Central Bank of Nigeria Affirms All Banknotes as Legal Tender Amidst Cash Scarcity Concerns

The Central Bank of Nigeria (CBN) has reaffirmed that every banknote it has issued remains legal tender and should not be rejected.

This clarification comes in response to reports of a shortage of cash in some regions, despite previous assurances of sufficient cash reserves.

The directive, issued in a public statement by CBN’s Director of Corporate Communications, Isah Abdulmumin, emphasizes the legal status of all CBN-issued banknotes and is aimed at quelling anxieties about the acceptability of older Naira banknotes.

In accordance with Section 20(5) of the CBN Act, 2007, no one should refuse to accept the Naira as a means of payment.

Also, the CBN has directed its branches nationwide to continue supplying various denominations of both old and redesigned banknotes in ample quantities to deposit money banks, ensuring a seamless circulation to the general public.

The CBN acknowledges that the scarcity of cash in some areas has been influenced by high-volume withdrawals by Deposit Money Banks from CBN branches and panic withdrawals by customers at Automated Teller Machines (ATMs).

The CBN’s clarification is particularly relevant as the December 2023 deadline approaches for the legitimacy of old Naira notes.

The apex bank had previously unveiled plans to redesign certain Naira denominations, including the N200, N500, and N1000 notes, as part of a broader effort to promote cashless transactions and combat counterfeit currency.

While the existing notes were initially set to lose their legal tender status by January 31, 2023, the policy faced significant resistance from various sectors and ultimately led to hardships and economic challenges.

The aftermath of the cash scarcity and policy implementation reportedly caused Nigeria’s Gross Domestic Product growth to drop to 2.31 percent in the first quarter of 2023, resulting in economic losses estimated at around N20 trillion.

The Supreme Court later ruled to extend the legality of the old N1,000, N500, and N200 notes alongside their redesigned counterparts until December 31, 2023.

Nigerians have welcomed the CBN’s recent announcement, expressing relief and sharing their experiences during the cashless policy implementation.

This development aims to ensure the continued circulation and acceptance of all CBN-issued banknotes, providing reassurance to the public.