COVID-19: CBN records reduction in volume of FX on 2020

The Central Bank of Nigeria (CBN) said it recorded a significant reduction in the volume and cost of foreign exchange procurement in 2020.

CBN said a total of $1.83 billion was procured over the period, representing a decline of $2.12 billion or 53.67 per cent compared to the $3.95 billion procured in 2019.

This was largely occasioned by the COVID-19 pandemic which has ravaged economies of the world.

According to the annual report by the apex bank’s Currency Operations Department (COD) posted on its website, the CBN also slashed its expenditure on currency printing from N75.52 billion in 2019 to N58.61 billion in 2020.

CBN explained that this was used to fund Bureaux De Change (BDC) operations, payment of estacode and Personal Travel Allowances (PTA) to Ministries, Departments and Agencies (MDAs), adding that receipt and authentication of foreign currency deposits by Deposit Money Banks (DMBs) reduced significantly due to the downturn in global trade in 2020.

This represented a decrease of N16.91 billion or 28.84 per cent compared to the preceding year, while currency printing gulped N64.04 billion in 2018.

According to the report, total stock of currency (issuable and non-issuable) in the vaults of the CBN stood at 2.75 billion as at December 2020 compared to 2.64 billion pieces in 2019, indicating an increase of 105.73 million pieces or 4 per cent.

In the period under review, total issuable notes (newly printed notes and Counted Audited Clean notes) were 592.94 million pieces, compared with 726.43 million pieces in 2019, representing a decrease of 133.49 million pieces or 18.38 per cent.

The central bank said it generated the sum of N6.50 billion as total income from currency management activities in 2020, compared with N13.24 billion in the preceding year, representing a decrease of N6.74 billion or 50.92 per cent.

The bank explained that the income generated was largely, from penal charges on unsorted banknotes deposited by Deposit Money Bank (DMBs) and charges for authentication of foreign currency deposits with the central bank.

The CBN, however, incurred a total of N67.21 billion as expenses on currency operations in 2020, representing a decrease of N17.96 billion or 21.08 per cent, less than N 85.18 billion in 2019.

The apex bank added that despite the limitations occasioned by the outbreak of the COVID-19 pandemic and its impact in 2020, the bank nonetheless, concluded upgrade of the Cash Activity Reporting Portal (CARP) for transmission of currency management data from the financial industry to the Nigeria Inter-Bank Settlement System (NIBSS).

It also completed the development of the Mint tracking system application, needs assessment on the infrastructure, user sensitisation, test run at five branches and end-to-end system tests with a view to instituting the pilot launch in 2021.

The CBN also commenced establishment of the currency lab for banknote quality assessment, authentication and independent investigations as well as to adjudicate cases of suspected counterfeit banknotes.

It also registered an additional Cash-in-Transit (CIT) company which brought the total to nine CIT companies, to further deepen the private sector participation in CIT services among others.