New naira notes: CBN harps on compliance for banks

Nigeria finds itself at a crossroads as the Central Bank announces new regulations regarding Naira notes while grappling with economic challenges and a downward revision in growth forecast by the World Bank. The Central Bank of Nigeria has put commercial banks on notice that their ATMs will no longer dispense old Naira notes. This move comes with a serialisation policy to load the new ₦200, ₦500, and ₦1,000 notes. Non-compliant banks face penalties, highlighting the urgency of the situation. As the country navigates these changes, the World Bank has revised its economic growth forecast for Sub-Saharan Africa, projecting 3.6% growth for the current year, a figure that drops to 3.9% for 2024. This shift underscores the economic challenges facing the region. The implications of these developments were discussed by Steve Osho, co-managing partner and head of advisory at Comercio Partners, who joined CNBC Africa for an in-depth analysis. The conversation began with a focus on the global economic outlook, which has been adjusted downwards due to various downside risks. Factors such as the Ukraine-Russia crisis and rising inflation trends pose significant threats to economic stability. Osho highlighted the importance of central banks worldwide in managing inflation and the potential impact on GDP growth if inflation persists. Additionally, he emphasized the concern over debt issuance by emerging markets and the need for sustainable debt management strategies to mitigate financial risks. Turning to Nigeria specifically, Osho examined the country's oil production challenges and revenue potential. While production issues have hampered Nigeria's performance compared to Angola, recent efforts to increase production levels could lead to improved revenue generation and bolster foreign reserves. Osho pointed out the significance of hitting production targets to enhance economic stability and revenue streams. The discussion shifted to Nigeria's food systems and poverty reduction strategies. Osho stressed the importance of directing resources towards human capital development and supporting small and medium enterprises to stimulate economic growth. With upcoming elections and ongoing economic challenges, Osho highlighted the need for cohesive poverty reduction policies to address welfare concerns at the grassroots level. A critical issue raised was Nigeria's mounting debt burden and the necessity of debt restructuring to prevent further fiscal deterioration. Osho underscored the challenges ahead for the incoming government in balancing debt management with driving economic growth in the non-oil sector. The conversation concluded with a focus on the implementation of the new cash withdrawal limits and the circulation of the new Naira notes. Osho acknowledged the logistical challenges faced by banks in transitioning to the new currency and emphasized the need for seamless coordination between banks and the Central Bank to ensure a smooth rollout. Despite the tight deadline to phase out old notes by the end of March, Osho expressed confidence in the efforts being made to transition to the new currency regime. As Nigeria grapples with economic uncertainty and structural changes, proactive measures and strategic planning will be crucial to steer the country towards sustainable growth and stability.