Not a few Nigerians are waiting eagerly for the next meeting of the Monetary Policy Committee (MPC) of the Central Bank of Nigeria (CBN)—whenever it holds, to know its prescriptions for the country’s recovery from the various outcomes of the ongoing implementation of the currency redesign policy. Perhaps, in only a few instances throughout the history of this country, shall the meeting of this body, be of keener interest to Nigerians than now, given the painful experiences which most Nigerians had with the convoluted drama associated which the exercise, since October 2022 when it was launched. While the scope of drastic changes in both positive and negative terms – which the dispensation had imposed on the country may take some time to document in full panoply, put in the mildest context, it spun the country into an economic tail spin and meltdown, both of which coalesced with a combined impact on the country of near apocalyptic dimensions.
Given the preponderantly cash driven state of the Nigerian economy, it is not difficult to appreciate what would happen in the face of stiff statutory restrictions on cash transactions. And the exercise launched such privations on the citizenry. Firstly was the promise of the replacement of the N1,000, N500 and N200 denominations with new notes. Then came the hurried process of coercing the public to deposit old currency notes in the banks and collecting new notes. Then was the hoodwinking of the unsuspecting members of the public to contend with rationing of cash withdrawals. Then came the shortage of replacement new notes. This was followed by a most sordid drama of black marketeering of the new notes, along with the flip-flop management of the availability of even the old currency notes, which led to sale of Naira for Naira at rates as high as 60% mark-up. Nigerians bought Naira currency notes at the rate of N600 for every N1000 in many instances. The foregoing were the faces of the outrages which most Nigerians were subjected to during the period while the ordeal lasted.
Meanwhile, the most grievous aspect of the ordeal was that vulnerable Nigerians who constitute the wider cross-section of the population, were largely unprepared for it, hence were hit below the belt by the crisis. Considering that the country has had several currency change exercises under both civilian and military rules, it was not out of place for Nigerians to brace up ordinarily for some limited fallouts from any similar exercise. So, many had thought this exercise would be. But they were in for a shocker as events proved them wrong. Indeed, no previous similar exercises so far had matched this present one in terms of ferociousness of its impact.
However, with the coming of respite through the intervention of the Supreme Court which extended the validity of the old currency denominations to December 31st 2023, the country now has a breathing space to pick up from where the crisis stalled, it and commence on the road to recovery. Yet for the anticipated recovery to actualize optimally, it needs to have incorporated in its framework, the gains as well as losses from the currency swap exercise – specifically to foster a trade-in of such into the thrust of the economy.
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For much as the currency change exercise may have hurt Nigerians, it will be defeatist to see nothing good about it, as there are several silver linings around its darkest sides. And these layers of silver linings constitute the catalysts for recovery of the country. For instance a major gain from the currency redesign exercise is the all-be-it surreptitious launch of the long-awaited cashless policy of the CBN. Until this exercise, expectation of and plans for full roll-out of a cashless Nigeria were hanging in limbo, even as the dispensation has been in the pipeline since 2012. With the ‘shock therapy’ from the currency exercise, virtually every Nigerian in any line of commercial enterprise has now come to terms with the cashless policy and familiarity with hitherto out of reach concepts like ‘bank transfer’and ‘network’, to mention a few.
This is even as the exercise has also exposed the inherent systemic weaknesses in the country’s banking system as relates to online operations. Clearly, the country’s banking system remains unprepared for widespread cashless operations with a wide swathe of areas needy of improvement. Ordinarily, the Nigerian banking system has not been having the best of infrastructural endowment with respect to effective service delivery. The currency crisis simply exacerbated the already bad situation. A recovery process needs this area in the country’s banking sector to be fixed.
Another area for attention in the recovery process is that of improving oversight and supervision of the country’s banking institutions and agencies. A clear source of pain for the general public during the currency exercise was the liberty and impunity with which banks and other financial institutions as well as agencies ran riot with sundry extortionist tendencies. It was clear that the country’s finance and banking sector has been running without an effective regulatory framework. It was just a case of every dealer for himself. This is an area that needs more discretion from the CBN. Against the backdrop of the diminished capacity of the apex bank to provide effective supervision of even the traditional deposit banks, the proliferation of sundry financial institutions in the sector had been known to overwhelm it. This weakness became crystal clear with the currency crunch. A recovery process therefore needs to factor into its matrix, an improvement in the CBN’s capacity to place itself on top of the financial services industry, as an effective regulator for the well-being of Nigerians.
Yet another area for consideration remains the critical issue of how the worst hit victims of the vagaries of the crisis – especially the displaced actors in the informal sector will recover. This area is sensitive given that the Nigerian economy is driven by the informal sector by as much as 75%. It therefore stands to reason that until such are returned to winning ways, so shall their pains constitute stumbling blocks to the recovery of the entire economy.
And in an economy that panders mostly to elitist interests, it remains of interest how this matter will play out.