N29bn Scandal: How CBN Flooded Markets with “Condemned” Banknotes

If you have ever wondered why so many tattered, smelly, and barely recognizable Naira notes are still in circulation, the answer might just be sitting in a damning new report from the Office of the Auditor-General of the Federation.

In a revelation that has raised eyebrows across the financial sector, the Auditor-General has accused the Central Bank of Nigeria (CBN)—under the leadership of former Governor Godwin Emefiele of breaking its own rules by pumping N29.77 billion worth of “dirty notes” back into the economy.

The “Counted Audited Dirty” Breach

The details are contained in the Auditor-General’s Annual Report on Non-Compliance and Internal Control Weaknesses, covering the year ending December 31, 2022.

The report uncovers a systematic failure to adhere to the “Clean Note Policy.” According to the audit, the CBN took banknotes that had already been classified as “Counted Audited Dirty”—money officially processed and certified as unfit for use and simply sent them back out to commercial banks and the public.

Between April and December 2022, four specific CBN branches were flagged for this practice:

• Abuja: The biggest offender, releasing a staggering N28.615 billion between October and December.
• Lagos: Pushed out N970 million in December alone.
• Jos: Released N150 million in May.
• Bauchi: Issued N30 million in April.

The CBN’s Defense: “We Had No Choice”

When confronted by the audit team, the CBN management offered a variety of explanations for why they violated the standard procedure.

• The Abuja Branch blamed the COVID-19 pandemic, claiming that operational disruptions and cash scarcity forced their hand to “meet cash shortfalls.”
• The Lagos Branch cited the overwhelming demand for cash during the Christmas season.
• The Jos Branch argued that the release was necessary due to urgent cash demands from the military during security operations.
• The Bauchi Branch simply denied the allegation.

Auditor-General: “Not Good Enough”

The Auditor-General was not impressed. The report dismissed the CBN’s explanations as “not satisfactory.”

It noted that releasing unfit notes exposes the country to reputational damage and violates the core mandate of maintaining a clean currency.

Consequently, the report has recommended that the CBN Governor face the Public Accounts Committees of the National Assembly to explain these breaches or face sanctions under Financial Regulations.

A Ticking Time Bomb in the Vaults?

Perhaps even more concerning than the dirty notes in circulation is the cash sitting in the vaults. The audit highlighted a dangerous delay in the destruction of condemned currency.

Investigators found that N3.57 billion in unfit notes including nearly 1,000 boxes of N10 notes declared unfit since 2021 were still sitting in CBN vaults as of October 2023.

The auditors warned that leaving condemned cash lying around for years increases the risk of “pilferage” (theft) and inefficiency.

The Bigger Picture

This revelation adds another layer to the controversy surrounding the tenure of Godwin Emefiele. The recirculation of these dirty notes coincided with the chaotic Naira redesign policy of late 2022, which triggered a nationwide cash crunch.

While the former Governor battles multiple fraud and abuse-of-office charges in court, this report suggests that the management failures at the apex bank may have been more widespread than previously thought.

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