The Central Bank of Nigeria (CBN) has sounded the alarm on the escalating problem of illicit banknote transactions, a practice that poses a serious threat to the stability of the nation’s financial system. CBN Governor, Olayemi Cardoso, revealed the extent of the problem at a security workshop in Abuja, highlighting the findings of mystery shopping exercises conducted across major commercial centers in Nigeria. These exercises uncovered a rampant disregard for the value of the Naira, with traders and intermediaries charging exorbitant premiums for banknotes, effectively creating a black market for the nation’s currency. This practice not only distorts the true value of the Naira but also erodes public trust in the formal financial system, creating an environment where illicit activities can thrive. The CBN governor emphasized the need for swift and decisive action to curb this trend, calling for increased collaboration between regulatory bodies and law enforcement agencies.
The scale of the illegal banknote trade was brought into sharp focus by a specific case where N2.3 million worth of banknotes were procured for N3.2 million, revealing a premium of nearly 40%. This practice, where premiums range from 20% to 40%, underscores the urgent need for intervention. Beyond the direct economic implications, the symbolic damage inflicted by the blatant disregard for the Naira is a significant concern. The open display of currency abuse on social media, where banknotes are mishandled, sprayed, and even trampled upon, further exacerbates the problem. This behavior not only undermines the currency’s value but also erodes national pride and respect for the Naira as a symbol of national identity. The CBN Governor stressed the importance of public education and awareness campaigns to foster a greater sense of responsibility and respect for the national currency.
The CBN’s operational effectiveness is also being hampered by a number of security challenges, including limited access to armed security personnel, delays in obtaining security clearances for cash movements, interference in routine approvals, and uncoordinated handling of cash-in-transit services, often resulting in unnecessary arrests and detentions. These obstacles underscore the systemic nature of the problem, demanding a more structured and collaborative approach to security management. Improved security protocols, enhanced inter-agency cooperation, and streamlined processes are crucial for addressing these challenges and ensuring the smooth functioning of the CBN’s operations. The Governor emphasized the collective responsibility of all stakeholders in safeguarding the integrity of the financial system and restoring public confidence.
National Security Adviser, Nuhu Ribadu, echoed the CBN Governor’s concerns, emphasizing the urgent need for tougher enforcement actions against individuals involved in illicit currency dealings. He highlighted the pervasive issue of impunity and stressed the importance of accountability in deterring future offenses. Ribadu’s remarks underscored the critical role of law enforcement agencies in upholding the rule of law and maintaining the integrity of the financial system. He called for a more proactive approach to tackling emerging threats, emphasizing the need for stronger collaboration between regulatory agencies and security forces. This collaborative approach is crucial for effectively combating illicit financial activities and safeguarding the nation’s economic stability.
Ribadu also drew attention to the largely unregulated movement of vast sums of cash within the country, a practice that creates significant opportunities for illicit activities. He cited examples of commercial aircraft being used to transport large amounts of cash, often occupying a substantial portion of the passenger seats, and the use of private aircraft, boats, and other means to move funds outside the purview of regulatory oversight. This lack of control and transparency poses a serious risk to the financial system, facilitating money laundering, tax evasion, and other criminal activities. Ribadu called for a more robust regulatory framework to govern cash movements, ensuring proper supervision and tracking of funds to prevent misuse.
The combined perspectives of the CBN Governor and the National Security Adviser paint a clear picture of the multifaceted challenges facing Nigeria’s financial system. The illicit banknote trade, coupled with security vulnerabilities and the unregulated movement of cash, creates a breeding ground for criminal activity and undermines public trust. Addressing these issues requires a multi-pronged approach involving stricter enforcement, enhanced inter-agency cooperation, improved security protocols, public awareness campaigns, and a more robust regulatory framework for cash movements. A concerted effort from all stakeholders, including regulatory bodies, law enforcement agencies, financial institutions, and the public, is essential to safeguard the integrity of the financial system, protect the value of the Naira, and ensure the long-term economic stability of Nigeria.
