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If the timing of the naira redesign project is being questioned, let me be among the first to state that there is no better moment than now. This policy should have been put into place long ago. However, though still late, it’s better to be late than never, hence this article is rightly titled, ‘good thinking right timing.
Economic and social pressures in Nigeria caused by factors such as stagflation and other unknowns necessitate a concerted effort to solve the most pressing problems. That effort ought to be spearheaded by monetary and fiscal authorities.
The Central Bank of Nigeria (CBN) is adopting the right measures to achieve gradual but steady progress toward its goals of expanding access to financial services, bolstering the value of the naira, and discouraging the illicit hoarding of the currency. The current CBN Governor and his team have made stopping the naira’s fast fall and saving the economy their top priorities. The CBN shouldn’t be seen to be taking advice from economic saboteurs, such as individuals who are stockpiling naira and pursuing the dollar, when making the difficult decision to redesign the naira.
It’s been 24 years, but I think this is the third redesign of the naira. During Prof. Charles Soludo’s tenure as CBN governor, polymer was introduced for several smaller denomination notes of the naira, hence I find it difficult to understand the hues and cries against the current project, except that the frontiers of corruption have expanded.
Since CBN announced the new policy, the Nigerian public has been treated to a variety of spectacles since the latest revelation, including the display of billions of notes still wrapped with the bands of dissolved institutions. Reportedly, the Miyetti Allah has also requested more time in order to remove funds from the forest.
None of the new policy’s provisions should be treated as special or with exceptionlism. The CBN has issued its recommendations for how large holders of naira notes should adjust. In addition, they have provided plenty of notice for individuals still holding the old notes to make the necessary transition. Separate laws for the North and the South ought to be abandoned. Making policies that benefit one group over another is discriminatory and should be avoided at all costs.
The central bank’s recent decision to redesign higher denominations of the naira has been extensively commended by economic and financial experts, and this has been seen by many as evidence of the bank’s expertise in protecting the naira.
The redesign project’s potential effects on Nigeria’s economic policies have recently emerged as a central topic of discussion. The continuing large-scale hoarding of the naira spurred the decision, which comes at a time when more than 80 per cent of the money in circulation is held outside of the banking system, which is a cause for concern.
Reasons for the decision include, but are not limited to, the high expense of currency management, the rising risk of naira counterfeiting, and the lengthy periods of time that denominations have existed without being redesigned. Benefits of the strategy include a shift toward paperless transactions, lower expenses associated with managing currency, and a decrease in the prevalence of counterfeit bills and other forms of financial fraud.
Many people and groups applauded the CBN for taking this action, which they believe will restore the bank’s credibility while also helping to fix the underlying problem of corrupt election finance, which has hurt the country’s economy.
Many problems, including as the possibility of naira counterfeiting and the length of time that denominations have existed without being redesigned, will be alleviated as a result of the action, according to CAPE Economic Research & Consulting. Ideally, the policy is not expected to have fundamental repercussions for the value of the currency, since it is merely a matter of changing the characteristics and cosmetics, as stated in the November newsletter from CAPE Economic Research & Consulting. There is nonetheless widespread policy pessimism and a significant knowledge and information asymmetry in Nigeria. That’s why some people are worried the decision would cause unwarranted panic, which will drive up demand for the US dollar as a safe haven investment. The CBN sees the decision as having long-term benefits for the naira, financial crimes control, and the national economy, therefore any short-term pain is worth it.
Support for the top bank has surfaced at home from unexpected quarters, demonstrating the concept’s widespread appeal. Examples of people who support the central bank’s redesign of the naira include former deputy governor Kingsley Moghalu. He expressed concern that “80 per cent of bank notes in circulation” were not held in institutionalized banking systems. Policy to rein in inflation has been met with skepticism due to other existential issues like security and other fiscal pressures, but it is generally agreed that this step is now vital for national security and in the benefit of the economy as a whole.
The Economic and Financial Crimes Commission (EFCC) called the central bank’s action “a well-considered and timely response” to the problems with currency management that have had a negative effect on the country’s monetary policy and security priorities. The Commission urged all participants in Nigeria’s banking and currency exchange systems to comply with the CBN’s regulations for a smooth phase-out of the old currency.
With this new regulation, the CBN can start phasing out the usage of cash in commercial transactions, one of the first steps in implementing its cashless economy agenda. No more than 20 per cent of the total amount of currency in circulation should be in circulation at any given time. I think the central bank should take advantage of the new chance to exert complete command over the total amount of cash in circulation.
Interestingly, the Minister of Finance, Budget, and National Planning, Mrs. Zainab Ahmed, openly expressed her disapproval of the choice to alter the currency. During a budget defence in the Senate, Ahmad vehemently opposed the plan, claiming it would have a disastrous impact on the economy. The Finance Minister warned that the current implementation of the strategy could have disastrous effects on the value of the naira relative to other currencies.
Mrs. Ahmed also indicated a lack of synergy or cooperation between the fiscal and monetary authorities by telling the lawmakers that her ministry was not informed by CBN on the planned re-designing of the naira and hence cannot comment on the merits or otherwise of the proposal.
Thus far, the CBN’s actions were completely within its purview, as such it had no statutory obligation to seek approval from the Minister of Finance to perform its constitutional duty. Nonetheless, it’s appealing to public viewers when the CBN came clean about the procedure it went through to acquire clearance for the revamping of the naira, stating that it followed the law and due process to carry out the exercise that’s been 12 years in the making. In order to redesign, produce, release, and circulate new series of N200, N500, and N1,000 banknotes, CBN management relied on provisions of section 2(b), section 18(a), and section 19(a)(b) of the CBN Act 2007 and sought written consent from President Muhammadu Buhari.
The Central Bank of Nigeria (CBN) urged Nigerians to back the currency redesign project, saying it was in the country’s best interest. The CBN emphasized that some people were stockpiling large amounts of cash outside of commercial bank vaults, which the CBN stated was not acceptable. No one with the nation’s best interests at heart should support this movement.
The Central Bank of Nigeria (CBN) spokesman, Mr. Osita Nwanisiobi had reassured Nigerians that the currency redesign exercise was merely a central banking exercise and was not directed at any particular group. He also expressed hope that the effort would help Nigeria further its push to establish a cashless economy. He also noted that this would go a long way toward reducing acts of terrorism and kidnapping by making it more difficult for criminals to gain access to the vast sums of money held outside of the banking system that are often used to pay ransoms
