CBN: Foreign currency inflows fell to $1.83bn in 2020, Year of COVID

The Central Bank of Nigeria (CBN) reported a significant reduction in the volume and cost of foreign exchange procurement in 2020, the year of COVID, when the entire world was on lockdown and businesses were closed.

The bank stated that a total of $1.83 billion was procured during the period, representing a decrease of $2.12 billion or 53.67 percent compared to the $3.95 billion procured in 2019.

According to the apex bank’s Currency Operations Department (COD) annual report, which was posted on its website, the CBN also reduced its expenditure on currency printing from N75.52 billion in 2019 to N58.61 billion in 2020.
The central bank explained that this was used to fund Bureaux De Change (BDC) operations, as well as the payment of estacode and Personal Travel Allowances (PTA) to Ministries, Departments, and Agencies (MDAs).

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The CBN stated that the receipt and authentication of foreign currency deposits by Deposit Money Banks (DMBs) has decreased significantly as a result of the global trade downturn in 2020.

This represented a decrease of N16.91 billion, or 28.84 percent, from the previous year.
According to the central bank, currency printing consumed N64.04 billion in 2018.
According to sources, the cut was in line with the CBN Governor, Mr. Godwin Emefiele’s, policy goal of lowering the cost of printing bank notes and cash management in the country.

The Central Bank Digital Currency (CBDC), also known as the eNaira, which was recently unveiled by President Muhammadu Buhari, is in line with the policy of further reducing the cost of printing the naira.

According to the report, the total stock of currency (issuable and non-issuable) in the CBN vaults stood at 2.75 billion as of December 2020, up from 2.64 billion in 2019, representing a 105.73 million piece or 4% increase.
Total issuable notes (newly printed notes and Counted Audited Clean notes) were 592.94 million pieces in the review period, compared to 726.43 million pieces in 2019, representing a decrease of 133.49 million pieces or 18.38 percent.

The central bank reported that total income from currency management activities was N6.50 billion in 2020, down from N13.24 billion the previous year, a decrease of N6.74 billion or 50.92 percent.

The bank explained that the income was primarily generated by penal charges on unsorted banknotes deposited by Deposit Money Banks (DMBs) and charges for authentication of foreign currency deposits with the central bank.

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The CBN, on the other hand, incurred a total of N67.21 billion in currency operations expenses in 2020, a decrease of N17.96 billion or 21.08 percent from N85.18 billion in 2019.

Despite the limitations imposed by the COVID-19 pandemic and its impact in 2020, the apex bank completed an upgrade of the Cash Activity Reporting Portal (CARP) for transmission of currency management data from the financial industry to the Nigeria Inter-Bank Settlement System (NIBSS).

It also completed the development of the Mint tracking system application, a needs assessment on the infrastructure, user sensitization, a test run at five branches, and end-to-end system tests in preparation for the pilot launch in 2021.

The CBN also began the process of establishing a currency lab for banknote quality assessment, authentication, and independent investigations, as well as to adjudicate cases of suspected counterfeit banknotes.
It also registered an additional Cash-in-Transit (CIT) company, bringing the total to nine CIT companies, in order to increase private sector participation in CIT services, among other things.