By Otori Emmanuel
The Central Bank of Nigeria (CBN) Governor, Godwin Emefiele, has issued a statement concerning the institution’s policy to introduce redesigned naira notes by the 15th of December 2022.
This, he said, is a result of the continuous rise in the inability of banks to control the circulation of Nigeria’s naira notes, which poses as incompetence on the side of the banking sector as well as a causative factor to why the naira keeps decreasing in value.
Mr Emeliefe mentioned that, amongst the many other reasons behind this new policy, the mass hoarding of banknotes by members of the public and an increasing shortage of banknotes that are standard and clean, which has heightened the ease in the production of counterfeit currencies in the country are notable reasons for this development.
Although this new policy has been revolted by some top personalities in the country, including the Minister of Finance, Budget and National Planning, Zainab Ahmed, saying that she and the ministry were not aware of any plan by the CBN to redesign new banknotes and also complained that it is ill-timed, however, the President has given his support for the plan.
This move by the CBN has been viewed by many to be political, while the institution and others are seeing it from an economic point of view. But the CBN has said that the redesign only applies to denotations like the N200, N500 and N1000 notes. The banknotes (old ones) in circulation now are expected to be submitted to the banks on or before the 31st of January 2023, as after this date, they will be treated as expired currency.
Political Implications of Redesigning the Naira Notes
Just as the 2023 general election is around the corner, this new policy of the CBN seems to be politically motivated. But on the other hand, certain financial and political analysts have come out to say that this move would disrupt the plan of some political parties to use cash stored in different individual vaults in the country to buy votes.
Statistics of the banks have it that over 80% of the nation’s currency is stored in private vaults by corrupt politicians who are involved in one crime or the other and who wouldn’t be able to defend the source of such huge funds if brought to the bank.
This group applauds the CBN for coming up with such a strong plan at such a strategic season in the country when new leaders are selected. This policy, if successful, is likely to guarantee a bribery-free election by 2023, where voters and agencies would not be offered money to vote candidates into power.
Economic Implications of The New Naira Notes
For the banking sector, which has reportedly lost control of over 80% of the money in circulation, it will help them regain it. Mr Emefiele said that, as of September 2022, the CBN had released N3.23 trillion, and N2.73 trillion is said to be outside the bank vault.
This development is a negative one for the banking sector as it weakens her monetary policy. If control is regained, it will go a long way to help curb the inflation rate, which is currently over 20%. Although, between the time of launching the new note, which is the 15th of December, and the expiry date for the old one, after the 31st of January, there is likely going to be a lot of money in circulation when those who hoard money will be forced to spend them on purchasing, and some would also exchange theirs to foreign currency. When this happens, the naira is likely to fall the most, but however, with time, when the CBN takes back control of the money in circulation, the economy will smile again. Some persons have also expressed concerns about the cost of printing this new currency, going by what it cost them to print the ones printed in 2020. Questions have been asked if this is really a good time to do this, considering the various crises surrounding the nation’s economy, including the debt crisis, poor revenue, underfunded government projects, etc.
On average, an alarm has also been raised concerning the effect of this on the price of commodities in the market, especially now that the festive period is around the corner. People are worried and pleading that adjustments are made, or other measures are taken to achieve the same thing other than totally clearing the old currency within such a short time and notice.
In conclusion, there is a need to grow and stabilize the nation’s economy and the even distribution of money, properly monitored by our Central Bank, would play a significant role in achieving this. A policy is to make the life of the people and not worsen it. There is a need for the CBN to take into consideration the plea of the average Nigerian for this new innovation, although Nigerians have over the years grown hard-skin to circumstances, and if swallowing one more pill of suffering during this short time would guarantee a better future, we might as well take it in with a smiling face.