By Chinwendu Obienyi
Currently, Nigerians are in anguish as naira notes (both old and new) have become a scarce commodity.
Even Point of Sale (PoS) operators are making more profit having raised charges for any transaction.
To withdraw N10,000, customers now pay N2,000 and pay N1,000 for N5,000. Furthermore, some business transactions worth millions and billions have been put on hold and “pending” while other online transactions have either been reversed or have not gotten to receiver.
This development is due to the fact that commercial banks across the country are lacking cash, and with Automated Teller Machines (ATMs) not dispensing enough cash, this is the reason for the surge in charges charged by PoS or Mobile Money Operators (MMOs) as well as the network glitches experienced.
Emefiele had on October 2022, announced moves to redesign the Naira in the variation of N200, N500 and N1,000. The CBN governor, who pointed out that the change was a sequel to the approval of President Muhammadu Buhari, said circulation of the new banknotes would commence on December 15, 2022.
He said the development was also aimed at checking the increasing ease and risk of currency counterfeiting evidenced by several security reports and the increased risk to financial stability as well as the worsening shortage of clean and fit currency, with the attendant negative perception of the CBN.
The CBN governor said there is significant hoarding of the naira notes by members of the public, with statistics showing that over 80 per cent of the currency in circulation was outside the vaults of the commercial banks.
He said that as of September 2022, a total of N3.2 trillion was in circulation, of which N2.73 trillion was outside the vaults of the banks, describing the development as unacceptable. Although the cessation of the old notes was meant to stop by January 31, 2023, the apex bank at the weekend, extended the deadline for the exchange of old naira notes for new ones from January 31 to February 10, 2023.
Describing President Muhammadu Buhari, as an incorruptible leader for approving the naira redesign programme, Emefiele said the aim of the CBN is mainly to make the nation’s monetary policy decisions more efficacious while adding that it is also supporting the efforts of the security agencies in combating banditry and ransom taking in Nigeria through redesigning program.
According to Emefiele, the currency in circulation in 2015 was just N1.4 trillion but as of October 2022, the currency in circulation in Nigeria has surged to N3.23 trillion out of which only N500 billion was within the vaults of the banks and about N2.7 trillion still held in people’s homes.
“Ordinarily when CBN releases currency in circulation, it is meant to be used and after effluxion of time, it returns to the CBN thereby keeping the volume of currency in circulation under the firm control of the CBN. So far and since the commencement of this program, we have collected about N1.9 trillion, leaving us with about N900 billion,” he said.
He noted that to achieve effective distribution of the new currency, the CBN embarked on several initiatives while adding that amid reports of breaches by some bank branches, the apex bank will partner with the EFCC and ICPC, by sending their staff to all CBN and DMB branches nationwide to join in monitoring the implementation of these guidelines to ensure compliance with the laid down guidelines.
“We are happy that so far, the exercise has achieved a success rate of over 75 per cent of the N2.7 trillion held outside the banking system. Nigerians in the rural areas, villages, the aged and vulnerable have had the opportunity to swap their old notes; leveraging the Agent Naira Swap initiative as well as the CBN Senior staff nationwide sensitisation team exercise.
“Aside from those holding illicit/ stolen Naira in their homes for speculative purposes, we do aim to give all Nigerians that have naira legitimately earned and trapped, the opportunity to deposit their legitimately trapped monies at the CBN for exchange. Based on the foregoing, we sought and obtained the approval of the President for the following; A 10-day extension of the deadline from January 31, 2023 to February 10, 2023 to allow collection of old notes legitimately held by Nigerians and a 7-day grace period beginning on February 10 -17, 2023 in compliance with sections 20 (3) and 22 of the CBN’s act allowing Nigerians to deposit their old notes at the CBN after the February deadline for the cessation of the notes as legal tender,” the CBN governor said.
Although, the Central Bank of Nigeria (CBN) has insisted that the banks have adequate money and even accused banks of paying money to their priority customers, leaving the vulnerable to lament, Nigerians are not satisfied.
It has often been said that even if withdrawals are difficult, mobile bank transfers at least can help.
However, this has not gone well despite the efforts of the apex bank’s cashless policy plan.
For instance, Ogechi Mbachu, a trader at Orile Iganmu axis, said, “I had felt that I was in sync with what the CBN’s cashless policy stood for even though it has been hell. But the glitches experienced so far has made me have a rethink. If we really want this policy to work, then the FG, CBN, telecom providers and banks have to work together. As at now, I am currently owing millions to the person who supplied my goods to me at Balogun market because the money I sent to his account has not been received for like days now.”
Also speaking to Daily Sun, Mr Hamza Ibrahim, a dealer in clothing materials, said, “Right now I am very upset with my customer who is a tailor. Up until weeks, he had told me that he transferred money to my account and I am yet to get it which is still making me upset.”
When Daily Sun tried calling some banks as to why most of their applications were no longer working efficiently before the scarcity of the naira notes began, they never picked up.
Technological analysts who spoke to Daily Sun via emails and telephone chats, said technical challenges, such as inadequate technology infrastructure and weak public telecom connectivity, contributed to the unreliability and scalability of these applications and channels.
According to them, poor network robustness and overloaded systems are also major issues, hence leading to increased demand which has continued to put a strain on the banks’ technology infrastructure and systems.
The Chief Executive Officer, Jidaw Systems Limited, Jide Awe, said that with the nation beginning its new cashless policy, the significant number of bank transfers which are being reversed and sometimes transferred money that doesn’t reach the receiver is becoming worrisome.
Awe stated that the increased reliance on cashless transactions has led to a rise in failures and issues in banking applications and channels for several reasons.
“With more people using banking applications and channels, the likelihood of technical faults and issues increases, and the demand for digital financial services puts pressure on the personnel who support these systems.
“A shortage of trained IT personnel in some banks can make it challenging to address technical issues promptly. This, combined with a rise in demands for support, can bog down call centers and tech teams, leading to longer waiting times and reduced reliability.
“The increased failures and issues in banking applications and channels suggest a need for a more robust and well-developed regulatory framework for digital financial services, with greater oversight regarding service delivery and performance.
“It’s important to acknowledge the advantages and benefits of digital financial services, such as increased convenience and accessibility, resulting in a more efficient and smart economy. The promotion of point-of-sales machines and digital bank transfers is therefore understandable. However, the increased failures and issues in banking applications and channels pose a challenge for sustainable cashless growth. Those who are more comfortable with traditional banking practices and less familiar with digital financial services may find it difficult to adopt or trust these services,”Awe said.
According to him, financial institutions must address these challenges posed by the rapidly evolving industry strategically to keep up with the increased demand, increase reliability, and plan ahead.
“This requires the right investments in technology, infrastructure, strategy, and regulation. Financial institutions should invest in robust and up-to-date technology and systems, train their staff to handle increased demand, insist on top-notch service from vendors handling critical services, and continuously monitor and improve their own services to meet the needs of their customers,” he explained.
For his part, a stockbroker who craved anonymity because of the sensitivity of the matter said, “As rightly noted, failed e-payment transactions is a perennial problem in the Nigerian financial sector.
Whatever is the technical or structural deficiencies, Nigerians deserve efficient e-payment channels. As Nigeria has carried out several reforms to reposition its banking sector, an important component of the reforms cannot be left to suffer. Also, the economy is being threatened by this persisting cash scarcity issue, it is left for the NIBSS to see how it can address the failed online transaction issues”.
