A damning audit report has revealed that the Central Bank of Nigeria (CBN) under former Governor Godwin Emefiele recirculated ₦29.77 billion in banknotes deemed unfit for public use in 2022. The findings, detailed in the Auditor-General’s Annual Report on Non-Compliance and Internal Control Weaknesses, raise serious questions about the CBN’s currency management practices and internal controls.
The revelation comes at a sensitive time, as Emefiele already faces multiple fraud and corruption charges. While the audit doesn’t directly implicate him, it places accountability for these systemic failures squarely on the CBN’s leadership during his tenure. This latest allegation adds to a growing list of concerns surrounding the former governor’s handling of Nigeria’s monetary policies.
Violation of the Clean Note Policy
The CBN’s “Clean Note Policy Version 0.1 (2018)” explicitly mandates that only fit and authenticated banknotes be released into circulation, with unfit notes slated for immediate destruction. However, the audit uncovered widespread violations of this policy between April and December 2022. The Abuja branch was the most significant offender, re-issuing ₦28.615 billion of condemned notes during the October-December period alone. Further breaches were identified at the Lagos (₦970 million), Bauchi (₦30 million), and Jos (₦50 million and ₦100 million) branches, bringing the total recirculated amount to ₦29.765 billion.
Auditors warned that this practice not only damages the reputation of Nigeria’s financial system but also compromises the durability of the nation’s currency. The reintroduction of dirty and mutilated notes raises public health concerns and erodes confidence in the banking system. What level of oversight is truly in place to protect the integrity of Nigeria’s currency?
Branch Explanations Dismissed as Unsatisfactory
Each branch offered explanations for the breaches, which the Auditor-General deemed “not satisfactory.” The Abuja branch cited operational disruptions caused by the COVID-19 pandemic and a period of cash scarcity. The Lagos branch attributed its actions to high cash demand during the 2022 Christmas season. The Jos branch claimed re-issuance was necessary to fulfill cash requests from the military during security operations. The Bauchi branch outright denied issuing unfit notes. These justifications failed to address the fundamental violation of established policy.
The report recommends that the National Assembly’s Public Accounts Committees summon current CBN leadership to provide a detailed explanation of the breaches and to consider appropriate sanctions under Financial Regulations. These regulations outline penalties for misconduct and failures in financial management.
Delayed Destruction of Unfit Banknotes
The audit also highlighted a separate, equally concerning issue: the delayed destruction of unfit banknotes. As of October 2023, 997 boxes of ₦10 notes (valued at ₦99.7 million) and 695 boxes of ₦500 notes (valued at ₦3.475 billion) remained in CBN custody, despite being certified unfit as early as late 2021. Delays in the briquetting and disposal processes resulted in a total of ₦3.57 billion worth of condemned notes accumulating in CBN vaults, raising concerns about potential pilferage and mismanagement of public funds.
The CBN claimed destruction activities had commenced, but auditors rejected this explanation, maintaining their original findings. This lack of responsiveness further fuels concerns about accountability and transparency within the central bank.
Reports surfaced in April 2023 of bank workers and customers expressing dissatisfaction with the poor quality of naira notes being reintroduced into circulation. Concerns were raised about the potential for dirty and mutilated notes to spread diseases.
Context: The Naira Redesign Policy and its Aftermath
The circulation of dirty notes in 2022 coincided with the controversial naira redesign policy announced in October 2022. The rushed implementation of this policy led to severe cash shortages, legal challenges, and ultimately, a Supreme Court ruling extending the use of old notes. Analysts suggest that the current audit findings underscore the broader issues surrounding the former CBN leadership’s management of Nigeria’s currency and monetary policies. The policy, intended to curb inflation and illicit financial flows, instead created widespread economic hardship and fueled public discontent.
The Auditor-General’s office has emphasized that the recirculation of unfit notes must not recur and has urged lawmakers to enforce stricter accountability measures within the CBN. A transparent, efficient, and compliant currency management system is essential for maintaining economic stability and public trust.
External Link 1: International Monetary Fund – Currency Issues
External Link 2: World Bank – Financial Sector
Frequently Asked Questions
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What is the Clean Note Policy and why is it important?
The Clean Note Policy mandates the destruction of unfit banknotes and the circulation of only fit notes. It’s crucial for maintaining currency integrity, public health, and confidence in the financial system.
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How much money in unfit notes was recirculated by the CBN?
The audit report revealed that the CBN recirculated ₦29.77 billion in unfit banknotes in 2022.
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What explanations did the CBN branches offer for recirculating unfit notes?
Branches cited reasons such as COVID-19 disruptions, high Christmas demand, military requests, and denial of wrongdoing, all of which were rejected by the Auditor-General.
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What are the potential consequences of recirculating dirty banknotes?
Recirculating unfit notes can damage Nigeria’s reputation, reduce currency durability, and pose public health risks.
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What is the role of the National Assembly in addressing these findings?
The National Assembly’s Public Accounts Committees are recommended to summon CBN leadership to explain the breaches and consider sanctions.
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Beyond the financial implications, how does this affect the average Nigerian?
The circulation of dirty notes can lead to distrust in the banking system and potential health concerns, impacting the daily lives of citizens.
The findings of this audit demand a thorough investigation and decisive action to restore public trust in the Central Bank of Nigeria. Will the National Assembly take the necessary steps to hold those responsible accountable and prevent future occurrences? What systemic changes are needed to ensure the integrity of Nigeria’s currency management system?
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Disclaimer: This article provides information for general knowledge and informational purposes only, and does not constitute financial, legal, or medical advice.
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