Over $1.8 Billion Was Spent By The Nigerian Central Bank On Managing Local Currency

Key Points:

• Aisha Ahmad, the deputy governor of the Central Bank of Nigeria (CBN), testified before Nigerian lawmakers that more than 90% of the roughly $1.8 billion spent to manage the local currency was reportedly utilized to support costs related to the printing of banknotes.
• CBN put newly created naira banknotes into circulation in an effort to assist the central bank in overcoming some of the issues mentioned by Ahmad.
• The central bank also limits the number of cash people and businesses can withdraw.

Aisha Ahmad, the deputy governor of the Central Bank of Nigeria (CBN), testified before Nigerian lawmakers that more than 90% of the roughly $1.8 billion spent to manage the local currency was reportedly utilized to support costs related to the printing of banknotes.

According to its deputy governor Aisha Ahmad, the Central Bank of Nigeria (CBN) spent 800 billion nairas, or roughly $1.8 billion, regulating the national currency between 2017 and 2021. More than 90% of this amount resulted from only producing new banknotes.

According to comments made by Ahmad that were reported in the Punch, she recently testified before Nigerian MPs. She stated that the cost of sustaining the local currency has been rising by more than $22 million yearly. Kingsley Moghalu, a former CBN deputy governor, had already revealed to lawmakers that the central bank spends about $336 million managing the currency before Ahmad made his statement.

In addition to incurring high costs associated with managing the naira currency, the CBN has to contend with the increased risk of counterfeiting, the report said.

Meanwhile, in her testimony, Ahmad partly blamed the spiraling costs on the Nigerian public’s wholesale hoarding of the naira.

“An observation supported by statistics shows that cash outside banks consists of over 80% of the currency in circulation; worsening shortage of fit banknotes in circulation. This portends negative public perception of the bank and increases threat to financial system stability,” Ahmad is quoted as saying.

On December 15, the CBN put newly created naira banknotes into circulation in an effort to assist the central bank in overcoming some of the issues mentioned by Ahmad. The bank also stated that Nigerian citizens who still have old banknotes should return them by or on January 1, 2023.

CBN does not target politicians

The central bank also limits the amount of cash that people and businesses can withdraw. According to certain Nigerian observers, the CBN has been charged with utilizing the alleged naira redesign program to target politicians. Ahmad allegedly informed MPs that the bank’s move to restrict cash withdrawals was based on research in response to these accusations.

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