Banknotes destroyed were tattered and dirty
By Jeph Ajobaju, Chief Copy Editor
Tattered and dirty banknotes worth N698,593.29 million were destroyed by the Central Bank of Nigeria (CBN) in 2020 after a back and forth between it and commercial banks over filthy and mutilated naira notes that soil the country’s image.
The argument was about who, between the CBN and deposit money banks (DMBs), should bear the cost of sorting unfit currency notes and ferrying them to disposal sites.
Data newly released by the CBN shows it spent N538.59 million on currency disposal in 2020 but generated N6,499.91 million income from currency management activities.
Annual Report 2020 compiled by the Currency Operations Department of the CBN said the destruction of unfit banknotes is regularly carried out by the CBN under strict security and with the authorisation of Section 18(d) of the CBN Act 2007.
The Section mandates the destruction of currency notes and coins withdrawn from circulation under Section 20(3) of the Act or otherwise found by the CBN to be unfit for use.
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Disposal costs
The report disclosed that unfit banknotes were destroyed to ensure the circulation of clean ones and the CBN deployed 11 Banknote Destruction Systems (BDS) and three Currency Disintegrating Systems (CDS) for disposals.
“At end-December 2020, a total of 1,514.66 million pieces (151,427 boxes) valued at N698,593.29 million was disposed, compared with 1,572.17 million pieces (157,217 boxes) valued at N814,437.60 million in 2019.
“The boxes and value of unfit notes disposed in 2020 decreased by 5,790 boxes, and N1,115.84 million, respectively, below 157,217 boxes, valued at N814,437.10 million in 2019.
“The decrease was attributed to the suspension of disposal activities due to COVID19 restrictions,” the CBN explained, reported by Nairametrics.
The CBN said it incurred N538.59 million on currency disposal in 2020, compared with N647.82 million in 2019. This was N109.23 million or 16.86 per cent lower than the cost in 2019.
“The Bank generated the sum of N6,499.91 million as total income from currency management activities in 2020, compared with N13,242.91 million in 2019, representing a decrease of N6,743.01 million or 50.92%.
“The income generated was large, from penal charges on unsorted banknotes deposited by DMBs and charges for authentication of foreign currency deposits with the Bank.”
The CBN incurred N67,212.20 million as expenses on currency operations in 2020, a decrease of N17,963.18 million or 21.08 per cent against N85,175.36 million in 2019.
A total 79,993 pieces of mutilated banknotes of various denominations, valued at N52.82 million, were audited, disposed of and replaced in 2020, compared with 865,775 pieces worth N45.99 million in 2019.
This represented a decrease of 90.76 per cent in volume and 14.85 per cent in value, according to the report.
Quest for better ways of currency disposal
The CBN had explained in a circular last year that “banknotes disposal operation is presently carried out in twelve (12) disposal centres across the country weekly where about 100 tons of paper banknote wastes are generated.
“These wastes are destroyed through open-air burning in sites owned by the Bank or rented, usually from the respective state governments.”
The CBN said due to the pollution and health hazards cause by open-air burning, it is seeking a more environmentally sustainable method to reduce its carbon footprint.
It has invited proposals from qualified recycling companies interested in recycling paper banknote waste.
The goal of this Request for Proposal (RFP) is to select credible organisations to recycle paper banknote trash into usable items that benefit the country while following Health and Safety Executive (HSE) standards, the CBN explained.
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