Economy
Redesign Gone Wrong? – Costly Cashless
How does the central bank retrieve 84.5% of a country’s currency in circulation in just 90 days? This was one of the many questions seemingly begging for answers when Nigeria’s apex bank announced its plan to redesign the three higher value notes of the naira (N200, N500 and N1,000) on October 26, 2022.
Fast-forward three months and three weeks (a week before the general elections), and a majority of Nigerians are now confronted with a shortage of naira notes that is proving disruptive to lives and livelihoods.
Given the analyst consensus that a 90-day window was simply insufficient to complete the project, it is difficult to conceive a scenario where the Central Bank of Nigeria (CBN) did not anticipate the challenges which have accompanied this transition period.
President Muhammadu Buhari, in his address to Nigerians on February 16, 2023, said… “I am not unaware of the obstacles placed on the path of innocent Nigerians by unscrupulous officials in the banking industry, entrusted with the process of implementation of the new monetary policy. I am deeply pained and sincerely sympathise with you all over these unintended outcomes.”
In what appears to be a clear case of buck-passing by the federal government, the blame is being laid squarely on the banking industry’s purported failings and not any lapses in the policy’s design or hasty execution.
Depending on whom you ask, a performance appraisal of the CBN’s execution of the redesign project would range from grossly unprepared to poorly perceived.
In our opinion, the CBN failed to do enough through the media (television, radio, newspapers, new media) to effectively sensitise the public, particularly the rural dwellers, and manage expectations.
Most Nigerians assumed a simple exchange of old Naira notes for new ones. However, if we are to believe claims by the Kaduna State Governor, Nasir El-Rufai, the CBN printed circa N400 billion in new notes, leaving a shortfall of N2.3 trillion.
So, while the exercise has reportedly reeled in 80% (N2.1 trillion) of the N2.7 trillion held outside the banking system thus far, the average Nigerian is once again confronted with a test of resilience. Cash has become commoditized, hoarded by many, and now commanding outrageous premiums of up to 20-30% at Point-of-Sale (PoS) outlets.
The Road to Perdition is Famously paved with Good
Public outrage has degenerated into violent protests in some cities, with incidents of vandalism and arson at several banks’ facilities – and PoS outlets. The cash crunch and the uncertainty surrounding the policy are fanning a long-simmering fire of public resentment, triggered by deteriorating economic conditions and recently exacerbated by unending petrol shortages.
The result has been a significant loss of manhours, logistics constraints to many businesses and possible threats to the successful execution of the general elections.
The CBN, when launching the redesign project, outlined the objectives clearly. Perhaps its most compelling arguments centred on the need to combat terrorism and reduce counterfeiting.
The others largely revolved around driving the cashless policy through a shift away from cash and toward increased adoption of digital banking channels for transactions. This was underscored by a need to deepen financial inclusion (currently at 64%) and drive an efficient payment system that would improve the efficacy of monetary policy tools in combating inflation.
While the design of the policy gave room for underhand dealings by a privileged few, where the banking industry has really fallen short is in the capacity of the current digital payment infrastructure, which was already plagued by ‘transaction failures’ and an apparent inability to implement instant refunds, to handle the surge in transaction volumes.
For context, in the five years leading up to 2021, electronic payment surged by 386% to N272 trillion, accounting for over 94% of the entire value of transactions in Nigeria’s banking system. Financial institutions also responded accordingly by upscaling digital infrastructure to support the increasing adoption of electronic banking.
Recently, the Nigeria Inter-Bank Settlement System (NIBSS) reported a spike in the value of total cashless transactions in Nigeria to N39.58 trillion in January 2023 – a year-on-year increase of 45.41% – largely on the back of the CBN’s redesign and cash withdrawal policy.
Nevertheless, on evidence, the abrupt shift to electronic payments, which the current cash shortage has necessitated, has overwhelmed the banking industry’s digital payments infrastructure.
Nigerians are currently grappling with an unprecedented rate of electronic transaction failures. To further complicate matters, many transactions have not only failed, but refunds are taking days, even weeks in some instances, leaving many stranded and constraining commercial activity.
Unintended Consequences
The hardest hit by the policy have been the most vulnerable members of the population (the poor, the unbanked and the rural dwellers).
