Taking most Nigerians by surprise in a move to counter terrorism financing, hoarding of banknotes by members of the public and the increasing ease and risk of counterfeiting, the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, recently announced the redesigning of the N200, N500 and N1000 naira notes which would go into circulation from December 15, 2022. Emefiele who disclosed this during a special press briefing said CBN had obtained approval from the federal government to redesign the naira notes.
Currency management has, according to Emefiele, “faced several daunting challenges that have continued to grow in scale and sophistication with attendant and unintended consequences for the integrity of both the CBN and the country”. He said there was significant hoarding of banknotes by members of the public, with statistics showing that over 85 per cent of monies in circulation were outside the vaults of commercial banks. Specifically, he said “N2.73 trillion out of the N3.23 trillion in circulation exists outside the vault of the commercial banks”; adding that “currency in circulation has more than doubled since 2015, raising from N1.46 trillion in December 2015 to N3.23 trillion as at September 2022.”
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Emefiele further explained that the CBN was convinced that the incidents of terrorism and kidnapping shall minimise because access to large volumes of money outside of the banking sector used as a source of funds for ransom payment shall begin to dry up. He also mentioned the worsening shortage of clean and fit banknotes as well as the increasing ease and risk of counterfeiting evidenced by several security reports as justifications for redesigning the naira notes. “Indeed, recent development in photographic technology and advancements in printing devices have made counterfeiting relatively easier. In recent years, CBN recorded significantly higher rates of counterfeiting, especially at the higher denominations of N500 and N1,000 banknotes,” Emefiele observed.
To ease transition from old to new notes, Emefiele said bank charges for cash deposits have been suspended with immediate effect. The CBN boss explained that the new and existing naira notes shall remain legal tender and circulate together until January 31, 2023, when the existing currencies shall seize to be legal tender. Meanwhile, all deposit money banks currently holding the existing denominations of the currency are required to immediately start returning the notes to the CBN. On the other hand, bank customers are also expected to begin paying the existing currency into their bank accounts to enable them to withdraw new banknotes once circulation begins in mid-December 2022.
The question, however, for Emefiele is, how is this applicable and feasible to petty traders, daily-pay workers, unskilled labourers and hustlers when the redesigned notes are not readily available at the banks for withdrawal? Those who have enough or more than enough can afford to take existing notes to banks and keep until the new notes are available for withdrawal. But the old notes belonging to the ‘hand-to-mouth’ group of Nigerians who depend wholly on their daily income may have to be revolving in their hands until December 15, 2022. Also, let’s hope that the intention to bring the huge funds stashed in people’s houses back into the banking system is not frustrated. Except the Financial Intelligence Unit is vigilant enough to be on the watch out for huge deposits and illegitimate transactions, a phone call to a bank manager by one of those stashing such huge monies at home would just make useless of this policy.
Given all the reasons advanced by the CBN governor and the immediate positive impact of the exercise on national economy, the plan to change the look of the naira notes would seem to be evidently justified. More so, the naira has not been redesigned in the last 20 years even as global best practices provide for central banks to redesign, produce and circulate new local legal tender every 5–8 years. Nonetheless, in-house controversy and fears have trailed Emefiele’s announcement of government approval to unveil new naira notes.
What’s the controversy? Yes, barely two days after the CBN announced the redesigning of the naira, the Minister of Finance, Budget and National Planning, Zainab Ahmed, disowned the policy and said the Federal Ministry of Finance was not consulted; alleging that herself and the Minister of State for Finance were not aware of the policy as they only heard of it from the media. She noted that something was wrong with the timing slated for the exercise. She said this while responding to a question put before her by the Senate Committee on Finance during the 2023 budget defence session at the national assembly. “I will however appeal to this committee to invite the CBN governor for required explanations as regards merits of the planned policy and rightness or otherwise of its implementation now”, Zainab said.
Few days later, precisely on Sunday October 30, 2022, President Muhammadu Buhari who spoke in a Hausa radio interview with a veteran journalist, Halilu Ahmed Getso, said CBN’s decision to launch new designs and replace high-value naira notes had his approval and backing. Buhari said the reasons given by the CBN convinced him that the economy stood to benefit from the exercise. This embarrassing controversy between the managers of Nigeria’s economy does not speak well of the government they are serving. Although Emefiele said CBN relied upon Sections 19, Subsections a and b of the CBN Act 2007 and obtained the approval of President Buhari to redesign, produce, and circulate new series of banknotes, a coordinated government would have put the finance minister in the know.
Top on the list of fears is that of the financially-excluded Nigerians. They have no bank accounts, and therefore, cannot deposit their monies in any account. The attempt to change old notes into new ones by this group of Nigerians is likely to create endless queues in our banks, which could be a recipe for commotions and loss of old or new naira notes to pickpockets. That’s a double tragedy. The 1984 experience has remained indelible on our minds. When the deadline closes in and people are desperate to change their old notes, banks and POS operators may take undue advantage of the situation to start charging fees for collecting old notes. May Allah guide CBN to put in place measures that will protect innocent Nigerians from the exploitations of banks and POS operators when changing their old notes, amin.
