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Old naira notes: CBN insists on Jan 31 deadline, raises interest rate to 17.5%

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.Reps summon bank operators, Emefiele over scarcity of new notes  

.Again, Senate asks for July 31st date

.Increase in interest rate ‘ll lead to less money in circulation –Olowookere

.Tasks economic managers on proactiveness

17.5 % interest rate: Olowookere tasks economic managers on proactive ness 

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COMFORT EKELEME, Business Editor  and Adekunle Adesuji, Abuja

The Central Bank of Nigeria, CBN has insisted that the January 31, 2023 deadline for the validity of the old N200, N500 and N1,000 notes remains.

Also, the apex bank has raised the Monetary Policy Rate (MPR), which measures interest rate from 16.5% to 17.5 percent to tame inflation.

The CBN Governor, Mr. Godwin Emefiele announced this after the apex bank’s Monetary Policy Committee (MPC) meeting in Abuja on Tuesday.

The MPC raised the MPR by 100 basis point to 17.5% and kept the asymmetric corridor at +100/-700 basis points around the MPR.

The MPC also retained Cash Reserve Ratio (CRR) by 32.5% while liquidity ratio is kept at 30%.

Emefiele said the MPC “members welcome the recent deceleration of the year-on-year headline inflation, noting that the persistence in policy rate hike over the last few meetings of the committee have started to yield the expected decline in inflation.”

He said the committee considered perennial scarcity of Premium Motor Spirit known as petrol, the 2023 general election, continuous rise in energy prices, exchange rate pressure as well as continuous rise in insecurity.

He said committee members noted that the naira redesign has huge moderating factors to price development on cash.

Announcing the committee’s decision, Emefiele said, “MPC was of the view that although inflation rate moderated marginally in December, the economy remained confronted with the risk of high inflation with adverse consequences on the general standards of living.

“Committee, therefore, decided to sustain the current stance of policy at this point in time to further rein in inflation aggressively.

“MPC voted to raise the MPR to 17.5%, retain the asymmetric at +100/-700 basis points around the corridor.”

No Deadline Shift For Old Naira Notes

He said its January 31, 2023 deadline for the validity of the old N200, N500 and N1,000 notes remains sacrosact.

He said there is no reason for the nation’s currency in circulation to rise from N1.4 trillion to N3.2 trillion in seven years, saying that some persons are hoarding the naira and embracing currency speculation.

“I must say here that unfortunately, I don’t have good news for those who feel that we should shift the deadline. My apologies.

“The reason is because just like the President has said more than two occasions and even to people privately, that for us, 90 days, in fact, we feel it is 100 days, that it is enough for anyone who has money or the old currency to deposit it in the bank. And we took every measure to ensure all the banks remain open to receive all old currencies.

“100 days we believe is more than adequate. We called on the banks, not only are we requesting you to extend your banking hours so that you can receive old currencies, but we are also asking you to keep your doors open on Saturdays.
“Ladies and gentlemen, the banks did not even have any reasons to even keep their banking halls open on Saturdays neither did they see the kind of rush that they anticipated.

“We do not see any reason to begin to talk about a shift because people could not deposit their old monies into their banks.”

Emefiele also said he recently met with the Nigeria Governors’ Forum and Governors Inuwa Yahaya (Gombe) and Mai Mala Buni (Yobe) and he told them that there is no going back on the January 31 deadline.
He said the CBN has 1.4 million super agents nationwide to collect old naira notes in exchange for new notes in riverine and upland areas, saying “money is going down and is circulating to the lower rung of the community”.

“We have 1.4 million points of our super agents; those agents are going to be available to conduct cash exchanges. The super agents are like kiosks, shops in your community, whether it is a riverine or upland area, they are there, selling sweets, selling kola nuts but they have been appointed as agents that will do cash exchange and cash swap for you. This, we have put in place,” he said.

The bank chief further stressed that CBN agents are all over the country including areas around Sambisa in Borno State.

“I’ll give a few examples: We have some information and videos about our staff and agents how they are doing cash swaps in our communities. In areas like Baga, Monguno, Rann on the Lake Chad Basin, in Banki, Kirawa, Gwoza on the borders of Cameroon, Ngoshe, Bama, Chibok, Damboa, Ngala, Izge…all these are areas around the Sambisa. Our agents and our staff are all there conducting cash swap and exchanges of old to new currencies,” he said.

Emefiele also expressed hope that before the deadline, all the “noise” about scarcity of new notes would have subsided.

The CBN on October 26, 2022 had announced its plan to redesign the three banknotes. President Muhammadu Buhari subsequently unveiled the redesigned N200, N500 and N1,000 notes on November 23, 2022, while the apex bank fixed January 31 deadline for the validity of the old notes.

The CBN also pegged its weekly cash withdrawal limits to N500,000 for individuals and N5m for corporate firms.

There have been concerns from many Nigerians over the slow spread of the three new naira notes as the January 31 2023 deadline approaches but the apex bank has insisted that the date stands.

The CBN also recently directed commercial banks to halt over-the-counter payment of the new notes and load their Automated Teller Machines (ATMs) with the redesigned naira notes to boost circulation.

The apex bank also launched a cash swap programme nationwide to enable those in the unbanked areas to exchange their old notes for new notes before the deadline.