Nigeria is still a largely cash-dependent economy, with informal economic activity accounting for approximately 65% of GDP and being dominated by Micro, Small and Medium Enterprises (MSMEs). These MSMEs account for up to 96% of businesses and 86.3% of the national workforce. These are mostly cash-based businesses – particularly the micro-enterprises, which account for 99.8% of Nigeria’s 37.1 million MSMEs.
Given the low levels of education and exposure of a significant number of Nigerians in this category, many of whom live in rural areas with inadequate or non-existent telecommunications infrastructure, a quick and seamless transition to digital payment channels was always unlikely.
In addition, while mobile phone ownership in Nigeria is estimated at 81% by Enhancing Financial Innovation & Access (EFinA), internet penetration is still a mere 44.3%, as 60% of Nigerians live in rural areas where network outages were widespread even before the latest wave of transaction failures, and coverage was often non-existent, limiting access to traditional banking services. The Unstructured Supplementary Service Data (USSD), launched by banks and TelCos to enable deeper mobile banking penetration in communities lacking mobile data, has also been plagued by network-related setbacks.
The disruption to transactions, trade (domestic & foreign), productivity and all-round economic activity is likely to be significant enough to trigger a contraction in GDP in Q1’23 and possibly a loss of livelihoods for many.
Many cash-dependent businesses are being pushed to the brink. For example, cocoa farmers are currently unable to pay their labourers and transporters, jeopardising production and exports. The cash constraint is also likely to compel consumers to prioritise spending on necessities, leaving many businesses, particularly MSMEs, with decreased sales and heightened credit risks.
Worse still, living standards could decline further, particularly for many rural dwellers, as an inability to access cash could limit access to critical services like healthcare, stoking public discontent even further.
On the flip side, some of the biggest beneficiaries of the current lapses in electronic transactions have been Fintechs like Opay, Moniepoint, Paga, and Kuda, amongst others, which are reportedly far less prone to glitches and charge significantly lower transfer fees.
Whether this is down to lower transaction volumes than traditional banks or the capacity of their digital infrastructure, or both, it remains unclear.
However, getting traditional banks to invest in expanding their digital infrastructure in a period of rapid currency depreciation (most of the required infrastructure is imported) and, just as crucially, enhancing their cybersecurity will be crucial in convincing Nigerians to go cashless.
Some of the tier 1 banks spent an average of 5.4% of their operating expenses on ‘IT and related expenses” in 2021. Raising this expense in the face of shrinking margins would become increasingly difficult, as it is likely to further impinge on profitability.
Final Thoughts
Many contend that the solution to the immediate problem is rather straightforward: print more of the redesigned naira notes while gradually phasing out the old ones.
There is, however, a contrarian view suggesting that agreeing to the aforementioned is not to have a full appreciation of the nuances at play.
Perhaps the most significant takeaway from President Buhari’s recent address is clarity over who makes decisions and who must approve any deviation from the current position on which naira banknotes are legal tender.
The President concludes his address by noting that the policy’s success in minimising the influence of money in politics was a “positive departure from the past”. Given the timing of the policy, many argue that curbing vote-buying was the overarching objective.
The question is whether the long-term benefits of redesigning the naira outweigh the short-term costs and inconvenience of Nigerians being practically compelled to do away with cash. The hope is that the average Nigerian, now confronted with even greater hardship amid the current cost of living crises, is not a mere pawn in a political chess game.
By Adedapo Adesanya
Nigeria lost $1.1 billion (N1.493 trillion) to gas flaring in 2025, as oil and gas companies operating in the country burnt 323 billion Standard Cubic Feet (SCF) of gas between January and December 2025.
This is according to the latest data released by the National Oil Spill Detection and Remediation Agency (NOSDRA).
The agency, in its gas flare report for 2025, released recently, disclosed that the volume of gas flared in 2025 was 7.2 per cent higher than the 301.3 billion SCF (BSCF) of gas flared in 2024, which was also valued at $1.1 billion, about N1.493 billion.
The environmental impact regulator further stated that the volume of gas flared in the 12-month period of 2025 contributed 17.2 million tonnes of carbon dioxide into the atmosphere; had the potential to generate 32,300 gigawatt-hours (GWh) of electricity; while the offending companies were liable for penalties payment of $646.1 million, about N876.622 billion.
