CBN Gives Reasons for Naira Scarcity, Blames Hoarding, Others

After fierce resistance, protracted heat on Nigerians and  aggressive reactions leading to protest, authorities of the Central Bank of Nigeria (CBN) on Thursday, admitted that the ongoing problems associated with the Naira redesign and cash withdrawal policy were not anticipated.

A Deputy Governor of the apex bank, Folashodun Shonubi, made the admission at the 22nd Fellowship Conferment Lecture and Ceremony organised by the Nigerian Society of Engineers (NSE) in Abuja.

While delivering a lecture titled, “The intricacies of the naira redesign and its benefit to Nigerians,” Shonubi explained that contrary to public opinion, the redesign plan which has been in the works for two years was not to punish anyone but to improve the economy.

According to him, some extraneous behaviour which were not envisaged took over the stage to worsen situation beyond control.

The Deputy Governor who stated that challenges faced were caused by a new line of business created by indigenous Nigerians, revealed that numerous benefits have been achieved which include retrieval of N2 trillion to the banking system.

He said, “As you know, Nigerians are very ingenious and we created a whole new line of business for people that we never envisaged.

“An aspect of that is queuing, where you sell your position on the queue for money. Night crawling, where you wait till night, collect numerous cards from your friends and family and go to an ATM and empty them using different cards and then take the cash to sell.

“So, it’s been a bit stressful to be honest because we did not anticipate this kind of behaviour.”

Shonubi, however, noted that the challenges would be short-lived as the apex bank will do everything within its reach to salvage the current situation.

“I believe that sooner rather than later, the stress ongoing in relation to money would reduce,” he assured.

In this same vein, the Central Bank of Nigeria (CBN) has attributed hoarding of the new Naira notes as being responsible for its scarcity, and not that small quantity was issued out.

The CBN Director, Consumer Protection, Mrs Rashidat Mongunu, said this on Thursday while monitoring microfinance banks in Offa, Offa Local Government Area of Kwara.

The monitoring team first paid homage to the Olofa of Offa, Oba Mufutau Gbadamosi, before heading to Stockcorp Microfinance and Ibolo Microfinance banks.

She said the redesigned notes were already made available by the CBN, but it is those hoarding it that make it scarce and people now throng banks to collect money almost at the same time.

“Because of the attitude of some Nigerians in hoarding the money, even those that don’t really need the money are rushing to get it and keep, not to spend.

“Currency management is a cycle but we have not allowed the cycle to mature, because when you issue out currency as CBN, what we expect is that the Naira issued out will come back into the banking system again.

“But now, everybody collecting the Naira is hoarding it. So, no matter how much Naira we put out there, if we continue with this attitude and the CBN issue from now till December, it will still not be enough.

“And you know that in every economy, you must have a proper accountability on the indent.

“You just don’t issue out Naira for the fun of it, you issue the amount that is commensurate with the level of activity you have in that country,” Mongunu said.

The CBN director added that the situation could only get better when people started spending money already hoarded because enough money was already in circulation.

“There is Naira out there.  I have been in Kwara for over three weeks and we have been allocating money daily.

“The truth is that if the currency is circulating the way it should and not being hoarded, we shouldn’t have a problem.

“The only thing is for us to change our attitude because it can only get better when people start spending the money they have hoarded,” Mongunu stressed.

She added that the CBN was already engaging traditional rulers to sensitise their people to have a positive attitude and be confident that the Naira redesign policy was not to punish anyone but to better the economy.

Responding, the traditional ruler said the extension of the legality of the old notes from Jan. 31 to Feb. 10 was responsible for the problems people are facing currently.

He said people had already deposited all that they have on Jan. 30 in anticipation to start spending the new notes on Feb. 1, hoping that it will be available, but it’s not so.

Oba Gbadamosi however advised that if the CBN want the policy to be received with open arms and successful, it should make the new notes available for people to spend.