Abuja, Sept 3,2017 An cconomic expert, Prof. Uche Uwaleke, has called on the Central Bank of Nigeria (CBN) to remove old and dirty notes from circulation.
Uwaleke, an Associate Professor of Banking at the Nasarawa State University, said such notes were causing constant malfunctioning of Automated Teller Machines (ATMs), especially during pressure periods.
He said this in an interview with the News Agency of Nigeria (NAN) on Sunday in Abuja.
NAN had reported in a national survey on challenges faced by bank customers in cash withdrawal at festive periods, that hundreds of Nigerians complained of machine failure, slowness and long queues.
These happened at a time when people were eager to withdraw their savings to celebrate, many of them left frustrated due to the challenges.
Many of the banks in some states do not have enough ATM machines to cater to the needs of the people and the ones available break down when they are put on constant use.
To proffer solution to these, Uwaleke urged the CBN to ensure that banks did not use worn-out notes in the ATMs.
“Abroad, the ATMs are used to dispense new ‘mint’ notes, so when you use dirty notes, the machine finds it difficult to recognise it or even dispense it.
“The money in the ATM is what these banks get from the CBN and you will agree with me that most notes in circulation today are dirty and old.
“As a customer, when you complain about the condition of the bank notes, the banks will just tell you that is what they have.
“So CBN should try and ensure that dirty notes are withdrawn from circulation and replaced with new ones, especially during festive periods,” he said.
Uwaleke said also that the banks should be made to provide more ATMs around the country because no matter how good the machines were, they would be ineffective when put under too much pressure.
“Banks should be made to provide more ATMs. ATMs are bound to break down when it is put under pressure. It’s just like using your generator 24 hours non-stop.
“When more ATMs are made available, they will help to reduce the long queues normally experienced during festive periods and also serve to ease pressure on a particular ATM so that it doesn’t get overworked.
“Banks should also make sure that there is staff readily available at any point in time to attend to issues arising from the breakdown of these machines.
“I know some banks dedicate workers during these periods and even on weekends but not all of them. Banks should be encouraged to do more,” he said.
Uwaleke also advised the CBN to continue to sensitise the public to cashless policy and use of electronic payment methods.
“We must not buy all our things using cash and that is why we have long queues. The idea of using POS should be encouraged.
“CBN should continue to enlighten people on the importance of using POS during these period so that even if you are to withdraw cash, it’s just little that you need.
“Let the bulk of your purchase be done electronically. If all these are done, we won’t be having much of these complaints again,” he said.

Naira scarcity: CBN fails to print small denominations in 1 year

By Racheal Ishaya
News Agency of Nigeria

The Central Bank of Nigeria (CBN) has not printed the small naira denominations for about a year, causing the scarcity of the notes in the economy.

Sources at the CBN hinted that for a year now, the apex bank did not award contract for the printing of the notes such as N5, N10, N20 and N50 usually done abroad.

NAN gathered that the recently printed notes in circulation, N200, N500 and N1,000 , were produced by the Nigeria Security Printing and Minting plc (NSPM).

NSPM produces currency notes and coins for the CBN and a wide range of security documents for the federal, state and local government establishments, commercial banks and blue chip companies.

According to the NSPM website, the company has the ability to print over 40 million notes weekly.

However, the sources said the high cost of printing banknotes was the reason the apex bank did not give contracts for their production.

“The cost of printing N50 is almost the same as N1,000. Printing small denominations costs more than the value and with the present economic situation, it makes sense to print higher notes which can be done locally by NSPM.

A worker at the First Bank Plc, told NAN that throughout the 2016 festive seasons, there were hardly smaller currency notes to give to customers.

“We usually request for cash from the CBN through our Cash Management Centre, but recently, we have not been able to get mints of N100 and below.

“We had N50 at one point but it wasn’t in the quantity we are used to getting.

“We have been telling our customers who call to request for mints that the smallest currencies they can get is N200,” the worker ,who also preferred anonymity, said.

Mr Jude Ndukwe, a Political Economist, said the implication of the situation was that prices of goods were likely to increase since there were no smaller currencies in circulation.

“A bread seller is likely to increase the cost of bread from N350 to N400 simply because he does not want to deal with the difficult task of getting change.

“The same goes to a bus conductor and so forth. This act alone is enough to add to the hardship of the average Nigerians.

“N10, N50 may not mean anything to some, but it means a whole lot to millions of Nigerians living in poverty.

So the government should do something about this,” he said.

But the CBN Acting Director, Corporate Communications, Mr Isaac Okorafor, denied the allegation that the apex bank had not contracted the printing of smaller denomination currencies since 2015.

“There is no scarcity of smaller denomination in the market. People are complaining because we did not make provision for mints to be supplied in smaller denomination during the festive season.

“You see people are fond of abusing these denominations by spraying them to be stepped on during weddings and other ceremonies.

“The abuse is even worse during the festive season, so we decided to make scarce the denominations.

But it’s not that we have not been printing them.

“ Yes we haven’t printed abroad but we also print locally which we have been doing,” he said. When asked the last time Nigeria actually had these smaller denominations printed, he promised to get the details.