NOSDRA maintained that in the 12-month period of 2024, the 301.3 billion SCF of gas flared by oil and gas firms was valued at $1.1 billion, about N1.493 trillion, with penalties payable at $602.7 million, about N818.271 billion, while it contributed 16 million tonnes of carbon dioxide emissions, and had power generation potential of 30,100 GWh.
Providing a breakdown of gas flared data across segments of the oil-producing space in 2025, the agency reported that 206.3 billion SCF of gas was flared by oil and gas firms operating in the country’s onshore oil space, accounting for 63.8 per cent of total gas flared in the period under review, and was 18.36 per cent higher than the volume lost to gas flaring in this same segment in 2024.
NOSDRA added that the volume of gas flared onshore caused the country a loss of 20,600 GWh of electricity, and the emission of 11 million tonnes of greenhouse gases; this was valued at $722 million, about N979.754 billion; while the companies were liable to pay penalties of $412.6 million, about N560.441 billion.
In comparison, the 174.3 billion SCF of gas flared in 2024 by companies operating onshore was valued at $610 million, about N827.77 billion; with penalties payable at $348.6 million, about N473.593 billion; caused the loss of power generation potential of 17,400 GWh; and contributed 9.3 million tonnes of carbon dioxide into the atmosphere.
On the other hand, companies operating offshore accounted for 36.2 per cent of total gas flared between January and December 2025, with 116.8 billion SCF of gas, valued at $408.7 million (N555.013 billion); penalties payable at $233.5 million (N317.538 billion); contributed 6.2 million tonnes of carbon dioxide emission; and eroded 11,700 GWh of electricity generation potential.
Similarly, in the same 12-month period in 2024, offshore operations emitted 6.7 million tonnes of carbon dioxide into the atmosphere, causing the loss of power generation capacity of 12,700 GWh, with 127.1 billion SCF of gas flared, valued at $444.7 million (N603.865 billion), and penalties payable at $254.1 million (N344.678 billion).
NOSDRA noted that the offending companies flared gas from Oil Mining Leases (OML) 04, 05, 11, 13, 14, 17, 18, 22, 28, 23, 24, 38, 40, 42, 43, 72, 49, 54, 86, 90, 95, 67, 70, 104, 59, 99, 100, 101, 102, 110 and Oil Prospecting Licences (OPL) 090, 209, 212, 216, 222, 246, 316 and 306, among others.
It identified the offending companies as Shell Petroleum, Development Company (SPDC), Nigerian Petroleum Development Company (NPDC), Chevron Nigeria, Mobil Oil, Elf Petroleum Nigeria, Nigeria Agip Oil Company (NAOC), Addax Petroleum, Texaco Overseas (Nigeria), Esso Exploration and Production Nigeria, Allied Energy Resources, Ultramar Petroleum, Atlas Petroleum; Cromwell, Afric Oil and Marketing, Famfa Oil, Moni Pulo, and South Atlantic Petroleum, Star Deep Water, Summit Oil, among others.
By Aduragbemi Omiyale
About 61.9 million barrels of crude oil were allocated to domestic refineries, including Dangote Petroleum Refinery, in the first quarter of 2026.
This information was revealed by the Nigerian Upstream Petroleum Regulatory Commission (NUPRC) in a statement by its Head of Media and Corporate Communication, Mr Eniola Akinkuotu, on Tuesday.
In the statistics on the enforcement of the Domestic Crude Supply Obligation (DCSO) for the quarter under review, it was emphasised that producers collectively offered a higher volume of 68.7 million barrels, but actual supply to local refineries was 28.5 million barrels, translating to a supply conversion rate of 36-46 per cent between January 2026 and March 2026.
A breakdown of the DCSO month by month reveals that in the month of January, following consultations with stakeholders, including crude oil producers, the commission mandated producers to supply 22.6 million barrels to the local refiners.
Producers exceeded expectations, offering 25.3 million barrels, representing a rise of 11.9 per cent, or an additional 2.7 million barrels, in the month. However, 9.2 million barrels were ultimately supplied to local refiners.
In February, the agency, in discharging its DCSO, allocated 20.5 million barrels to local refineries, but producers offered slightly less at 19.8 million barrels, missing the target by 700,000 barrels. Actual supply was down at 9.1 million barrels.
