(Bloomberg) – The Central Bank of Nigeria expects at least 2 trillion naira ($4.3 billion) in cash to be returned to banks by Jan. 31, when the deadline to replace high-grade notes ends.
Residents exchanged up to 1.5 trillion naira of old notes since last week, Governor Godwin Emefiele told reporters in Abuja on Tuesday. “We’re hoping to approach 2 trillion naira by this week,” he said.
Africa’s most populous nation began issuing redesigned 200-, 500- and 1000-naira notes in mid-December to eliminate excess cash liquidity and take control of the money supply. Nigeria’s cash in circulation has more than doubled to 3.23 trillion naira since 2015, Emefiele said.
That suggests that “people are hoarding it, people have safes in their homes, we can’t allow them to be banks in their homes, they don’t have a license to build bank vaults in their homes,” he said. “They should return this money to CBN because what they are doing is undermining monetary policy, they are keeping these funds to speculate against a currency, which makes our job more difficult.”
To increase acceptance, the central bank on Monday allowed unbanked citizens in rural areas and those with limited access to formal financial services to exchange a maximum of 10,000 naira per person of the old banknotes through banks or agents without having to open an account.
Read more: Nigeria Allows Cash Naira Swap to Facilitate Introduction of New Banknotes
It also works with approximately 1.4 million agents and lenders to reach citizens across the country to exchange old bills for new ones or open bank accounts. Using agents to invade rural areas rules out extending the deadline, the governor said.
People who don’t exchange the notes by Jan. 31 will have “useless” cash in their hands, Emefiele said.
That may not happen if the central bank complies with a request from Nigerian lawmakers, who on Tuesday asked for an extension of the deadline for phasing out the existing higher denominations of the naira to July. Senate President Ahmad Lawan cited the shortage of new banknotes and insufficient financial industry staff in remote areas to distribute the currency.
(Updates requesting six month extension of currency swap in penultimate paragraph)
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