The Office of the Auditor-General of the Federation has formally accused the Central Bank of Nigeria (CBN), under former Governor Godwin Emefiele, of reintroducing dirty and unfit banknotes worth N29.77 billion into circulation, in direct breach of the CBN’s own Clean Note Policy.
The allegation is detailed in the Auditor-General’s recently released Annual Report on Non-Compliance and Internal Control Weaknesses in MDAs for the year ending December 31, 2022. The report revealed that several CBN branches issued notes previously classified as “Counted Audited Dirty”, a category of banknotes officially deemed unfit for circulation.
Between April and December 2022, the audit found that condemned notes were distributed across Abuja, Lagos, Bauchi, and Jos. The bulk of the reissued currency came from Abuja, where N28.615 billion was circulated between October and December 2022. Lagos reportedly released N970 million in December 2022, Bauchi issued N30 million in April, and Jos dispensed N50 million and N100 million on May 16 and May 27, respectively.
The report stated, “Audit observed that Counted Audited Dirty banknotes amounting to N29,765,000,000.00 were re-circulated into the system by the Central Bank of Nigeria.” It stressed that this practice violated Clean Note Policy Version 0.1 (2018), which stipulates that only authenticated, fit notes may be issued while unfit notes must not enter circulation, either via the CBN or commercial banks.
The audit team attributed the breaches to weaknesses in internal control systems and warned that the irregular circulation of dirty notes could harm the country’s reputation and reduce the lifespan of banknotes.
CBN Branch Explanations Rejected
The CBN offered varying reasons for the violations. The Abuja branch blamed operational challenges linked to the COVID-19 pandemic, claiming cash shortages necessitated issuing unfit notes. The Bauchi branch denied releasing any unfit currency, while the Jos branch cited military cash demands during periods of insecurity. The Lagos branch argued that heightened cash demand during the Christmas season prompted the release.
However, the Auditor-General rejected all justifications as unsatisfactory, insisting the findings remain valid until corrective measures are implemented. The report recommended that the Governor of the CBN be summoned by the Public Accounts Committees of the National Assembly to explain the breaches, warning that failure to justify the actions could attract sanctions under the Financial Regulations.
Context Amid Naira Redesign
The report noted that the recirculation of dirty notes coincided with the CBN’s controversial naira redesign, announced on October 26, 2022. The rushed rollout led to a nationwide cash crunch, legal disputes, and a Supreme Court ruling extending the validity of old notes beyond the initial deadline.
The audit also highlighted delays in destroying unfit notes. 997 boxes of N10 notes, valued at N99.7 million, declared unfit since November 2021, remained in CBN vaults as of October 2023. Additionally, 695 boxes of N500 notes, worth N3.475 billion, processed between October and November 2022, had not been destroyed. In total, N3.57 billion in condemned notes accumulated due to delays in briquetting and disposal, creating risks of pilferage, fund loss, and inefficiency.
While the CBN stated that briquetting and destruction were underway, auditors dismissed the explanations, maintaining their findings.
Emefiele’s Leadership Under Scrutiny
The revelations add to scrutiny of Godwin Emefiele’s tenure, during which he has faced multiple corruption and abuse-of-office allegations. Although the audit does not directly indict him, it holds CBN management accountable for lapses in cash-handling and internal controls.
The Federal Government, through the EFCC and the Office of the Attorney-General of the Federation, is prosecuting Emefiele in multiple courts, including a 19-count fraud case in Lagos and an amended 20-count procurement case in Abuja, alongside other charges related to corruption and forex allocation.
The audit recommended that the National Assembly summon CBN officials to explain the breaches.
Public Concerns Over Currency Quality
Earlier in April 2023, PUNCH reported complaints from bank workers and customers about the poor quality of old naira notes reintroduced into circulation amid the gradual disappearance of new notes. Bank tellers and bulk cash operators raised concerns that the dirty and mutilated notes could pose health risks, as well as operational challenges in handling cash.
