The scarcity of N100 notes across the country could be linked to a series of CBN policies.
In an interview with the News Agency of Nigeria (NAN), a number of people registered their displeasure about how N100 note and other lower denomination have become scarce in the country in recent times, and how this impacting on their businesses.
For instance, Mr Musa Haliru, a commercial bus driver in Gwagwalada, said he found it very challenging to give change to passengers whenever a N1,000 note is tendered for transport fares.
“This issue of smaller denomination is giving us problems at the garage when giving out change to passengers.
“The N100 notes in circulation are very old and dirty and the smaller denominations are hard to get.
“Small denominations like N100, N50 and N20 notes are scarce and not much in circulation these days.
“When passengers bring out N1,000 notes to pay for their transport fare, it becomes a problem finding change.
“If the government can print more of smaller denominations, I think it will reduce the difficulties we are facing at the garage,’’ Haliru said.
Similarly, motorcycle operators in Kuje Area Council described the situation as worrisome as they found it very difficult to give change to their passengers.
The Chairman of Kuje Traders Association, Mr Musa Umar, called on the CBN to print more of N100 notes and other smaller denominations to address the scarcity.
Why the scarcity?
The current scarcity of N100 and other lower denomination note could be tied to series of CBN policies, one of which is the cashless policy that aims to reduce the amount of physical currency circulating in the economy.
The policy has resulted to the adoption of POS machine and frequent usage of ATMs for transactions as against the tradition means of paying with cash.
This has drastically reduced the need to carry physical currency around in the economy and as such might have informed the decision of the CBN to reduce the amounted of smaller denomination currency minted.
Aside the cashless policy, there are some other factors that could be tied to the scarcity of N100 note in the economy.
The scarcity may be tied to the economics of Naira notes denominations. What this implies is that the CBN may have deliberately reduced the quantity of N100 notes minted because of the associated cost of minting.
That is, it makes good economic sense for it to print higher denominations because it would curb its spending on minting currency notes. It is cost efficient for the CBN to print more of N500 and N1000 notes than to print lots of N100 notes and other smaller denomination notes.
Printing those notes have a cost. To print them, the CBN has to pay for the paper, the security features, transportation and security while transporting them. And then the CBN is going to eventually make for destruction of these notes.
There is need to consider low-value transactions and retail sector players
Nevertheless, it is important that the CBN to consider the impact of this scarcity on retail sector growth.
According to a groceries seller, Mrs Helen Eze, “the issue of smaller denominations is becoming a problem to traders in the market, especially those of us that sell food items and perishable goods.
“Sometimes, when customers bring out higher denominations to buy something small, we normally do not sell to them because of change and we are the ones at a loss.
“We are pleading with the banks to make smaller notes available and save our businesses,” she said.
It is important that the CBN factor in the marketplace reality in the formulation of these policies. In reality, it is the items that people need to pay for with naira notes that should determine how much of the currency notes that should be made available in circulation per time.
Buhari to finally send Petroleum Industry Bill to National Assembly next week
Sources in the Presidency have disclosed that the President may be presenting the bill to the National Assembly.
President Muhammadu Buhari is expected to present the long-awaited Petroleum Industry Bill (PIB) to the Senate as early as next week.
According to Reuters, who were quoting 4 sources familiar with the development, the presentation of the bill to the National Assembly, follows its official approval by the president late last week. This is as the National Assembly has already formed teams of members that will work most closely on the individual portions of the bill.
Both chambers of the National Assembly must have to pass the bill after deliberating on it before it can then be passed on to the president for his final signature.
The PIB which is an oil reform bill has been in the works for about 20 years, is key to the repositioning of Nigeria’s Oil and Gas Industry under its post-COVID-19 agenda as the main laws governing oil and gas exploration have not been fully updated since the 1960s due to some contentious issues like taxes, payments to local communities, terms and revenue sharing within Nigeria.
The Group Managing Director of the Nigerian National Petroleum Corporation (NNPC), had disclosed that the delay and non-passage of the bill has made international investors to start losing confidence in the country’s oil and gas industry.
