CBN Spends N74.84bn on Printing New Naira Notes in 2022, Despite Naira Scarcity

The Central Bank of Nigeria (CBN) and its subsidiary, the Nigerian Security Printing and Minting Plc (NSPM), incurred a whopping N74.84bn on currency production and distribution in 2022.

This was a 40.42 per cent increase from the N53.29bn they spent in 2021, despite the scarcity of naira that hit the country in the last months of 2022.

According to the CBN’s financial statements, the currency issue expenses, which include the costs of printing, processing, distributing, and disposing of currency notes, rose by 94.66 per cent from N15.23bn in 2021 to N29.65bn in 2022.

The cost of sale, which represents the expenses incurred by the NSPM in producing currency notes and coins, also increased by 18.72 per cent from N38.07bn in 2021 to N45.19bn in 2022.

The CBN said that the cost of sale comprised of the cost of raw materials, employee benefit expenses relating to production staff, electricity and diesel expenses, depreciation and repairs and maintenance.

The increase in currency production and distribution costs came at a time when the total amount of naira in circulation declined by 9.47 per cent from N3.32tn in 2021 to N3.01tn in 2022. This was partly due to the CBN’s decision to redesign the naira notes and introduce new denominations of N5,000 and N10,000.

In October 2022, the suspended CBN Governor, Godwin Emefiele, announced that the new naira notes would be released by December 15, 2022, and some of the existing notes would cease to be legal tender by January 31, 2023.

However, this move triggered a cash crunch crisis that lasted for months and adversely affected the economy.

Many Nigerians complained about the difficulty of accessing cash from banks and ATMs, as well as the high cost of printing and transporting cash across the country.

 Some analysts also questioned the rationale behind the redesign and introduction of new naira notes, especially at a time when the country was facing high inflation, low foreign exchange reserves, and weak economic growth.

The CBN has not yet disclosed how much it will cost to print and distribute the new naira notes in 2023, but it is expected that the currency issue expenses and cost of sale will remain high as the bank tries to meet the demand for cash in the economy.

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