Following the Naira Scarcity in Nigeria, GoldenNewsNg has compiled Latest CBN News On Naira Notes Today 8th April 2023.
Naira crisis: Cash circulation low, NLC tells CBN
The Central Bank of Nigeria has been given a two-week ultimatum by the organized labour to provide adequate cash, failing which its offices will be picketed, as per a warning issued by the labour. Adewale Adeyanju, Vice–President of the Nigeria Labour Congress, said that the congress is keeping an eye on the cash supply to commercial banks by the CBN and that the current cash flow is not meeting expectations. However, he also acknowledged that the situation has improved compared to the past few weeks. The scarcity of naira notes has exacerbated the country‘s hardship, and a few weeks ago, the NLC announced its intention to picket CBN state offices nationwide.
Banks’ Deposit With CBN Drops By 95.82% On Naira Redesign
Over the course of the past year, an additional credit of N4.56 trillion was created, with N300 billion added in the last month alone. Alongside this, there was an increase of N6.95 trillion in additional deposits. However, due to a cash crunch caused by the Federal Government’s approved naira redesign, commercial banks’ deposits with the Central Bank of Nigeria (CBN) have dropped by 95.82% in less than two months.
Data from the CBN’s website shows that banks’ deposits with their regulator (CBN) have decreased from N112.24 billion on February 10, 2023, to N4.69 billion as of April 4, 2023. This drop is due to the poorly executed Naira redesign policy, which has caused a cash crunch across Nigeria.
The Standing Deposit Facility (SDF) is one of the instruments of liquidity management and serves as an avenue to invest surplus funds overnight and to square up whenever the system is short at the end of each business day, according to the CBN.
The public had until the deadline of January 31 (extended to February 10 and 17) to return the old currency to commercial banks. The CBN also limited over-the-counter cash withdrawal to N100,000 and N500,000 per week for individual and corporate organisations, respectively. This limit was later increased to N500,000 and N5,000,000 respectively. Although new Naira notes were printed, they were not circulated effectively, causing panic among citizens as the old notes were declared to no longer be legal tender.
According to analysts at FSDH Research, the poorly executed Naira redesign policy has led to a cash crunch across Nigeria. The sub-optimal performance of payment platforms and rationing of cash withdrawal has caused many individuals to lose trust in several banks. This has had a profound impact on their confidence regarding cash deposits.
Muda Yusuf, the chief executive officer of The Centre for the Promotion of Private Enterprise (CPPE), said that the cash crisis experienced by bank customers had a profound impact on their confidence regarding cash deposits. He added that it would take some time for this confidence to be restored.
Taiwo Oyedele, head of tax and corporate advisory services at PwC Nigeria, noted that the CBN’s poorly implemented currency redesign and cashless economy has inadvertently unbanked the bank. He added that addressing the problem would require the CBN to consistently inject sufficient cash into the system to restore confidence and get people to have faith in banking again.
CBN Makes Adjustments as Naira Exchanges at All-Time Low Against US Dollar
According to Report, there are signs that the Central Bank of Nigeria (CBN) may have devalued the official exchange rate of the Naira against the US dollar. The report states that since the beginning of the second quarter of 2023 (April 1, 2023), the Naira has been trading at an all-time low of above N463 to dollar, which is higher than the exchange rate band of N461 to a dollar recorded in recent months.
Despite the absence of an official confirmation, it is anticipated that the Nigerian government may unify the country’s exchange rate in response to mounting pressure from international lenders such as the World Bank and the International Monetary Fund (IMF).
Old and New Notes: The Endless Naira Scarcity
The Supreme Court of Nigeria had recently ordered the use of old N1000 and N500 notes as legal tender until December 31, 2023. Following this, the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, has officially instructed commercial banks to comply with the court’s decision. He has also stated that the old N200, N500, and N1,000 notes will be accepted as legal tender until the end of the year.
With this new development, it is important to know how people have been coping with the naira scarcity and when they predict this issue will be resolved. Share your thoughts and experiences in the comment section.
Effects of naira scarcity in Nigeria
The scarcity of naira, the official currency of Nigeria, can have a significant impact on the country’s economy and its citizens. Some of the effects of naira scarcity in Nigeria include:
- Inflation: The scarcity of naira can lead to an increase in prices of goods and services, leading to inflation. This can result in a decrease in purchasing power and a decrease in the standard of living for the citizens.
- Unemployment: Naira scarcity can lead to a decrease in economic activity and investment, which can result in job losses and increased unemployment.
- Currency devaluation: When there is a scarcity of naira, the value of the currency can decrease, making it less valuable in international markets. This can lead to a decrease in foreign investment and an increase in the cost of imported goods.
- Black market activities: When the official exchange rate is not favorable, people may turn to the black market to exchange their money. This can lead to an increase in illegal activities and corruption.
Overall, naira scarcity can have a negative impact on the economy and the citizens of Nigeria, leading to inflation, unemployment, currency devaluation, and illegal activities.
CBN Set to Close Millions of Bank Accounts in GTB, Access, Zenith, First Bank, and Others- See Reasons
The Central Bank of Nigeria (CBN) has recently made an announcement to address the increasing incidents of fraud in the financial sector. As part of their efforts to combat this problem, the CBN has planned to close millions of bank accounts that are not linked to a Bank Verification Number (BVN).
