Business Hilights
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CBN’s idea of enforcing cashless policy with mutilated notes counterproductive—Survey

Since the beginning of cashless policy in Nigeria by the Central Bank of Nigeria (CBN) few years ago, there has been apparent end to the visibility of new lower naira notes including N200, N100, N50, N20, N10 and N5.

Investigations revealed that the apex bank is working on the understanding that the official none availability of the notes will spur subscription to cashless transactions in smaller businesses that dominate the informal sector.

However, an expert in cashless policy, Mr. Sani Mohammed told our correspondent that “Even if the CBN want to drive cashless policy, ending minting and circulation of lower naira notes will even compound the problem because uptakes of the policy in every part of the world usually start from the upper class who run businesses in millions”.

“The informal sector is usually the very last to join and even if they join, it will not be all of them at the same time.

According to Mohammed, “The CBN is totally wrong in thinking that if it stops new lower naira notes, the informal sector will embrace cashless policy and every market woman and trader will start using their phones to transfer money no matter how small”.

“The idea that when a buyer’s mutilated notes are rejected, he or she will be forced to do transfer is childish and cannot work in Nigeria for now.

“I don’t want to say that the CBN is not aware that the Nigerian economy is currently driven by the informal sector and they need good notes to do business. Issues of cashless economy is driven by network strength and awareness creation which I think they are not yet salutary for total end to circulation of new lower naira notes.

Apart from minting new notes and withdrawing mutilated ones through the commercial banks, a top management official of one of the commercial banks confided in our correspondent that the CBN created the problem of high number of mutilated lower naira notes when it raised the amount it charges commercial banks to clear or change them for new ones.

According to the banker, “I don’t think that any commercial bank can pay the new CBN rate in handling or exchanging boxes of dirty notes and that is the truth which the apex bank may not want anybody to know while the informal sector suffers the challenge”.

“Remember before, if you go to any bank with dirty notes, they will accept it in deposit but many banks won’t do that now to avoid the cost.

Business Hilights Intelligence Unit (BHIU) investigations show that since this year, there has been a rising confusion during transactions in lower naira notes due to presence of mutilated notes.

Currently, Nigerians are decrying the widespread circulation of mutilated naira notes in every market, saying the disagreements that usually trail issuance of change after business transaction now lead to the collapse of buying and selling as the scenario forces either buyers or sellers to terminate concluded transaction due to lack of change or rejection of badly mutilated change by any of the parties.

Further investigations by BHIU showed that many Nigerians have forced themselves to the reality of accepting and transacting business with dirty naira notes at a time the apex bank is going around in states preaching careful use of new naira notes that are not available.

A nursing mother revealed in an interview that “I tell you, they are appalling. As a nursing mother, I am always scared of touching those notes because it is very glaring that those naira notes, particularly the N100 are contaminated”.

Medical experts say touching of mutilated notes and putting anything in the mouth with unwashed hands can cause a health challenge due to bacteria or even virus infestation on mutilated notes. He said whereas new notes to some extend have anti-bacteria content, mutilated ones are carriers of germs and bacteria.

Another banker with one of the new generation banks confided in our correspondent that “Until the CBN resolves the issue with commercial banks, the scarcity of new lower naira notes will continue because banks cannot foot the new bill given by the CBN for return of bad notes”.

“It is very unfortunate that the CBN is not even looking at this idea because we have noticed that instead of resolving the issue, it is spending government money going to popular markets across the nation to preach how to use new naira notes which it has not given out. To me that is an embarrassment on the collective intelligence of millions of Nigerians in the informal sector.

Efforts to get reactions from the CBN on the scarcity of new lower notes and the unprecedented presence of mutilated notes failed.