However, the House of Representatives, the Senate and the Nigeria Governors’ Forum have asked the CBN to extend the date to enable more Nigerians get the new notes.

Meanwhile, the House of Representatives has summoned bank operators and the Governor of Central Bank of Nigeria (CBN), Mr Godwin Emefiele, on the scarcity of the new naira notes.

The News Agency of Nigeria (NAN) reports that the bank operators are to appear on Wednesday, while the CBN governor will appear on Thursday.

This was sequel to the adoption of a motion of urgent public importance by Rep. Sanda Soli (APC-Katsina) at the plenary in Abuja on Tuesday.

In his motion, Soli said that all over the world, currencies were being ‘phased out’ and not ‘forced out’.

He said: ”I am of the view that our currencies are being forced out and there is the need for some reviews and sensitisation by CBN and non-bank promoters.”

The lawmaker called for review of the cashless policy, adding that CBN should ensure price stability.

Although Soli said that the cashless policy was in tandem with global best practices, he, however, added that most banks in Nigeria did not have what it takes to ensure that such was achieved.

He decried what he called the CBN’s refusal to listen to the cry of Nigerians for the extension of the Jan. 31 deadline for the deposit of the old naira notes, stating that this might have negative effect on the economy.

Speaker of the House of Representatives, Rep Femi Gbajabiamila, said that as good as the policy was, the modus operandi and the timing were the problem.

Gbajabiamila said that the currency should be phased out gradually, such that Nigerians would use the old and new naira together.

“There is nothing wrong in reviewing a policy; banks are claiming they don’t have the new naira notes, while CBN is also claiming the banks have them,” he said.

The speaker said that banks’ managing directors should be invited to brief the leadership or the ad-hoc committee to find out whether the money was available or they are being hoarded by banks.

The House, however, called for a six-month extension of the deadline to make the new notes available and that President Muhammadu Buhari should intervene on the debacle in the interest of Nigerians.

The House also set up an ad-hoc committee, led by Rep. Alhassan Ado-Doguwa, to meet with bank operators on Wednesday on Jan. 31 deadline on the old currency.

Similarly, the Senate has, again, asked the Central Bank of Nigeria (CBN) to immediately extend the deadline for the withdrawal of old naira notes from circulation to July 31, 2023.

The apex bank had, on December 15, commenced circulating newly redesigned N200, N500 and N1000 notes and set January 31st, 2023 as deadline for the withdrawal of old notes.

The Red Chamber had in December 2022 directed the CBN to extend the deadline but the resolution was shunned by the apex bank.

This has caused panic in many parts of the country as the deadline draws nearer, with thousands, especially those in rural areas storming banks to exchange the old notes with the new ones.

Senators, during debate on a motion sponsored by Senator Sadiq Suleiman Umar (APC, Kwara) at Tuesday’s plenary, said the new notes were not enough in circulation,  warning that if the deadline was not extended, there would be chaos in many parts of the country.
The lawmakers also expressed dismay that the CBN had insisted on the January 31 deadline despite huge public outcries.

The Senate, therefore, asked the CBN to  extend the deadline by six months to allow Nigerians especially those in rural areas more time to change their old notes.
The Red Chamber also urged the CBN to compel commercial banks  to open  naira exchange windows for those without bank accounts to exchange their old naira notes.

Senate President Ahmad Lawan, assured that the National  Assembly leadership would ensure that the resolution is implemented by the CBN.
In a related development, the Managing Director/ Chief Economist at Analysts Service and Resources Limited, Dr. Afolabi Olowookere has taken a cursory look at the development in the nation’s economy and said the Central Bank of Nigeria (CBN) is playing it’s role towards taming inflation.

According to him, if other managers of the economy are effectively playing their roles, Nigeria may not have had this high inflation rate.

Against projections by some experts, the Monetary Policy Committee (MPC) CBN increased the monetary policy rate by 100 basis points to 17.5 per cent.

This was contained in a communiqué issued at the end of the first MPC meeting in 2023, in Abuja on Tuesday

Dr.Olowooker who spoke to Daily Champion in a telephone interview on the development  said that there is need for the nation to have long plan to avoid a situation of having no choice than be raising inflation rate.

He said, “We need to be long term planners so that we don’t find ourselves in a situation whereby we have no choice.

“Even the CBN will not like to be raising interest rate forever if the economy is what it is supposed to be. Generally,the Monetary authority has done what it knows to do inorder to address inflation. It is their own tool towards addressing the problem. But there are other aspects of the economy beyond CBN.

“If everyone is doing their own part, we may not have had this high inflation and CBN will not be raising rates,” he said.

Speaking further, Dr. Olowookere noted that the rise in interest rate will lead to less money in circulation, adding that businesses that wants to borrow will have to pay hugger interest.

He said that may have some negative impact on the economy.

The CBN Governor, Godwin Emefiele who read the communiqué said that the previous increases had yielded results, with the slight drop in the inflation rate recorded in December 2022.

CBN however, held all other parameters constant.

While the Assymetric Corridor of +100/-700 basis points around the MPR was retained, the Liquidity Ratio of 30 per cent and the Cash Reserve Ratio (CRR) of 32.5 per cent were also retained.

The MPR had witnessed four consecutive increases, from 11.5 per cent in early 2022 to 16.5 in November 2022.

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