He reiterated that it was still a crime to hawk or sell mint notes in the country, saying there was still an enforcement committee comprising CBN and the security agencies to check the menace and arrest culprits.

Okorafor said that the CBN was collaborating with the police to ensure that the Nigerian currencies were not abused.

Read more at: http://www.vanguardngr.com/2016/12/naira-scarcity-cbn-fails-to-print-small-denominations-in-1-year/

Bridging inter-bank, parallel market rate: The CBN dilemma

Posted by AYO OLUOKUN on DECEMBER 28, 2016

Racheal Ishaya, News Agency of Nigeria (NAN) Analysis

2016 has been a tough year for the CBN in regulating the foreign exchange market, especially the Bureau de Change, parallel market segment of the financial sector, which experts believe is full of speculators and round-trippers.

The ban on the 41 items by the Federal Government in 2015 has made the demand for foreign currencies at the black market and BDCs even higher in 2016.

The items include rice, cement, margarine, palm kernel, poultry products, meat, fish, wooden doors, steel nails.

According to the CBN, the measure is to encourage local production of the items and simultaneously conserve the nation’s depleting foreign reserves.

This measure has forced several legitimate business operators that import some of the banned items to patronise the segments.

When demand for foreign currencies is more than supply, it creates a widening gap within the inter-bank rate, Bureau de Change and black market.

Financial experts, however, believe that such gap makes it tempting and possible for speculators to buy at the cheaper rate through the inter-bank window and sell at the more expensive rate through the black market.

In recent times, there seems to be too thin a line between the Bureau de Change and black market operators because often times, BDC operators double their rates to further create uncertainty in the foreign exchange market.
When the dollar was going for an average of N197, it was selling at these segment for about N300 and when the new flexible exchange rate was introduced, the price went up to an average of N480 to a dollar.

However, prices at the inter bank rate have remained stable with dollar trading at an average of N307 to a dollar since the introduction of the flexible exchange rate in June, 2016.

Recently, the CBN Governor, Mr Godwin Emefiele, in a move to regulate prices at the BDCs, directed banks to sell Diaspora remittances to BDCs. They were to get 50,000 dollars every week at the rate of N390 and sell at N400.

To ensure compliance, the Department of State Services embarked on an operation to arrest BDC operators selling above the stipulated N400 and cases of this happened in Lagos, PortHacourt, Kano and Kaduna.

However, market operators and financial experts expressed the view that the operation only succeeded in putting fears in the system as many operators went underground.

As sales of foreign currencies turned underground, with many of them refusing to sell at the fixed price of N400, scarcity of Forex became more pronounced and threw the market into confusion and uncertainties.

In all nooks and crannies of major cities like Zone 4 in Abuja, the Murtala Muhammed International Airport in Lagos, Hamdala Hotel in Kaduna and WAPPA Market in Kano, black market operators had a field day, selling a dollar at N480 under ground while the market remained shrouded in secrecy for some time.

But the Minister of Finance, Mrs Kemi Adeosun, raised the hope of addressing the irregularities when she said that the CBN would try to eliminate the gap between the official and parallel market exchange rates against the dollar.

“The CBN is working on the elimination of arbitrage in the market,” she said.

Adeosun advised the CBN to revisit its stance on the foreign exchange restrictions placed on the 41 items in the country in order to reduce demand pressure in the parallel market.

The CBN spokesperson, Mr Isaac Okorafor, said the bank was working towards “ensuring that the Forex market operates as effectively as we would envisage”.

However, a CBN official, who preferred anonymity, told the News Agency of Nigeria (NAN) that the apex bank could not eliminate the parallel market as it had no control over the segment.

“CBN does not print dollar and it is the shortage in circulation that is making the price to sky rocket in the parallel market; so it will be difficult for CBN to do anything about that segment.

“It’s a shame because the black market is something that is done in hidden in other countries, yet in Nigeria you find unlicensed people selling foreign currencies on the street, under the trees and even in the banks.

“The BDCs that should know better, are doing the same. They collect licence from us to get dollars at an affordable rate, but instead of setting up an appropriate establishment, they prefer to sell under the tree too,” the source said.

The President, Association of Bureau De Change Operators in Nigeria, Alhaji Aminu Gwadabe, said eliminating the black market was possible if the CBN strengthened the BDCs to meet Forex demand at the retail end of the market.

He said that the commercial bank’s refusal to fund the segment with Diaspora remittance as directed by the CBN had negatively affected the market as customers were forced to look for alternative funding from black market operators.

Although the CBN governor says the parallel market is irrelevant as it accounts for an insignificant percentage of the foreign exchange market, observers in the finance sector are of the opinion that nevertheless bridging the gap is important to the nation’s economy.

Therefore, economic experts are expressing the view that the black market is important to an average Nigerian because that is where they access foreign currencies to travel abroad on tourism and for small business owners to restock their shops.

Consequently, it is believed that many small businesses died in 2016 because their operators depended on price of dollar at the parallel market. (NAN)