President Muhammad Buhari was clearly appropriately thrilled when central bank governor Godwin Emephile presented the newly designed banknotes to members of the Federal Executive Council (FEC) last week.
The president listed the benefits of the redesigned N1000, N500, and N200 denominations. New security features make counterfeiting more difficult, possible better monetary policy goals, enrich the collective memory of a nation’s heritage, potentially control over currencies in circulation, and hoard large denominations and the cost of currency management.
Happy hour for me was the moment when it was mentioned that the redesigned bills were locally produced and printed. This banknote was produced by the Security Printing and Minting Authority of Nigeria (NSPM). Two issues are important here. At a forum, it was stated that only 4 of her 54 countries in Africa print their own currency.
Nigeria is proud to be one of the four, showing that Nigeria still has some redeeming features. Secondly, this is happening as many Nigerian doctors, paramedics and instructors leave the country in search of greener pastures abroad. is. A desire to move abroad.
It also turned out that our banknotes were redesigned almost 20 years ago, even though best practice is that banknotes should be redesigned every 5 to 8 years. That may be part of the reason there are so many dirty and torn banknotes in circulation.
New ones that may have been printed within the last 19 years are controlled by the bank’s management. Bank managers sell to agents, agencies sell them to people who want to show them off, and these notes are stylishly sprayed on the faces and bodies of celebrities at birthdays and weddings. Chiefs’ ceremonies and other nonsensical social events.
When they spray and the banknotes fall to the floor, another sprayer in their turn to show off that these neat currency notes that are piled up on the floor are marching. However, it continues endlessly with various ceremonies every week.
For Nigerians, it is a pleasure to have newly redesigned notebooks, but they are not new for long and do not give us much pleasure for long. Very dirty, as if it had gone through a machine. Most of them are torn as if they had gone through a broken crusher. A few days ago, I was at a bank where the cashier was struggling with torn and dirty banknotes.
First, I had to separate the torn and dirty. She put on a nasal mask, even though no one else at the bank was wearing one. increase. The only difference is that doctors and even civilians know how to manage it.
The girl took a stack of notes and slammed them on her desk. She had to take out her mask and stick it to her nose as the dust started to ooze towards me. She didn’t want to swallow the dust. She then sorted out the ones that were physically torn and the ones that were mostly torn, and put the usable ones into a counting machine.
Often they would stick to the machine and she would peel them cleanly off the machine with her painted fingernails. rice field. It was not an uncommon experience. This is standard for most banks. If you don’t want them, you can go home and starve them.
CBN Governor is a strong advocate for a cashless economy. Beneficial. It prevents you from being robbed physically. You may not be able to move around with large amounts of cash for transactions that are as easy as punching four numbers. Note, however, that many ongoing financial crimes cannot be stopped. Some robbers now use point-of-sale machines (POS) to get around. Kidnappers also have them for ransom payment. For the cashless economy to work seamlessly, it needs infrastructure.
Ukanahung, my municipality in Akwa Ibom province, has 87 villages. There are no banks, no ATM galleries. Accessing a bank or ATM requires at least an hour of travel.
Among the 87 villages, there is only one police station with one Hilux and about 50 police officers. That is probably the situation in most municipal areas located in rural areas. The Ibrahim Babangida government brought the idea of rural banks and people’s banks from Southeast Asia. They thrived there because they had the right infrastructure and the economy was more developed than the Nigerian economy.
According to the International Monetary Fund (IMF), Nigeria’s banks closed 234 branches and 649 automated teller machines (ATMs) in 2020, pushing the country’s Financial Access Score (FAS) to 4.44 from 4.78 in 2019. Decreased. This is documented in the Financial Access Survey 2021 Trends and Developments.
The Fund uses two indicators: commercial bank branches per 100,000 adults and ATMs per 100,000 adults. According to the report, Nigeria recorded declines in these two key indicators and 12 others out of 64 indicators measured by the FAS.
This is because the number of commercial bank branches in Nigeria has decreased from 5,392 in 2019 to 5,158 in 2020. Similarly, the number of ATMs per 100,000 adults enabled the country’s financial access score. The actual number of ATMs has decreased from 19,459 in 2019 to 17.19 in 2020.
The report also showed a decline in the number of registered mobile money agent outlets in the country from 145,800 in 2019 to 129,154 in 2020. These financial products that can realize a cashless economy. At the presentation of the newly designed banknote, Emefiele said the world has largely moved from cash to a cashless economy.
That’s right. Efficiently navigating this paradigm shift, especially in developed countries, requires the necessary infrastructure. Two examples that the Governor General mentioned where he can’t withdraw $10,000 or he can easily withdraw £10,000 are the United States and the United Kingdom.
The reason why this works in these two countries is because the economies are very developed and the infrastructure exists for the seamless operation of a cashless economy. In Nigeria I have used ATM cards in shopping malls Any person will tell you what he often experiences. You may get a “declined” notice only to find out a little later that the money has been paid.
Then you have to go to the bank, fill out a form and request that the money be returned to your account. Another way is for the store owner or cashier to go around the room looking for good service. A final option is for you and the cashier to be prayer warriors asking God or Allah for approval of the transaction. Sometimes prayers are answered. It may not be. That is how trades flow in Nigeria. I wonder if that’s the way it’s done in the UK or the US.
Another thing to keep in mind is that our informal economy employs more people than our formal economy.Our informal economy is also largely small and medium-sized. Our informal economy is also largely rural based and lacks most of the facilities needed for a cashless economy. That’s why people in these areas keep money at their bedside. They don’t take them to the bank because there is no bank nearby. The people’s banks and mini-banks that operated in rural areas subsequently collapsed, leaving rural people as helpless as they were before the banks were put on hold in their communities.
Another factor to consider is the illiteracy of most small farmers, traders and artisans. Success in the cashless economy requires some education. The literacy rate in the US and UK is over 95%. The same is true for most other European and Asian countries.
Nigeria remains a largely illiterate society, especially among those living in rural areas. What this means is that Nigeria is still years away from a seamlessly functioning cashless economy due to some of the factors already mentioned. Most city dwellers are already happy to flush their plastic in front of the cashier.
What else needs to be said is that the idea of a cashless economy is not a project that belongs only to central banks. Governments at various levels must embrace it so they can help provide the infrastructure that will make it possible in the foreseeable future.
Central banks must emphasize this at all forums where they meet with federal, state and local government officials. If they don’t all agree, CBN is simply leaning towards the windmill.