Recession: Scarcity of small naira denominations hits banks

- Sources at the CBN say the apex bank did not award contract for the printing of small naira denominations for about a year, leading to scarcity

- Sources attribute the high cost of printing banknotes as the reason the apex bank did not give contracts for their production

- But the CBN denies allegations that it has not contracted the printing of smaller denomination currencies since 2015

The current economic recession has forced the Central Bank of Nigeria (CBN) not to print small naira denominations for about a year, causing the scarcity of the notes in the economy, sources at the apex bank have disclosed.

The News Agency of Nigeria (NAN), citing sources at the CBN reports that for a year now, the apex bank did not award contract for the printing of the notes such as N5, N10, N20 and N50 usually done abroad.

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According to NAN, the recently printed notes in circulation, N200, N500 and N1,000 , were produced by the Nigeria Security Printing and Minting plc (NSPM).

Sources attribute the high cost of printing banknotes as the reason the apex bank did not give contracts for their production.

“The cost of printing N50 is almost the same as N1,000. Printing small denominations costs more than the value and with the present economic situation, it makes sense to print higher notes which can be done locally by NSPM.," a source said.

Confirming the scarcity of the small naira denominations in the country, a worker at the First Bank Plc said that there were hardly smaller currency notes to give to customers throughout the 2016 festive seasons.

“We usually request for cash from the CBN through our Cash Management Centre, but recently, we have not been able to get mints of N100 and below.

“We had N50 at one point but it wasn’t in the quantity we are used to getting.

“We have been telling our customers who call to request for mints that the smallest currencies they can get is N200,” the worker, who pleaded anonomity said.

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But the CBN has denied the allegation that it had not contracted the printing of smaller denomination currencies since 2015.

The CBN acting director, corporate communications, Mr Isaac Okorafor, dismissed reports of scarcity of smaller denomination in the market.

He said people are complaining because the CBN did not make provision for mints to be supplied in smaller denomination during the festive season.

“You see people are fond of abusing these denominations by spraying them to be stepped on during weddings and other ceremonies.

“The abuse is even worse during the festive season, so we decided to make scarce the denominations. But it’s not that we have not been printing them.

“ Yes we haven’t printed abroad but we also print locally which we have been doing,” he said.

Meanwhile, the Union of Tomato Paste Manufacturers in Nigeria through its spokesman, Mr. Nnamdi Nnodebe, has hinted that the once vibrant tomato industry might stop existing next year if the Central Bank of Nigeria (CBN) does not amend its policy on Forex to exclude triple concentrate tomato paste from the scope of the 41 items under the restricted list.

The Managing Director of Sonia Foods Industries Limited, one of the stakeholders in the production of tomato paste variants, said this from his office in Lagos

He said it makes better economics to import the raw materials that will enable production, grow the economy and keep jobs rather than importing the finished products or frustrating efforts to get the raw materials, thereby rendering millions jobless which might further kill the economy.

Source: Legit.ng