CBN Expenditure Soars: N74.84 Billion Spent on Currency Production Despite 2022’s Cash Crunch

Despite facing a cash scarcity that gripped the nation in the latter months of 2022, the Central Bank of Nigeria (CBN) expended a staggering N74.84 billion on the production and rollout of currencies, including new naira notes, throughout the year.

This figure represents a substantial 40.42% increase compared to the N53.29 billion spent in the preceding year.

The CBN’s recently released financial statements reveal that currency issue expenses surged to N29.65 billion in 2022, marking a remarkable 94.66% rise from the N15.23 billion spent in 2021.

Currency issue expenses encompass costs related to printing, processing, distribution, and disposal of currency notes. These expenses are recognized at cost when incurred, according to the apex bank’s definition.

Additionally, one of the CBN’s subsidiaries, the Nigerian Security Printing and Minting Plc, reported a cost of sale amounting to N45.19 billion in 2022, reflecting an 18.72% increase from the N38.07 billion recorded in 2021. This cost of sale covers various elements, such as raw materials, employee benefits for production staff, electricity and diesel expenses, depreciation, and repairs and maintenance.

In 2022, the total currency circulation amounted to N3.01 trillion, marking a 9.47% decline from the N3.32 trillion recorded in 2021. This decrease in circulation follows the pattern observed in 2020, when the cost of printing bank notes decreased by 28.83% to N58.62 billion from the N75.52 billion recorded in 2019, according to the bank’s ‘2020 Currency Report.’

The CBN made a significant move in October 2022 under the leadership of the suspended Governor, Godwin Emefiele. Emefiele announced plans for the release of re-designed naira notes by December 15, 2022, along with the decision to phase out certain denominations of the existing notes as legal tender by January 31, 2023. However, this decision inadvertently led to a prolonged cash crunch that adversely impacted the economy for several months.

The substantial increase in currency production costs against the backdrop of a cash crunch highlights the challenges faced by the CBN in balancing currency supply and demand. As the nation navigates these financial dynamics, the effects of such decisions on the economy continue to remain a topic of concern and analysis.