The Central Bank of Nigeria (CBN) recently announced its plans to redesign the naira in the variation of 200, 500 and 1,000.
The CBN governor, Godwin Emefiele, also said 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 hoarding of banknotes had become a challenge, noting that over 80 percent of the currency in circulation is outside the vaults of commercial banks.
Emefiele also said 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 Muhammadu 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.
Questions have arisen as to what impact this would have on the economy. How would this decision impact the common man? How well has the CBN prepared Nigerians for this particular move? Was there effective communication before the announcement was made?
Nigerians react
Some Nigerians say upgrading the value of the naira should be a better problem for CBN to handle, not rebranding the naira notes.
Others are concerned about the cost of redesigning the new naira notes, the timeline for implementation, and if Nigerians will be better off. Here is a tweet from @vsntongs:
My concerns are;
1. Can the CBN governor be trusted?
2. What is the Cost of redesigning new naira notes?
3. Will Nigerians better off?
4. Is there collaborations between CBN, NFIU & EFCC on this pursuits?— ntong v.s. (@vsntongs) October 27, 2022
Another tweep, @adepoju Tobi Samuel, said, ‘Time frame is my issue’.
What is the financial implementation of the CBN’s new Naira notes?
Any finance person on my TL?
We need genuine education and look at the factors and time frame. Time frame is my issue..
— Adepoju Tobi Samuel 🇳🇬 (@OgaNlaMedia) October 27, 2022
Reactions from experts
A business analyst, Chika Mbonu, said as CBN goes ahead on this policy, there is a need to ensure that the nation does not suffer.
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.
Mbonu noted that when this action was implemented at the time, during the military government of Major General Muhammadu Buhari, it led to chaos in the country.
He added, ‘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’.
Another business expert, Mude Yusuf, posited that redesigning the currency will cost the economy a lot to print the amount of currency needed.
He added that there are more important issues, including liquidity in forex markets, volatility of the currency and problems with currency depreciation, that the CBN should attend to.
Minister, CBN Governor bicker
After the announcement from the CBN, Nigeria’s Finance Minister, Zainab Ahmed, claimed not to be aware of the policy.
Meanwhile, President Muhammadu Buhari, speaking on reactions concerning the naira redesign, said the CBN has his backing, and he is convinced the economy stands to benefit in terms of reduction in inflation, currency counterfeiting, and excess cash in circulation.
CSO reaction
The Resource Centre for Human Rights and Civic Education (CHRICED) has criticised the president’s handling of the situation.
In a statement signed by its Executive Director, Ibrahim Zikirullahi, the human rights organisation nonprofit said the president should have allowed the Federal Executive Council (FEC) to convene on the critical issue of redesigning the now before the CBN Governor, Godwin Emefiele, made it public.
He called on president Buhari to do something in order to ameliorate the sufferings faced by Nigerians as a result of the rising inflation rate.
‘It is inexcusable that President Buhari continues to turn a blind eye while his subordinates publicly quarrel over policy matters that are crucial to the health of the Nigerian economy’, he said in a statement.
‘CHRICED believes the president should act as the chief coordinator of policy emanating from government institutions, rather than remaining aloof while top government officials bicker, which is detrimental to the stability of the nation’s currency and, by extension, investor confidence’.
Given the ongoing challenges in the nation, the timeframe for achieving this should be looked into to avoid chaos.
Also, attention should be paid specifically to rural areas where fewer bank branches are available to attend to every citizen who would want to deposit their old notes.
Photo source: CBN
