Sorry No Change! ---as artificial scarcity of smaller notes of naira hits businesses

Scarcity of smaller units of Naira has cause ‘no ‘change’ situation in the economy, Emeka Ibemere, reports

Akachi Ndidi is a Lagos bus conductor plying Oshodi to Mile 2 Express Road on daily basis but weekly, he has cause to fight with his clients who patronizes his bus.

Why the fight you may wish to know?

 ‘No change’ as he put it to our correspondent.  In most of the cases, he ends it at the police station where he would spend a day before returning to his house. Ask Bisiola, a recharge card seller at the popular Cele Bus Stop on the Oshodi-Apapa express road, lack of change has affected her sells in the recent time.

 On the same page of low patronage because of scarcity of change in the economy, is another petty retailer, Olufemi at the Oshodi market, who hardly sell her wares because of smaller denominations in circulation.

An usher in one of the popular Pentecostal churches in the Island, also claimed that change has become problem these days and has affected Sunday service offerings. All these are the challenges petty traders in Lagos State faces recently with scarcity of smaller denominations in circulation. Those doing business that has to balance their clients with what's left after payment are going tough time settling it because of none availability of smaller notes.

‘Change’ in Nigeria economic parlance is commonly used to mean a remaining or outstanding amount, e.g. the amount remaining in a bank account after a withdrawal or the amount still to be paid to settle a bill. It could also mean a sum of money given or received for a coin or bill of a higher denomination.

The balance of money given back to a customer who has handed over a larger sum than the cost of the goods or services purchased. But because of low smaller units of the currency in circulation, this ‘change’ is now scarce as it affects business, religious and other social activities in the Lagos State and its environs.

Mostly affected are the petty traders who deals on articles, food items, kiosk business, super markets, shopping Malls, transportation, including commercial motor cycle operators, newspaper vendors, food vendors, barbers, party organizers, and other sundry petty business activities that doesn’t require bulk cash or trades on bigger currency notes.

 As serious as this problem posed in the serious business circle, smaller notes of the currency are sold at the motor parks by suspected money launderers and illegal currency traffickers that dots the streets of Lagos State.

 Even in the banking halls, these smaller units of the currency are as scarce as an essential commodity. It’s hard to walk to the bank hall and obtain smaller notes of any condition.

The least denomination one gets at the bank is the dirty N500, notes. It’s impossible to go to the bank and obtain N200, N100 and N50 note denominations.

But these denominations are readily available at the wrong place: motor parks and party venues on Saturdays and Sundays. At these wrong and unauthorized places, crisp and freshly minted naira currency notes are available but are scarce in the banking halls. At the party centres, they are not obtained freely. It’s for sale. The brisk business is as old as the CBN, the financial regulatory body. The new smaller denominations are purchased at premium rates by party goers. Experts say the illegal sale of currency notes by hawkers is contrary and against Section 21(4) of the Central Bank Act 2007, punishable with an imprisonment term of not less than six months, or a fine not less than N50, 000 or both.

According to financial experts, Central Bank of Nigeria (CBN) has put out notice that peddling and distribution of naira currency notes is unlawful, but it appears that not even the CBN are monitoring the ugly situation.

Deacon Chinedu Okafor, an ex-banker said custodians of fresh currency notes are the CBN and the Nigerian Security Printing and Minting Company. He said it gets to the commercial banks for circulation. How then isn’t at the banks but at the motor parks?

 Oluwafemi Johnson accused the bank mangers of having a cartel running the business of hawking new naira notes for them while returning interests and commissions to them. He stated that banks denied their customers of new naira notes of lesser denominations and prefers to lease it out to their cartels at the bank to make brisk business.

The bank managers create artificial scarcity of smaller units of the currency while doling out handsome buck to their currency hawkers cartel to re-sell them to citizens in need of clean notes.

Aside their managers, tellers at the banking hall are also guilty of this crime. They only pay these currency hawkers with the crispy notes. It was gathered that the currency hawkers have deposits with the bankers and each time they visit to withdraw, the tellers pay them with the new notes of smaller units who in turn return to the motor parks and party events to sell them to people for spraying.   Analysts are of the view that CBN has failed in its monitoring responsibility to crackdown the menace despite all their regulations. Investigation also revealed that both those in the CBN are also part of the cabal. According to the investigation, the apex bank is the channels of distribution of the freshly-minted cash begins and enroute to the commercial banks. Checks also revealed that for the CBN to checkmate the ugly trend, it shows that they lacked the moral conscience to stop the act because of their highly level involvement in the illicit deal

To check the scarcity of smaller notes in circulation, experts suggests that the CBN should circulate much smaller  currency notes to the Nigerian banks and monitor them on how they disburse the currencies. The sell of currency notes of smaller denominations is only noted in the cities.

A N1000 note, old or mint, exchanged for smaller denominations of the naira say N50, N100 or, N200 and they lose their value to as low as N800.

“This is what has caused scarcity of smaller naira notes in the system and gave currency hawkers in the country advantage to make brisk business”, Deacon Chinedu Okafor restated.

 Despite the persistent scarcity of smaller units of naira notes, illegal currency hawkers have continued to make brisk business by openly selling new notes in different denominations on the streets and party venues.

A police officer, who pleaded anonymity, alleged that the cabal in currency hawking business do bribe officials of the Central Bank of Nigeria and Deposit Money Banks to obtain the new smaller notes, which genuine bank customers cannot get.

