The Office of the Auditor-General of the Federation has indicted the Central Bank of Nigeria (CBN) for re-circulating dirty and unfit banknotes valued at N29.77bn, in clear violation of its own Clean Note Policy.
This finding, contained in the Auditor-General’s 2022 Annual Report on Non-Compliance and Internal Control Weaknesses in MDAs, revealed that several CBN branches issued banknotes that had already been classified as “Counted Audited Dirty”—notes formally processed and certified unfit for public use.
According to the report, the reissued notes were released between April and December 2022 across four branches.
The Abuja branch accounted for the bulk with N28.615bn released between October and December 2022.
The Lagos branch issued N970m in December 2022, while Bauchi released N30m in April of the same year.
In Jos, N50m was issued on May 16, 2022, and another N100m on May 27, 2022.
This contravened the CBN’s 2018 Clean Note Policy, which stipulates that only fit, authenticated notes are eligible for circulation, while unfit notes must not be released by either the CBN or commercial banks.
The audit team attributed the breach to weak internal control mechanisms within the CBN.
In its responses, the Abuja branch blamed COVID-19 disruptions and acute cash shortages at the time. The Lagos branch attributed its action to increased demand for cash during the Christmas season. The Jos branch said the release of unfit notes was necessitated by urgent military operations in insecure areas. The Bauchi branch simply denied re-circulating dirty notes.
The Auditor-General, however, rejected all explanations as “not satisfactory”, insisting the findings remain valid until corrective measures are taken.
The report warned that releasing condemned notes into circulation exposes the country to reputational damage, reduces the lifespan of currency, and undermines public confidence in the CBN’s currency management system.
It recommended that the CBN Governor be summoned by the National Assembly’s Public Accounts Committees to justify the breaches, adding that failure to provide satisfactory explanations should attract sanctions under the Financial Regulations for gross misconduct.
The audit also uncovered delays in the destruction of large volumes of already condemned notes.
As of October 2023, 997 boxes of N10 notes valued at N99.7m and 695 boxes of N500 notes worth N3.475bn, all classified as unfit between 2021 and 2022, were still sitting in CBN vaults.
In total, N3.57bn in condemned notes had accumulated due to delayed briquetting and disposal processes. The auditors warned that such delays increase risks of pilferage, loss of public funds, and inefficiencies. Although the CBN claimed that destruction had commenced, the audit team dismissed the explanation and maintained its findings.
The revelations emerge in the wider context of the controversial naira redesign programme announced on October 26, 2022, which led to severe cash shortages, public unrest, legal battles, and ultimately a Supreme Court ruling extending the validity of old notes.
Although the report does not personally indict former CBN Governor Godwin Emefiele, it places responsibility on the bank’s management under his leadership.
Emefiele is already facing multiple corruption, procurement, and foreign exchange-related charges in courts in Lagos and Abuja.
Earlier reports in April 2023 also indicated widespread complaints from bank workers and customers over the poor quality of old notes returned to circulation, further underscoring the systemic weaknesses highlighted by the Auditor-General’s report.