CBN, Currency Redesign and the Need for Public Awareness
By Edwin Uhara
Since the announcement on the redesigning of N200, N500, and N1,000 notes was made public by the Central Bank of Nigeria (CBN) late last month, I have seen different people express divergent opinions as well as read several commentaries in the print media.
In my view, the understanding of the plan is very poor outside the fact that the apex bank failed to carry critical stakeholders along before unveiling it to the public.
Their reactions have undoubtedly shown that the new plan took most of them by surprise without room for further negotiations.
Credence was, however, given to this notion by the type of reactions that trailed the announcement, especially from major stakeholders like the Minister of Finance, the National Assembly, the faith-based community and other interest groups in the nation’s economic sector.
I have also observed that there is a wide gap between the stated objectives and what the Nigerian people, especially those in the lower class, are taking home to be the new CBN plan.
No thanks to the fake news, which has become an industry of its own; which capitalised on the inability of the apex bank to consult widely as well as step-up sensitisation mechanisms as a follow-up strategy to the announcement in order to drive home their points; so that Nigerians would fully embrace it. But nothing of such ever came from the bank outside the clarification it made about the approval given to the plan by Mr President.
Accordingly, because nature abhors a vacuum, spin doctors went to work by distorting the original intention expressed by the bank and started pushing their own narratives about the plan down the throat of the people.
Some even went as far as doing a video which is currently circulating on different WhatsApp groups, saying that government wants to print N5,000 and N10,000 notes in order to loot them and then use some for next year’s general elections.
There are many interpretations coming from different opinion leaders about the plan, but the most dangerous one, which should force the CBN to go beyond average in their sensitisation plan, is the religious dimension some clerics and analysts are trying to associate the plan with.
However, in all these, I see a battle between the opposing side and the promoting side for the attention of the Nigerian people.
The nation has interestingly become a free marketplace of ideas where everyone is a buyer and a seller at the same time.
On the other side, the apex bank has filled up the vacuum created by the various political parties in this electioneering season.
For the fact that the Nigerian people are more interested in the programmes of the Buhari administration, which has about six months to officially wind down, instead of focusing attention on what would likely be the policies and programmes of the next government and how it would affect them; shows that the people have lost interest in the various campaign strategies so far adopted by the various political parties.
If I’m not mistaken, the only thing I can understand as their campaign is accusations, counter-accusations, and promotion of trivialities, mockeries and insults without really telling Nigerians what to expect and how they plan to deliver them to the people.
The various campaign spokespersons have moved away from being the image makers for their candidates to becoming dramatis personae, diverting attention to themselves instead of adding colours and believability to the cause they were employed to promote and defend.
Even among those who have unveiled their manifestoes, there are no detailed and sector-specific strategies on how to get stuff done, but they are filled with general assertions and untested hypotheses.
So, we can’t really blame the people for paying much attention to the policies and programmes of the Buhari administration, especially the currency redesigning plan of the CBN, because they know that this is the administration that truly means well for them but has, unfortunately, become the victim of clandestine and multi-sectoral conspiracies.
Nonetheless, the aspect I would have loved the debate on the new CBN plan to focus on would have been the area of microeconomics, which is the study of how the plan would affect individuals, households and firms.
According to the apex bank, “as of the end of September 2022, available data at the CBN indicates that N2.73 trillion out of the N3.23 trillion currency in circulation was outside the vault of commercial banks across the country and supposedly held by members of the public.
“Evidently, currency in circulation has more than doubled since 2015, rising from N1.46 trillion in December 2015 to N3.23 trillion as of September 2022. I must say that this is a worrisome trend that must not be continued.”
This is caused by “significant hoarding of banknotes by members of the public, with statistics showing that over 80 per cent of the currency in circulation are outside the vaults of commercial banks.
“Worsening shortage of clean and fit banknotes with an attendant negative perception of the CBN and increased risk to financial stability and increasing ease and risk of counterfeiting evidenced by several security reports” are some of the reasons that have necessitated the plan.
However, in a nation of over 200 million people, where about N2.7 trillion is pulled out of circulation, what do you think would be the general economic outlook across the country? Your guess is as good as mine!
The questions are; who pulled these monies out of circulation? Why and for what purposes?
Just imagine the impact N2.7 trillion would have made in the nation’s economic sector if there were in circulation and were within reach of the commercial banks to be made available as loans to investors, manufacturers, businesses and small and medium-scale entrepreneurs.
But because 80 per cent of the currency in circulation is outside the vaults of commercial banks, the government became the main driver and sustainer of the economy through many programmes like ‘Business Grant,’ ‘Subsidized Loans,’ ‘Market Money,’ ‘Trader Money,’ ‘Conditional Cash Transfers,’ ‘N-Power,’ ‘Anchor Borrowers Programme,’ and several other direct supports to victims of natural disasters among others.
With N2.7 trillion in circulation, we could fight insecurity with jobs. We could boost the Internally Generated Revenues of many states. We could boost the domestic production capacity of the nation, thereby exporting some of our products to the international market, where access to foreign currencies would have increased.
Even when the announcement for currency redesigning was made by the CBN, instead of hoarders of these monies to push them back into the economy through investments and other economic boosting avenues, they chose to be converting them to foreign currencies, thereby pushing the demand for these currencies over the roof.
What this means is that the cost of importation or even production of goods and services would be too high, and as a result of such, the new market price for essential commodities in our various local markets would increase astronomically in the coming festive seasons.
In conclusion, the CBN should not only intensify its awareness campaigns for the plan to enjoy popular support among the people, but it should also collaborate with genuine Bureau De Change operators as well as commercial banks to make special arrangements for genuine importers and manufacturers to have easy access to foreign currencies in order not to make the prices of essential commodities to be out of the reach of the common man.
Comrade Edwin Uhara is a Public Affairs Commentator and UN-trained Negotiator. He can be reached via [email protected]