told the court they had counter-affidavits from the defendants and required time to respond.

EFCC seizes Yakubu's money, labels them money laundering
Idaye Imbu, counsel to Guarantee Trust Bank, also told the court that a motion to regularise their process had been filed.

The court granted GTB's prayers without the other parties' objections, and the matter was adjourned to May 18, 2023.

The EFCC raided Yakubu's house in 2017 and confiscated about $ 772,800 and 74,000.

The anti-corruption agency subsequently arraigned Yakubu on March 16, 2017, on a six-count charge bordering on money laundering.

Justice Ahmed Mohammed discharged and acquitted Yakubu of the money laundering charge.