President Muhammadu Buhari

Nigeria’s leader, President Muhammadu Buhari has said that more than three months after the introduction of the new naira swap policy in October 2022, under which the 200, 500 and 1,000 naira notes were re-designed, more than N600billion of the total money in circulation still domiciles outside the banking system.

The President, who made a national broadcast today, also disclosed that he has directed the Central Bank of Nigeria CBN to allow the old 200 naira notes, which initially ceased to be a legal tender effective February 10, 2023, in line with the extended deadline be allowed to circulate alongside the new 200, 500 and 1,000 notes till April 10, 2023 was to ease the cash crunch experienced by the citizens.

He further disclosed that the currency in circulation in 2015 when he assumed office was N1.4trillion, which rose to N3.23trillion as at October, 2022 out of which only N500billion was within the banking system while N2.7billion was permanently outside the system.

He however further disclosed that with the introduction of the new naira monetary policy, a total of N2.1 trillion out of the N2.7trillion banknotes previously held outside the banking system have been successfully retrieved, still leaving about N600billion outside the system.

“The need to restore the statutory ability of the CBN to keep a firm control over money in circulation. In 2015 when this administration commenced its first term, currency-in-circulation was only N1.4trillion. The proportion of currency outside banks grew from 78per cent in 2015 to 85per cent in 2022. As of October 2022, therefore, currency in circulation had risen to N3.23 trillion; out of which only N500 billion was within the banking system while N2.7 trillion remained permanently outside the system; thereby distorting the financial policy and efficient management of inflation.

“The huge volume of Bank Notes outside the banking system has proven to be practically unavailable for economic activities and by implication, retard the attainment of potential economic growth. Economic growth projections make it imperative for government to aim at expanding financial inclusion in the country by reducing the number of the unbanked population and given the prevailing security situation across the country, which keeps improving, it also becomes compelling for government to deepen its continuing support for security agencies to successfully combat banditry and ransom-taking in Nigeria.

“Notwithstanding the initial setbacks experienced, the evaluation and feedback mechanism set up has revealed that gains have emerged from the policy initiative. ​I have been reliably informed that since the commencement of this programme, about N2.1 trillion out of the banknotes previously held outside the banking system, had been successfully retrieved. This represents about 80per cent of such funds.

“In the short to medium and long terms, therefore, it is expected that there would be a strengthening of our macro- economic parameters, reduction of broad money supply leading to a deceleration of the velocity of money in the economy which should result in less pressures on domestic prices, lowering of inflation as a result of the accompanying decline in money supply that will slow the pace of inflation and collapse of Illegal economic activities, which would help to stem corruption and acquisition of money through illegal ways”, the President said.

On the re-introduction of the 200 naira notes, the President said it was in line with efforts of his administration to cushion the negative effects of the new policy, which were unintended, especially given the activities of some bank officials, who are conniving with some politicians to scuttle the policy.

While warning that the government through the CBN and the security agencies would not hesitate to bring such persons to weight the full weight of the law, he enjoined the citizens to take advantage of the various windows created by the CBN to deposit the remaining old 500 and 1,000 naira notes in their possession within the given time frame.

Buhari also said: “I am not unaware of the obstacles placed on the path of innocent Nigerians by unscrupulous officials in the banking industry, entrusted with the process of implementation of the new monetary policy. I am deeply pained and sincerely sympathise with you all, over these unintended outcomes.

“To stem this tide, I have directed the CBN to deploy all legitimate resources and legal means to ensure that our citizens are adequately educated on the policy; enjoy easy access to cash withdrawal through availability of appropriate amount of currency; and ability to make deposits. ​I have similarly directed that the CBN should intensify collaboration with anti-corruption agencies, so as to ensure that any institution or person(s) found to have impeded or sabotaged the implementation should be made to bear the full weight of the law.

“During the extended phase of the deadline for currency swap, I listened to invaluable pieces of advice from well- meaning citizens and institutions across the nation. ​I similarly consulted widely with representatives of the State Governors as well as the Council of State. Above all, as an administration that respects the rule of law, I have also noted that the subject matter is before the courts of our land and some pronouncements have been made.

“​To further ease the supply pressures particularly to our citizens, I have given approval to the CBN that the old N200 bank notes be released back into circulation and that it should also be allowed to circulate as legal tender with the new N200, N500, and N1000 banknotes for 60 days from February 10, 2023 to April 10 2023 when the old N200 notes cease to be legal tender.