Reports also stated that tellers at the CBN front desks and branch service officials in commercial banks sell the smaller units of currency at a margin of 8 per cent to currency hawkers.

For instance, a report recently stated that a bundle of N100 notes of N10, 000 was being sold at N11, 000, while a bundle of N200 notes of N20, 000 was being exchanged for N22, 000. Recently, there were allegations that the CBN printed new notes but they were being hoarded and sold to currency hawkers. It would be recalled that CBN at a time stopped printing new notes for a while but started printing N500 notes recently. At Cele bus stop, one of the operators in the hawking currency said he has a friend at one of the new generation banks who assist her in getting the new naira small units of the currency. According to her, most of her business colleagues get theirs through their friends at the CBN and other commercial banks in the state.

She confessed that its insiders’ act adding that reserve new smaller units of the currency notes for them. Our source further bluntly told our correspondent that they pay to get their ‘wares’ direct from the banks and nothing can be done to stop it. Daily Newswatch gathered that politicians, government officials, top business men, and those preparing weddings and parties always ask for the higher denominations. From our source, unless, the CBN floods the banks with smaller units of denominations, scarcity of change in the polity would continue in the years to come.

Prior to now, Director, Corporate Communications, CBN, Mr. Ugo Okoroafor said the CBN has perfected its plan of trailing such currency notes being sold to individuals, using the serial numbers. He said. “The CBN is working in concert with the police and other security agencies to arrest errant persons, and, therefore, warns those bent on perpetrating the unlawful act to desist forthwith or risk facing the long arm of the law.” He, however, denied that the central bank was engaged in the practice of hoarding new currency notes only to release same to agents, who paid its officials commissions after selling the mint notes to interested members of the public. Recently, Okoroafor was quoted as having said thus:

“The CBN does not have responsibility for the supply of cash to Automated Teller Machines. ATMs are owned and deployed by DMBs as well as independent outfits. It is the responsibility of the banks and the other licensed outfits to generate and load ATM-fit banknotes into the cash dispensing machines from cash deposits”.

 Some years back, there have been intensive campaign by the CBN against subjecting the naira to all forms of abuses but the campaigns failed to yield result as naira is still the most mutilated currency in Africa.

 The CBN Act, 2007 frowns at the desecration of the nation’s currency and introduced legislation to this effect. It also prescribed a six-month jail term or a fine of N50, 000 or both for anybody found guilty of both offences.

At Ojota, Iddo, Cele, Oshodi, Ikotun, Ajah Mile 2, to Maza-Maza luxurious park, to Ikeja under bridge and from Iyana-Ipaja to Agege motor parks, and to the under the Oshodi Bridge, Lagos, smaller new naira notes denominations are freely displayed for sell. It’s a serious business on Friday, Saturday and Sundays due to numerous party events. Even, recently, hardly could one get smaller units from the Automated Teller Machine (ATMs), which continue to dispense dirty and mutilated five hundred naira notes.

It was reported that the cabals behind the scarcity of smaller units of denomination are so powerful from the CBN and they run their business with ease. More facts emerge recently that most of the operators of the illegal business were mainly CBN contractors. It was gathered that because N20, N50, and N10 are in high demand due to their scarcity in the economy, the hawkers prefer to sell them high as N1000. The business thrives because the security agents lack the power to make arrest of the hawkers as they go about their business as usual. Report say the sale of new notes came into being when MDBs claim non availability of new notes in lower denominations in their vaults. This action led to the establishment of black market and the parallel MDBs at the motor parks

According to sources, the new smaller units of currency notes are caused by the hawkers, who go to the banks to mop up the denominations only to return to the parks to display their ‘goods’. 

Those close to bank workers say each bank worker has one agent selling the currencies for them, most especially, those at the senior level category of the banks. Sales of mint smaller units of naira notes to illegal currency note hawkers are a booming business within and outside the banking system.  Banks get allocation of new notes from the CBN through their head offices or regional branches to exchange for the old notes in circulation. However, the branch managers and operations managers lease to their clients the money to them at an agreed commission.

Nigerians have urged the Economic and Financial Crime Commission, (EFCC) to wade into the scarcity of smaller units of currency and resolve the problem of ‘no change’ in the economy as it affects business life. Those who spoke to Daily Newswatch blamed the banks, the apex bank and the officials for the illegal trade. Analysts say such hording of smaller currency could lead to inflation and high cost of commodities in the state. It would called to remember that section 26 of CBN’s ACT only permits the sale of the Naira notes in exchange for other currencies and not naira exchanging for naira. Not done, the Law, also stated in section 3 and 4 of the country’s currency offences ACT cap c44, LFN of 2004, and makes illegal sales of the naira a punishable offence. It stipulates that offenders could be sent to jail or made to pay fines as the case may be. The CBN also stipulates that it is an offence punishable under the law to spray or the trample upon the nation’s currency notes. The Act prohibits the spraying of any note issued by CBN during social events. Last year, the Legal Adviser and Director of Legal Services of the apex bank, Mr. Anthony Oladunjoye, presented a paper at a CBN forum, and frowned at the spraying and sales of naira, and said it is an offence punishable under the country’s laws.

The CBN’s head of legal department, once told the media that the Police are empowered by the law to arrest and prosecute the sellers and buyers of crisp naira notes. The Currency Act vests the Federal High Court with the jurisdiction and power to try offences committed under the act. Nigerians are hoping that the earlier the CBN goes tough on the banks, the better for the availability of smaller units of naira. A stitch in time can save more than nine.