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Emefiele, make redesigned Naira notes available

The miscalculation and poor judgment exhibited by the Governor of the Central Bank of Nigeria, Mr Godwin Emefiele, in the redesign of some Naira notes,…

The miscalculation and poor judgment exhibited by the Governor of the Central Bank of Nigeria, Mr Godwin Emefiele, in the redesign of some Naira notes, in pursuit of the CBN’s cashless policy, has tossed Nigeria into confusion and foretold chaos. Warned on several occasions about the negative consequences of introducing the measures so close to the general elections, and under the current harsh economic atmosphere, Emefiele discarded caution and went ahead to foist the short cash swap time limit and restricted cash withdrawal limit on the people.

In the last three weeks, the country has been grounded by the dearth of cash at Automated Teller Machines (ATMs); poor Internet connectivity that makes intra-bank and inter-bank transfer of funds frustrating; lack of cash at Point of Sales (PoS) machines; embargo of cash transaction across the counter in banks; and rejection of  ‘old’ Naira notes even in the face of the scarcity of new ones. All these have frozen economic activities in the informal sector, rural areas, and even among big organizations.

All across the country there are tales of woe. While most ATM are out of service, Nigerians spend hours on long queues at the very few dispensing cash and they sometime end up without getting any money. Not to mention the man hours wasted. At the same time, the POS operators have hiked their charges as some of them claimed they had to buy the money to remain in business. In some communities in the north, with just one or no bank at all due to insurgency, activities have totally been grounded.  A report by this newspaper only a few days ago showed that many markets across the country were deserted due to lack of cash. A development that spells doom for a country that is already struggling economically.

The CBN governor, in October 2022, justified the redesign of the higher denominations of Naira notes (N200, N500 and N1,000) on the need to rein in about N2.7 trillion out of some N3.26 trillion, which was outside the vaults of commercial banks across the country. Emefiele backed his decision with the statistical argument that “84.71 percent of the currency in circulation are outside commercial banks’ vaults, with only 15.29 percent in the Central Bank and commercial banks’ vaults.” Last week, on his visit to President Muhammadu Buhari in Daura, Emefiele claimed that about 75 per cent of the funds had been reclaimed by the CBN. Other reasons Emefiele gave for the redesign of the currencies include the worsening shortage of clean and fit bank notes; and the increasing ease by criminals to produce counterfeits of the currencies which had been in circulation for about 19 years.

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On the advantages of the policy, the CBN governor had said, “This policy will help to control inflation as the exercise will bring the hoarded currency into the banking system, thereby making monetary policy more effective. It will also help with better design and implementation of monetary policy as we would have much more accurate data on money supply and monetary aggregates. We believe that this exercise would help in increasing financial inclusion, moving towards a more cashless economy, and ensuring greater formalization of the Nigerian economy. The currency redesign would assist in the fight against corruption”.

However, it does not appear as if the CBN is ready for the implementation of its own policy. From our harsh experiences in the last two weeks, the excuses given for the redesign are being defeated, as the scarce currency which ought to have been dispensed at ATMs machines and across the counter in banks have found their way into the black market. There are videos of persons distributing new Naira notes; celebrities spraying the new currencies at events. It beats one’s imagination how some persons succeeded in accessing millions of Naira in the new currency in spite of tough-talking CBN governor who threatened poor Nigerians with the Economic and Financial Crimes Commission (EFCC), the Independent Corrupt Practices and Other Related Offences Commission (ICPC), and the Nigeria Financial Intelligence Unit (NFIU).

Apart from the porousness of the systems at the apex bank, there is a major contradiction in the withdrawal limit imposed by the CBN. Few weeks ago, the bank acquiesced to the National Assembly’s demand that daily withdrawal limit from individual account should be N100,000, while withdrawals from accounts of corporate organizations should be N500,000. However, at ATMs and cash points, cash withdrawal is pegged at N20,000 from personal accounts. In reality, CBN’s failure to control inflation, one of its cardinal functions, has caused the devaluation of the Naira and made N20,000 cash withdrawal limit unsustainable and unrealistic. Also, the apex bank’s noise about financial inclusion has failed to achieve its objectives, as in many rural communities, where there are no banks, it is difficult for the people to entrust microfinance banks with their hard-earned cash. Most microfinance banks in rural areas have failed integrity and trust tests. It, therefore, amounts to daydreaming to assume that the cashless policy would be applicable in rural communities.

It is clear that the extension of the period for Nigerians to convert their ‘old’ Naira notes to redesigned ones is not a significant issue. The main problem is the scarcity of the new or redesigned Naira notes. Nigerians have the right to access the cash in their banks at any time; no policy must abridge this right. The CBN must make the currencies available and stop inflicting unnecessary hardship on innocent Nigerians. Just load the new currencies in ATMs, nothing more!

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