The total currency issued by the Central Bank of Nigeria (CBN) amounted to N2.405 trillion in six months, with banknotes rising to N2.400 trillion in June 2023.
This comes as scarcity of cash has bedevilled the country, dashing the hope of many Nigerians, particularly the festive holidaymakers and the small business operators who largely depend on cash for their business transactions.
In early November 2023, the CBN said there was sufficient currency stock in the banking system, warning the public against panic withdrawal.
Data from the CBN showed that the total banknote issued at the end of June 2023 stood at N1.4 trillion, indicating a significant (over 100 percent) increase above N557.61 billion issued in the corresponding period of 2022. Nigeria’s official currency is the naira, which the CBN is issuing.
The CBN spent N58.61 billion on printing banknotes in 2020 compared with N75.52 billion in 2019.
According to the CBN’s half year 2023 report published on its website, the banking and finance sector regulator’s issued currency stood at N2.405 trillion during the review (January – June 2023 period. This represented an increase of 331.0 and 236.37 per cent, respectively, relative to the first and second halves of 2022.
The eNaira accounted for less than half a per cent of the currency issued, with banknotes accounting for over 99.0 per cent, the report stated. “The Forensic Currency Laboratory of the Bank has secured approval to commence in-house counterfeit notes adjudication and examination using state-of-the-art technology to enhance quality and integrity of the currency,” the CBN said in the report.
A Lagos-based analyst said that government spending, economic growth, inflation, and change in monetary policy could increase the amount of currency in circulation.
Broad money (M3), which is the widest measure of an economy’s money supply, grew significantly above its provisional benchmark, driven largely by the increase in net foreign assets (NFA) following the adoption of a market-determined exchange rate in June 2023.
On June 14, 2023, the CBN collapsed all foreign exchange market segments into the Nigerian Autonomous Foreign Exchange Market (NAFEM), formerly the Investors’ and Exporters’ (I&E) forex window.
NFA grew significantly by 59.6 per cent to N11.11 trillion against the contraction of 25.6 and 34.7 per cent recorded at the end of December 2022 and June 2022, respectively.
Notably, the NFA maintained a downward trajectory until May 2023 before it started rising in June 2023, due to the revaluation effect of the assets, following the Bank’s decision to switch to a market-determined exchange rate.
This was reflected in the 51.8 per cent growth in claims on non-residents, propelled by the increase in the value of the official reserve assets and other foreign assets of the Bank and the increase in foreign currency deposits of Other Depository Corporations (ODCs).
Net domestic assets (NDA) also grew by 18.9 percent to N53.81 trillion in June 2023, relative to 28.9 percent and 21.9 percent at the end of December 2022 and June 2022, respectively. The increase in NDA was driven by the 31.2 per cent growth in domestic claims which was prompted by the 39.8 and 26.6 per cent rise in net claims on the central government and claims on other sectors, respectively.
The composition of the monetary authority’s claims on the central government changed significantly in line with the securitisation of the Ways and Means Advances, which took effect in June 2023.
Muda Yusuf, chief executive officer of the Centre for the Promotion of Private Enterprise, said the ways and means of finances of the CBN must be kept within statutory limits to avoid the damaging impacts of high-powered money on the macroeconomic environment.
According to him, the last few years’ experience must not be allowed to repeat itself.
Consequently, claims in the form of securities and shares increased by 987.1 per cent, compared with the growth of 22.8 per cent at the end of December 2022, but contrasted with the decrease of 4.6 per cent in the corresponding period of 2022. Claims in the form of loans to the central government declined by 60.78 per cent, in contrast to the increase of 34.4 and 25.6 per cent at end-December 2022 and end-June 2022, respectively.
