The Central Bank of Nigeria (CBN) has imposed a fine of ₦150 million on banks and financial institutions found guilty of selling newly minted naira notes to currency hawkers. The penalty, announced in a circular dated December 13, aims to curb the illegal trade of fresh banknotes and address Nigeria’s ongoing cash shortage crisis.
According to the CBN, the illicit flow of mint notes to currency traders has hindered the efficient distribution of cash to bank customers and the public. “The CBN has noted with dismay the prevalence of illicit flow of mint banknotes to currency hawkers and other unscrupulous economic agents that commodify naira banknotes, thus impeding efficient and effective cash distribution to banks’ customers and the general public,” the circular stated.
The cash shortage began in late 2022, following the CBN’s controversial currency redesign policy aimed at curbing counterfeiting and reducing cash circulation outside the banking system. However, the policy’s unintended consequences created a severe cash crunch, leaving millions of Nigerians unable to access money at ATMs or over the counter.
Although the redesign policy was eventually shelved, the shortage persisted, leading to increased reliance on informal cash channels. POS agents, supermarkets, and fuel stations have stepped in to supply cash, while currency hawkers—who purchase fresh notes from banks and resell them at marked-up prices—have further exacerbated the problem.
Reports indicate that newly minted notes are being sold in markets and at social events, creating a black market for currency that undermines the banking system’s cash distribution.
In its directive, the CBN emphasized its zero-tolerance approach toward banks involved in these illegal practices. “Any erring deposit money bank or financial institution that facilitates, aids, or abets the illicit flow of mint banknotes to currency traders and unscrupulous economic agents shall be penalized at first instance ₦150 million per erring branch. Subsequent violations will attract the full weight of BOFIA 2020 provisions,” the circular warned.
In response, some banks have reportedly begun implementing measures to comply with the directive. Sources revealed that at least two major commercial banks in Lagos ceased disbursing mint notes over the counter as of December 13.
While the CBN’s penalties are a step toward addressing the illegal trade of mint banknotes, experts suggest that the underlying issue may be systemic. Cash-heavy businesses, faced with supply constraints, have resorted to selling their banknotes to POS agents, bypassing formal banking channels and reducing the availability of cash within the system.
It remains to be seen whether the fines will effectively deter the commodification of naira notes or if deeper reforms are needed to address Nigeria’s cash distribution challenges.
