• Economists blame currency crisis on corruption, lack of political will
• ‘How bad notes support counterfeiting’
• Stakeholder wants return to use of coins
Experts, yesterday, blamed the preponderance of dirty notes on corruption and lack of political will, as 22,000 Automated Teller Machines (ATM) dispense bad notes.
This is as the disappearance of N10, N20, N50 and N100 notes, needed mostly for commercial transactions, has added to the currency crisis.
Economists also underscored the extent bad notes pose health hazards to the public.
The threat has been made more worrisome by the fear that bank notes, particularly dirty ones, are potential vectors of COVID-19.
The Guardian had reported in August that ATMs dispensed over ₦30 trillion in six years, with the country having the highest dispense errors in the world.
Speaking with The Guardian on the development, the Divisional Chief Executive Officer, Interswitch, Akeem Lawal, said bad notes also posed a problem to managing monetary policies in the country.
This is corroborated by the Managing Director and Chief Executive Officer, Avange Nigeria Limited, Olumide Bajomo, who said dirty and mutilated notes in circulation facilitated the use of counterfeit notes as consumers find it difficult to differentiate between authentic dirty notes and counterfeits.
He observed that apart from health hazards, loading of unprocessed or unsorted banknotes into ATMs caused cash jamming, debiting customers without dispensing cash.
The Executive Director, Sales and Strategy, Inlaks, Tope Dare, however, said there was no direct economic theory tracing inflation or interest rate to the quality of notes in circulation, stressing that volume of notes, irrespective of quality, had effect on monetary policies to a large extent.
According to him, dirty and bad notes affect ATM service delivery. He stressed that effective and efficient ATM operations and management would depend on quality of notes in ATMs.
“Bad notes increase rate of cash jams and cost of ATM service that lead to poor quality of service, thereby affecting customer satisfaction. The peculiarity of this plague is not unconnected with the level of corruption and leadership qualities in Nigeria. It is pathetic that despite establishing the Nigerian Security Printing and Minting Company, the foremost full-fledged security printing organisation in the whole of African sub-region, established in 1963, Nigeria appears to have this problem most. The level of systemic corruption by way of sabotaging government policies coupled with the lack of strong will to deal with it is one of the major factors,” Dare stated.
Meanwhile, the Secretary, Product, Pricing and Revenue Assurance at the Committee of e-Business Industry Heads (CeBIH), Dipo Alabede, has said Nigeria needs more ATMs to boost services.
Alabede, who also heads Digital Banking at Sterling Bank, said it costs about N10 million to deploy a single terminal. He stressed that ATM platform was still run at a loss in Nigeria.
In one of his interviews with The Guardian, the spokesman for the CBN, Isaac Okorafor, had blamed banks for persistent circulation of bad notes.
“They are playing tricks. They will see unfit notes and re-issue them again because they don’t want to make investments in sorting the money. It is their duty to return unfit notes to us and we will replace them with new ones.
“If banks sort the money before bringing to CBN, we don’t charge them, but if they don’t, we will sort and charge them. It is only when they mix up the unfit and good ones together, which is what they do, that we charge them for sorting.
“But it is our duty to issue new notes in place of the unfit and that we have been doing,” he said.
Underscoring health implication of dirty notes, experts warned that bad notes did not only adversely affect health but also undermine the country’s pride and image.
They lamented that bad notes had persisted despite efforts by the CBN to stop the trend and ensure better management of the nation’s currencies.
They urged the CBN to consider reintroducing coins, noting that its absence had negatively impacted transactions, with adverse effect on the economy.
Research and medical experts say dirty and mutilated naira notes could become breeding grounds for diseases, bacterial and fungi, and could lead to out-of-pocket medical expenses.
They stressed the need for the CBN to boost campaign for cashless transactions, promote electronic banking and sensitise citizens, especially market men and women, on cash handling.
Professor of Economics at Babcock University, Segun Ajibola, says currency notes should be made from quality and durable materials because it bears the image of the country and represents the sovereignty of the issuing country.
“Dirty currencies do not help the image of the country. Besides, such notes can carry germs and spread diseases.
“It debases the currency as a medium of exchange and store of value. Billions of dirty currency notes are often withdrawn from circulation by the CBN from time to time and disposed of,” he said.
He urged government to end the trend by improving on the quality of materials used in printing Nigeria’s currencies to increase its durability and usefulness as mediums of exchange and stores of value, among others.
Professor of Finance and Capital Market at the Nasarawa State University Keffi, Prof. Uche Uwaleke, said losses arising from circulation of dirty and mutilated notes were quite huge and might not be easily quantified.
According to him, they include enormous costs to banks involved in sorting dirty and mutilated notes, especially lower denominations such as N50 and N100 with high rate of usage.
“It also includes cost of destroying and replacing them by the CBN. Dirty notes also pose health hazards to holders particularly to men and women whose businesses are cash-based.
“The permanent solution is to coin lower denominations as we had in the past but I doubt if that will be possible any longer given the rate of inflation and the psyche of Nigerians already used to currency notes,” he said.
Sheriffdeen Tella, professor of Economics, Olabisi Onabanjo University, Ago-Iwoye, said N50, N100 and N200 should be printed regularly because they are mostly spent and mishandled.