Naira in circulation rises to 71% in March, as CBN returns old notes to banks

CURRENCY in circulation increased by 71.41 per cent in March after the Central Bank of Nigeria (CBN) returned old naira notes from its vaults to commercial banks.

The naira in circulation rose to N1.68 trillion at the end of March 2023  from N982 billion in February, data published on the CBN’S website showed.

The increase in the circulation of the old N200, N500, and N1,000 notes followed the extension of their legal tender status to December 31, 2023, as directed by the Supreme Court, and as eventually obeyed by the CBN after a two-week tarry.

Although naira circulation has increased, reducing substantially the scarcity agonies that attended the currency redesigned policy, checks by The ICIR showed poor circulation of the new N200, N500, and N1000 notes.

Visits to banking halls by our correspondent showed that banks were dispensing mostly the old notes, both over the counter and through their automated teller machines (ATMs).

Also, point-of-sale (PoS) operators have also been paying their customers the old naira notes.

A PoS operator, Muhammed Yusuf, told The ICIR, “The banks pay us more of old notes than the new ones. They pay us more of the N1,000 and N500 old notes.

Another PoS merchant, Ngozi Nwankpa, told The ICIR that issuance of the new notes was still slow from the banks.

Nwankpa said, “We are still not getting enough of the new notes. Although people are not complaining, we want a situation whereby it would circulate more side by side with the old ones.”

The CBN’s acting Director, Corporate Communications, Isah Abdumuminin, confirmed on March 26 that the regulator had disbursed substantial amounts of money to the commercial banks for onward distribution to the public.

Bank sources told The ICIR that banks had, however, been receiving more of the old currency, with the new notes coming in just slowly.

“We have been monitoring the situation and it is improving. Banks are also disbursing what they get, although our findings showed we are getting more of the old notes. I can authoritatively tell you that the situation will improve more than what it is currently .We have got that assurance from the CBN that it can only get better,” the president of the Corporate Affairs Managers of Banks (ACAMB), Rasheed Bolarinwa, told The ICIR

Commenting on rise in currency circulation, a professor of Capital Markets, Uche Uwaleke, said there was a rise in deposit money banks borrowing from the CBN’s standing lending window.

Uwaleke pointed out that the rise in currency circulation followed the reinjection into the banking system some old naira notes the CBN had mopped up.

“The increase in the circulation of old naira notes followed the extension of legal tender status of old notes to December 31, 2023,” he said.



    A report by the FSDH Merchant research unit noted that the impact of the naira redesign policy has been profound for the economy, and will be the major determinant of Nigeria’s economic trajectory in 2023.

    “The associated cash crunch has led to increased pressure on the banking system and on the financial system’s digital infrastructure.

    “It has also resulted in the disruption of economic activities, created social tensions, and distorted the trajectory of the economy,” the report stated.

    The CBN had said that as at September 2022, N2.73 trillion out of the N3.23 trillion currency was outside the vaults of commercial banks. This apex bank cited the development as key reason for its naira redesign, and insinuating that the currency outside the banking vaults was being used for terrorism financing.

    Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.

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