In March, there was a modest improvement in deliveries, which rose to 10.1 million barrels, up from 9.2 million barrels in January and 9.1 million barrels in February. During the same period, DCSO allocations stood at 18.8 million barrels, while producers offered a significantly higher 23.6 million barrels, representing an excess of 4.8 million barrels or 25.5 per cent.
It was stated that the shortfall between volumes offered and actual deliveries was primarily due to pricing gaps between producers and domestic refiners.
According to NUPRC, the current framework operates on a “willing buyer, willing seller” basis, which continues to shape transaction outcomes.
Despite these developments, the commission reaffirmed its commitment to achieving the government’s objective of energy sufficiency.
“Leveraging the framework of the PIA, 2021, the commission aims to sustain recent gains in crude oil production while continuously refining the DCSO methodology to enhance transparency, efficiency, and ensure that local refineries are supplied as committed,” the statement said.
Nigeria’s economy is entering a critical phase, moving from stabilisation into what the Federal Government describes as ‘growth acceleration’, according to the former Minister of Finance and Coordinating Minister of the Economy, Wale Edun, during his keynote delivery at the Nigeria Business Summit convened by Stanbic IBTC.
In his keynote address, Edun said recent macroeconomic reforms had begun to stabilise the economy but cautioned that current growth levels remain inadequate to deliver broad‑based prosperity.
“For nearly a decade, our GDP averaged around two per cent,” Edun said. “We have now moved into a new phase where growth is closer to four per cent, supported by macroeconomic reforms. This is an important improvement, but it is still below the level required to move Nigerians out of poverty in their millions.”
Reforms have strengthened resilience
Edun noted that Nigeria is navigating a renewed global economic shock at a sensitive point in its reform journey. However, he argued that the effects have been softened by reforms introduced since May 2023.
“These shocks would have been far more severe without the comprehensive reforms that have been put in place,” he said, citing stronger external reserves, improved non‑oil revenue performance, and returning investor confidence across domestic and foreign markets.
According to the former Minister, Nigeria is now better positioned to absorb shocks “through price adjustments, investment reallocation, and expanded trade opportunities across Africa and globally”, creating a more predictable environment for business planning and capital deployment.
Enterprises across the value chain must drive inclusive growth
The central theme of the address was the role of enterprises across the value chain in driving inclusive growth. While Edun described small and medium‑scale enterprises (SMEs) as the backbone of the economy, accounting for over 90 per cent of businesses and the majority of employment, he also highlighted the importance of large corporates in building productive and resilient ecosystems.
“Their growth is central to inclusive development,” he said of SMEs. “If we want growth that creates jobs and reduces poverty, then SMEs must be supported deliberately.”
He stressed that this support must translate into practical outcomes, including access to appropriate financing, improved processes, and stronger integration into value chains. For large organisations, he noted, scaling productive capacity and strengthening supplier networks is equally critical.
Productivity and trade as growth enablers
Edun highlighted the National Single Window Initiative as a reform focused on execution and productivity. “Government revenue will increase, not because of higher charges, but because of increased volumes through productivity,” he said.
He emphasised that Nigeria’s long‑term growth will depend on its ability to compete beyond its borders, noting that trade will remain a key driver of diversification and foreign exchange earnings.
“Our true potential does not lie only in our large domestic market,” Edun said. “It lies in becoming a leading exporting economy.”
Partnership and shared responsibility
The former Minister was clear that the government cannot deliver transformation alone.
“Government cannot drive transformation alone,” Edun said. “Its role is to maintain stability, implement predictable policies, and remove structural and bureaucratic constraints to investment.”
Achieving Nigeria’s ambition of building a one‑trillion‑Dollar economy, he added, will require collaboration between government, large corporates, financial institutions, and SMEs.
In closing, Edun delivered a clear signal to investors and businesses.
“Nigeria is open for business. Nigeria is ready for investment, and Nigeria is committed to building an economy that works for all and delivers shared prosperity.”
As discussions continue at the summit, the message is clear. The next phase of growth will favour businesses that are well‑structured, productive, and positioned to scale. Stanbic IBTC continues to support SMEs and large corporates across key sectors, providing financing, advisory, transaction banking, and trade solutions aligned to different stages of business growth.
Businesses seeking to scale operations, strengthen value chains, or expand into regional and global markets are encouraged to engage with Stanbic IBTC to explore solutions aligned with their growth ambitions.
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