Nigeria’s poor and marginalised communities could be adversely impacted by the apex bank’s directive for customers to exchange old naira notes for new ones through an existing bank account.
According to a report by Inclusion for all Initiative (I4All), a multifaceted advocacy programme, titled ‘Naira Redesign Impact’, 54 percent of the unbanked poor store cash at home or on their person, indicating that more than 50 percent of this segment of the population could lose their savings.
“The naira redesign and accompanying note replacement process will not address the issue of banks being too far away and costly to access for poor people.
“This process could further exclude underserved populations if appropriate measures and time are not given to overcome the existing barrier,” it said.
The report added that even if customers are able to access banks or their agents, the vast majority are unlikely to possess a proof of address or the documentation required to open a tier three bank account.
“This means that they may be unable to switch their existing notes to the new ones, or may have trouble depositing due to account limits.”
Recall that in October last year, the Central Bank of Nigeria (CBN) announced plans to redesign the 200, 500 and 1,000 naira notes.
The CBN said its objective was to mop up excess cash in circulation and ultimately drive digital adoption by requiring citizens to exchange old notes for new ones through a bank account.
While circulation of the newly designed notes began on December 15, both new and existing notes will remain in circulation until January 31, 2023.
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The I4All report said, the intent to use the process to drive account ownership and formal participation in the financial services sector is laudable, but it is essential to ensure that the implementation of the policy does not exclude already marginalised communities.
“The CBN has acknowledged concerns around vulnerable populations, and prioritised banking agents to help those in rural/underserved areas to deposit cash,” it said.
However, it cited insecurity, distance, lack of electricity, and low profits as the reasons the banking agents are concentrated more in urban areas compared to the rural ones.
The report also identified the top reasons why people don’t have bank accounts such as banks being too far from where they live, irregular income, no job and the costs too much to bank.
“Across the unbanked population that lives below the poverty line, the biggest proportion (19 percent) are saving less than N1, 000,” it said.
The organisation recommended that critical challenges need to be addressed in order to ensure that the policy does not unintentionally further disenfranchise already marginalised communities.
It said considering the tight timelines, a rapid and intensified rollout of a sensitisation programme amongst vulnerable groups, informing them of the process, deadlines and requirements should be done
“Adequately equip, incentivize and capacitates mobile agents to be able to reach and cover people in hard-to-reach areas effectively.
“Consideration also needs to be given to the availability of devices for issuing BVNs, and how this will work in areas with poor network coverage,” it added.
