MARKET NEWS

By Chinwendu Obienyi

When the Central Bank of Nigeria (CBN) introduced sanctions against naira abuse on September 19, 2019, it said the initiative was part of its commitment to ensuring the proper handling and protection of the Nigerian currency. 

The sanctions aimed to address issues such as spraying and stepping on naira notes during social events, selling or counterfeiting currency, and manhandling or defacing naira notes in any way. Furthermore, the apex bank warned that these actions were punishable offenses under the CBN Act of 2007, with violators facing penalties, including fines and possible imprisonment. 

>span class="s2">Bobrisky allegedly abused and mutilated banknotes during a film premiere in Lagos, as the Economic and Financial Crimes Commission (EFCC) revealed that Bobrisky “sprayed” banknotes, meaning she threw them in the air as a sign of appreciation. Videos of the event were widely shared on social media, which may have put pressure on the authorities to take action. Similarly, an actress, Oluwadarasimi Omoseyin, was sentenced to six months in prison for spraying and stepping on new naira notes. 

Hence, it was imperative that the apex bank remind Nigerians that the jury remains out on naira abuse owing to the incoming festive period. The bank, in a signed statement via its Acting Director, Currency Operations Department, Solaja Mohammed Olayemi, issued a stern warning to Deposit Money Banks (DMBs) against engaging in activities that could hinder the smooth flow of cash. 

To ensure compliance, the CBN said it would intensify its monitoring efforts through spot checks and mystery shopping activities, conducted in collaboration with law enforcement agencies. 

“For the avoidance of doubt, it should be noted that DMBs, to whom cash seized from hawkers of cash is traced, will be penalized 10% of the total value of cash withdrawn on the day the seized cash was withdrawn from the CBN. Every subsequent offense will be charged an incremental penalty of 5%. DMBs found engaging in cash hoarding, diversion, or any actions that hinder efficient cash distribution, including violations of the Clean Note Policy, will incur appropriate sanctions,” he said. 

Olayemi urged DMBs to implement internal controls for responsible disbursement and accountability in respect of mint banknote payouts at their outlets, as the yuletide season approached, with an anticipated increase in cash demand. 

“To enhance public access to cash, we encourage banks to prioritize cash distribution through Automated Teller Machines (ATMs). During this season, the CBN, in collaboration with relevant law enforcement agencies, will intensify spot checks and mystery shopping activities to monitor and enforce responsible cash distribution and prevent naira abuse,” he said. 

Enforcing responsible cash distribution and preventing cash abuse is crucial, especially in developing countries, for several reasons. Firstly, resources are often limited in developing countries; hence ensuring responsible cash distribution prevents waste, allowing funds to reach the intended beneficiaries and maximize impact. 

Developing countries often face significant challenges with corruption, so preventing cash abuse helps reduce opportunities for misappropriation, fostering trust in institutions and encouraging international aid and investment. 

Speaking on the development, the Head of Research at FSL Securities, Victor Chiazor, noted that the misuse of funds can destabilize economies by increasing inequality, discouraging economic participation, and fueling informal or illegal financial systems. 

“It is good that the CBN has come out with that statement as DMBs have actually been aiding the abuse of naira for some time. Ensuring responsible distribution of cash fosters trust in government and non-governmental organizations. Transparent and accountable systems can boost public confidence and international reputation. 

Responsible cash distribution ensures investments in critical sectors like education, healthcare, and infrastructure, contributing to long-term development and poverty reduction,” Chiazor explained. 

Giving insights as to how the CBN can enforce responsible cash distribution, the Co-founder of Flutterwave, Olugbenga Agboola, during a recent Nigerian Tech Summit forum, urged the apex bank to leverage technology, as digital payment systems and blockchain can reduce cash leakages. 

“There has to be an implementation of transparency mechanisms, enforce anti-corruption laws, evaluate these things and then most importantly, personnel and institutions can be effectively trained to manage funds effectively,” Agboola said. 

Preventing cash abuse and ensuring responsible distribution is not just a moral imperative but a cornerstone for sustainable growth and reducing poverty in developing countries.