While revealing last month that the PIB will be presented to the National Assembly in the next few weeks, the Minister of State for Petroleum Resources, Timipre Sylva, also said that the executive arm will be requesting the lawmakers to specially reconvene to receive and start deliberations on the bill.
These oil reforms and regulatory certainty became more pressing this year as low oil prices and a shift towards renewable energy made competition for investment from oil majors tougher.
The draft copy of the bill which was prepared by the Petroleum Ministry is a product of series of consultation between the federal government, oil and gas companies and other industry stakeholders.
Excerpts from the bill reported by Reuters include provisions that would streamline and reduce some oil and gas royalties, increase the amount of money companies pay to local communities and for environmental clean-ups alter the dispute resolution process between companies and the government.
It also included measures to push companies to develop gas discoveries and a framework for gas tariffs and delivery. Commercializing gas, particularly for use in local power generation, is a core government priority.
UK-based group to investment $245 million in 100 Nigerian businesses
A UK based organization is to partner local investment funds to disburse $245 million to 100 Nigerian businesses.
A UK-based development finance institution, CDC Group, has finalized plans to invest US$425 million as an aid to 100 businesses and 38,000 jobs in Nigeria.
This is sequel to its partnership with 40 investment funds such as Afreximbank, African Capital Alliance and Indoram, NAN reports
In a virtual visit to the country by the board of the organization led by Chief Executive, Nick O’Donohoe and Chairman, Graham Wrigley, the UK Government-funded organization stated that all earnings from its investments are ploughed back to improve the lives of millions of people in Africa and South Asia.
CDC Group noted that it paid a virtual visit to the Vice President of Nigeria, Prof. Yemi Osinbajo, and British High Commissioner to Nigeria, Catriona Laing, to discuss and ascertain the impact of CDC’s aid to its investees through the COVID-19 crisis and understand how to stimulate recovery and growth.
The discussions also focused on CDC’s own response to the pandemic through its preserved, strengthen and rebuild programme, the statement said
Commenting on the rationale of the aid, the Chief Executive of the CDC Group, Nick O’Donohe said that, “Nigeria plays a key part in our strategy of partnership and investment for economic growth in West Africa. “Hosting our 2020 board trip– albeit virtually – in both markets is a testament to our commitment.
“Looking forward, we will continue to prioritise the post-COVID-19 recovery as part of the Build Back Better agenda.
“We are committed to supporting a deeper and more strategic bilateral partnership between the UK and Nigeria that is based on enhancing economic development, job creation, inclusion, trade and investment,” O’Donohoe further remarked.
In a glowing tribute and commendation to the group, British High Commissioner to Nigeria, Catriona Laing CBE said CDC has been pivotal to creating jobs and supporting the growth of businesses by investing in the poorest countries across Africa, including Nigeria.
“CDC’s commitment to the country signals to other UK investors that investing in Nigeria is possible and should be prioritized in order to help Nigeria and indeed, Africa, mitigate the impact of COVID-19,” the envoy said.
Just-in: Nigeria’s manufacturing sector contracts for 5th consecutive month – CBN
The CBN disclosed in its September PMI report that the manufacturing sector contracted.
The Manufacturing Purchasing Managers’ Index (PMI), in September 2020, has witnessed a contraction for the fifth consecutive month, as it stood at 46.9 index points.
This was disclosed by the Central Bank of Nigeria (CBN), in its September PMI report released on Wednesday.
The report stated that, out of the 14 subsectors surveyed, 4 subsectors reported expansion (above 50% threshold) in the review month in the following order:
- Electrical equipment
- Transportation equipment
- Cement, and
- Nonmetallic mineral products
The paper product subsector was stable.
While the remaining 9 subsectors reported contraction (below 50% threshold) in the review month in the following order:
- Petroleum & coal products
- Primary metal
- Furniture & related products
- Printing & related support activities
- Food, beverage & tobacco products
- Textile, apparel, leather & footwear
- Chemical & pharmaceutical products;
- Fabricated metal products and
- Plastics & rubber products
The Non-manufacturing sector PMI stood at 41.9 points in September 2020, indicating contraction in nonmanufacturing PMI, for the sixth consecutive month.