CBN Fines Banks ₦150 Million as Naira Crisis Deepens

As the naira continues to face unprecedented devaluation, the Central Bank of Nigeria (CBN) has imposed a ₦150 million fine on Deposit Money Banks (DMBs) found complicit in aiding the illegal distribution of mint naira notes to currency hawkers. This enforcement, announced in a circular signed by Mohammed Olayemi, Acting Director of the Currency Operations Department, signals the apex bank’s heightened efforts to combat systemic inefficiencies undermining the currency’s stability.

Crackdown on Black Market Practices

The illicit trade of mint naira notes has exacerbated Nigeria’s monetary challenges, with currency hawkers capitalizing on public distrust of formal banking systems. According to the CBN, this practice disrupts the effective flow of cash to legitimate users and fuels speculation, further devaluing the naira in both formal and informal markets.

“The CBN has noted with dismay the prevalence of illicit flow of mint banknotes to currency hawkers and other unscrupulous economic agents,” Olayemi remarked, emphasizing the regulatory body’s commitment to addressing these economic distortions.

Strengthening Controls in an Unstable Economy

To counteract this trend, the CBN plans to intensify its periodic spot checks at banking halls and ATMs, alongside “mystery shopping” exercises at known cash hawking hotspots. Erring branches will face initial fines of ₦150 million, with harsher penalties applied under relevant sections of the Banks and Other Financial Institutions Act (BOFIA) 2020.

The CBN has also urged financial institutions to fortify their internal processes to prevent exploitation by cash hawkers. Enhanced controls at cash management centers and teller operations are essential to curbing the illegal commodification of naira notes, which weakens trust in the local currency and formal banking systems.

Naira’s Plight

Nigeria’s naira has been on a downward spiral, reflecting deep structural economic issues. The black-market trade in mint currency exacerbates inflationary pressures and widens the gap between the official and parallel market exchange rates. The weakened naira continues to erode purchasing power, hitting the average Nigerian hard as prices of goods and services surge.

Economic experts argue that addressing such practices is only a part of the broader need for monetary reform. “The fine is a step in the right direction,” says Dr. Olumide Adedoyin, an economist. “However, stabilizing the naira requires a multifaceted approach, including fostering transparency in the forex market, reducing dependency on imports, and rebuilding public trust in the currency.”

What This Means for Nigerians

For the average Nigerian, the crackdown signals an attempt by the CBN to restore some level of order within the cash circulation system. However, broader questions remain about the bank’s ability to effectively regulate currency distribution amidst widespread economic instability.

With inflation on the rise and the naira losing value against major global currencies, sustainable solutions must address both supply chain disruptions within the cash system and the underlying economic forces driving the naira’s continued decline.