Protocol
- It is my pleasure to address you at this second edition of
the “National Seminar on Cash Handling, Automation and
Management” organized by the Financial Institutions Training
Centre (FITC), in collaboration with the Central Bank of Nigeria
(CBN). I have no doubt that the organization of the second
edition of the seminar was motivated by the huge success
recorded at the first edition held in March, 2004. - This seminar is informed by the fact that the Nigerian
economy is predominantly cash-based, reflecting the
preference of economic agents, the weakness of the legal
system to enforce contracts, and the level of development of
our payments system. The seminar could not have come at a
more auspicious time, given the problems of currency
management in Nigeria and the urgent need to chart a new
direction consistent with best practices, in order to engender greater efficiency and minimize costs in printing and minting currency.
- The problems of currency management in Nigeria which
necessitated the hosting of the seminar in 2004 are still
prevalent. These include, dirty notes in circulation;
predominance of cash-based transactions; low level of
automation; and near absence of private sector participation in
currency management. The volume of currency-in-circulation
is large, totaling 3.99 billion pieces as at end-December, 2004.
The volume was as high as 8.2 billion pieces as at 2002 but
declined steadily, following the on-going currency reforms. A
significant proportion of the notes in circulation are not only
dirty, but defaced and abused due to poor handling and lack of
respect for the national currency. Our culture of “spraying
notes” typifies the abuse of the national currency. - A major dimension to the problem of currency
management is the very limited use of coins, attributable partly
to the many years of high inflation which eroded the purchasing
power of coins and resulted in rounding-up of prices to the
nearest banknote value. It is also partly due to the problems of
size and weight.
- Over the years, the CBN has been involved in virtually all
aspects of currency management, from strategic and
directional functions to conventional operational activities, with
minimal private sector participation. Currency management,
which straddles the entire cycle of currency issue functions,
from the printing of banknotes and minting of coins, storage,
distribution and processing, to the disposal of unfit notes, is not
only cumbersome with the attendant complex logistical
arrangements but also very expensive. - Ladies and Gentlemen, as many of you are aware, the
core functions of the Central Bank of Nigeria are: issuance of
the legal tender currency; maintenance and Management of
Nigeria’s external reserves to safeguard the international value
of the legal tender currency; promotion and maintenance of
monetary stability and a sound and an efficient financial
system; and acting as banker and financial adviser to the
Federal Government. Over the years, the Bank had
overstretched its capacity by undertaking several activities that
are only ancillary to its core functions. In order to re-position
itself to efficiently deliver on its core mandate, the Bank is
implementing a comprehensive reform programme which is
already at an advanced stage of implementation. It entails a reengineering of its structure, processes and deployment of appropriate information technology infrastructure. Specifically, in the area of currency management, the Bank is carrying out a comprehensive review of its entire currency series with a view to addressing issues of denominational structure; limited use of coins for transactions; dirty notes in circulation; and high cost of currency management. The N1000 note will be issued before the end of this year as an integral aspect of the currency restructuring that is aimed at enhancing the efficiency of currency management.
- Some non-core processes of the activities of the Central
Bank are now being outsourced to create space for the bank to
focus on its core functions. The processes being outsourced
will include currency distribution and currency processing,
while the CBN will ensure adequate regulatory and supervisory
standards. We believe that these processes could be more
efficiently performed by the private sector and we shall operate
in line with the global trend of increasing collaboration between
central banks and the private sector. This will free the CBN
from routine operational activities in currency management to
focus more on the directional functions, such as currency
issuance, research and development, currency control and
disposal, and supply chain facilitation.
- It is heartening to note that increasing interest is being
expressed by private sector organizations in cash-in-transit
operations as the Bank continues to receive enquiries on the
requirements and modalities for such ventures. The CBN is
favourably disposed to encouraging such pioneering
investments. We further urge prospective investors who are
interested in this line of business to explore both cash-in-transit
and currency processing operations to take advantage of the
huge economies of scale from both processes. - Ladies and Gentlemen, as many of you are aware, the
CBN has acquired majority shareholding in the Nigerian
Security Printing and Minting (NSPM) Plc and has taken over
the management of the company. The aim is to restructure
and reposition the company as a world-class competitive firm.
Our goal is to stop importation of finished banknotes within
three years and sufficiently meet the banknote and security
printing requirements of the Nigerian economy and those of
West and Central Africa in the longer-term. The restructuring
programme is on course and once the company stabilizes and
becomes profitable, the CBN will divest its interest to the
private sector to own and manage the Mint.
- Currency management in Nigeria poses a lot of
challenges. The establishment of a Real Time Gross
Settlement (RTGS) system for large-value payments which is
expected to go live before the end of the year, the operation of
the Nigeria Automated Clearing System (NACS) and increasing
use of electronic payment devices will help relieve the pressure
on cash. As part of the continued effort at enhancing the
quality of Naira notes in circulation, the CBN plans to
resuscitate its campaign against Naira abuse, especially
sensitizing the public on the proper handling of the Naira. The
national currency, the Naira, is a window on Nigeria, our
people, heritage and culture, and portrays our national
character. - Ladies and Gentlemen, I have noted that the specific
objectives of this seminar are to:
(1) Examine the various problems associated with the
management and handling of cash in Nigeria;
(2) Acquaint the participants with the framework for
maximizing cash-based transactions;
(3) Discuss the various ways of developing and sustaining
effectiveness in payments system and cash management
in Nigeria; and
(4) Preview the challenges for integrating cash management
operations in Nigeria.
It is my expectation that the distinguished participants at this
seminar will come up with workable solutions to cash and
currency management problems in Nigeria. Looking at the high
quality of resource persons and participants at the seminar, I
am convinced that the seminar will identify viable options to our
cash and currency management challenges. I am therefore
looking forward to the outcome of the seminar.
- I thank you all for your kind attention and wish you fruitful
deliberations.
PROF. CHARLES C. SOLUDO, CBN GOVERNOR,
9th August, 2005
Source: CBN
