Nigeria’s central bank has pushed back the deadline for taking old banknotes out of circulation.
In a statement issued on Sunday (Jan. 29), Central Bank of Nigeria (CBN) Governor Godwin Emefiele said the deadline for exchanging old naira banknotes for newer redesigned bills has been extended by 10 days, giving people until Feb. 10 to swap old currency for new.
As PYMNTS has reported, the withdrawal of old banknotes is part of a demonetization drive by the CBN that is being pursued hand-in-hand with a number of policies that restrict the circulation of cash.
Other ways the country’s authorities have attempted to discourage cash usage have been by setting stricter limits on withdrawals from ATMs and banning withdrawals from government accounts.
The CBN has also encouraged Nigerians to embrace cashless payment methods such as its Central Bank Digital Currency (CBDC), the eNaira. For example, when it announced the new restrictions on ATM withdrawals, the CBN stated that “customers should be encouraged to use alternative channels — Internet banking, mobile banking apps, USSD, cards, POS, eNaira to conduct their banking transactions.”
The central bank’s logic in withdrawing old notes from circulation is that it will make it more difficult for criminals to hoard cash for illicit purposes as anyone holding on to large volumes of bills will be forced to identify themselves or risk their cash becoming worthless.
In Sunday’s statement, Emefiele said that the initiative has been successful so far, announcing that 75% of the 2.7 trillion naira held outside of the nation’s banking system has already been exchanged.
However, he said the 10-day extension is needed to give the 30,000 agents of the nationwide “Cash Swap” initiative time to reach rural areas and regions underserved by banks, as well as to give extra time for the elderly and vulnerable to swap their currency.
He added, “Aside from those holding illicit/stolen naira in their homes for speculative purposes, we do aim to give all Nigerians that have naira legitimately earned and trapped, the opportunity to deposit their legitimately trapped monies at the CBN for exchange.”
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