President Muhammadu Buhari has unveiled the redesigned 1,000, 500 and 200 naira notes in Abuja, Nigeria’s capital.
Development Diaries reports that the redesigned notes, produced by the Nigerian Security Printing and Minting Company, have new security features.
According to the president, the new naira notes would help to control liquidity in an economy where most money is held outside the bank.
The Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, had announced that the new notes will be in circulation from 15 December, 2022, and the circulation of the old ones will cease from 13 January, 2023.
Naira redesign aim
The reasons the apex bank gave include high circulation volume outside bank’s vaults, counterfeiting of the currency, short supply of clean notes, and prevalence of currency mutilation.
Emefiele said that hoarding of banknotes had become a challenge, noting that over 80 percent of the currency in circulation is outside the vaults of commercial banks.
He also said that the move will also curb counterfeit currency and ransom payments to kidnappers and terrorists.
On the basis of these challenges identified and in line with Sections 19, Subsections A and B of the CBN Act, 2007, the CBN obtained the approval of President Buhari to redesign, produce and circulate new banknotes.
Although the global best practice is for central banks to redesign, produce and circulate new local legal tender every five to eight years, the naira has not been redesigned in nearly two decades.
Banknote changes in the past
In April 1984, the colours of naira notes in circulation, excluding the 50 kobo note, were changed to ‘arrest the currency trafficking prevalent at the time’.
In response to the expansion in economic activities and to facilitate an efficient payments system, the N100, N200, N500 and N1,000 banknotes were introduced in December 1999, November 2000, April 2001 and October 2005 respectively.
What are the concerns?
Questions have arisen as to what impact this would have on the economy. How would these new notes impact the common man? How well has the CBN prepared Nigerians for this particular move?
A business analyst, Chika Mbonu, had recalled that when this action was implemented in 1984, during the military government of Major General Muhammadu Buhari, it led to chaos in the country.
‘People were sleeping in banks, trying to change their notes. The queues in banks were longer than what is seen at fuel stations these days, markets were shut down, and borders in Nigeria were closed’, he said.
However, the CBN governor has argued that Nigerians have ample time to return the old notes in circulation, adding that the apex bank will not extend the 31 January, 2023, deadline.
But available data indicates that many gaps still exist with regard to access to banking services in Nigeria. According to data from the World Bank, 42 million adults who live in rural areas in the country lack basic banking services.
Therefore, what measures are in place to ensure that citizens in remote areas deposit their old notes in time?
Photo source: Presidency Nigeria
