CBN’s miscalculation, Banks’ sabotage cripple naira redesign

A catastrophic miscalculation by the regulator and a treacherous sabotage by the operators have turned a laudable naira redesign plan into a national monetary policy calamity.

Nigeria’s banking system has been practically shut down because the Central Bank of Nigeria (CBN) as its regulator could neither flog the treacherous operators of the industry into line nor predict with any measure of precision, the operating capacity of the Nigerian Security Printing and Minting Company (NSPMC).

That is why businesses have been shut down for weeks as everyone from the middle to the upper end of the lower income bracket spend millions of man hours on queues as long as three poles in some instances waiting to access automatic teller machines (ATMs) that no longer dispense cash.

Banking work has lost its splendour. The men and women who used to be decked out in intimidating suits and gowns now show up for work in worn out jeans trousers and fluttering T-shirts.

No one wants to be identified as a banker any more. The men and women who once practiced a profession that kept them on top of the world are now afraid to be identified with an industry that once flaunted astonishing magnificence.

They are now being haunted by the clients they once intimidated. The situation is so bad that at a certain point last week I visited three banks within two hours on the Abule-Egba stretch of Lagos-Abeokuta Highway. None was dispensing cash. In fact, none was rendering any form of banking service. Some had closed down completely because they could no longer stand the fury of frustrated customers that have lost access to their hard earned money.

A video that went viral showed a female worker in a leading bank scrambling for safety by climbing a fence with the aid of a ladder held down for her by her male colleagues who apparently were waiting for their turn to climb to safety.

I spent two hours at a UBA branch on Wednesday, February 8, 2023 trying to pay my son’s school fees but no one could attain to me. I left in frustration.

The blame game for the mayhem in the banking industry is so endless that no one knows precisely who is responsible for the chaos in Nigeria’s banking system.

The truth is that the naira redesign policy is irreprehensible even though seemingly belated. Only a lawless country allows treasury looters to keep 85 per cent of its currency in circulation in their private homes. No regulator can control inflation under that circumstance.

The timing of the redesign policy is flawless. It was partially targeted at sterilising the trillions of naira in politicians’ homes making them useless for vote buying.

It is equally true that there was supply deficit on the part of the CBN when it comes to how much of the new notes were sent to banks.

It is also true that the banks in collaboration with politicians disdainfully sabotaged the currency redesign policy by hoarding the new notes supplied by the CBN. The money was sold to politicians at the rate of N50, 000 per N1.5 million.

Some of the bank managers personally delivered the new notes at the homes of politicians while Nigeria’s inconsequential majority waited aimlessly at long queues at ATMs.

The sabotage by banks collaborating with politicians desperate to stock the new notes for vote buying worsened the supply deficit created by the CBN. If the banks did not hoard the new notes, the situation would not be as bad as it is today.

The truth about the supply deficit and the calamitous effect of the sabotage by banks is that the banks have inflicted seemingly irreversible damage on the system.

The diversion of huge funds to the private vaults of politicians emptied banks’ vaults and made them incapable of attending to the lowly in the society who trusted them with custody of their hard-earned money.

The banks themselves cannot salvage the situation because their sabotage has diverted the new notes to private vaults.

Even if the CBN is no longer capable of compelling the banks to meet the cash needs of their teeming clientele, customers intimidation could compel them to respond. But they cannot. The funds have been diverted.

The gate of a leading bank in Lagos was pulled down by infuriated customers demanding their hard earned money. The bankers were so helpless that they scaled the fence for safety. They could not even call the police because the police themselves were cash strapped.

If there was no supply deficit that was worsened by bankers’ reprehensible sabotage, banks would have started doling out the cash to assuage the ire of their menacing clientele.

I strongly believe that the CBN grossly underestimated the potential of the operators to sabotage the naira redesign policy.
Otherwise the apex bank could have flagged the accounts of some politicians to monitor lawless withdrawals at a time it was battling supply deficit of the new notes.

Now that the damage has been done, the tacticians behind the naira redesign policy should go back to the drawing board and fashion out workable plans to beef up the sagging supply of the new notes to salvage the tottering image of Nigeria’s embattled banking system.

Banking was never a popular business in Nigeria because of the way bankers made it the exclusive preserve of the rich. The mismanagement of the naira redesign policy has seriously worsened a bad situation. Millions no longer trust the banks.

From all indications, the February 10, 2023 deadline for withdrawing the old notes as legal tender is no longer feasible. However, a new deadline must take into consideration one of the cardinal aims of the naira redesign policy.

Consequently, the new deadline must not allow politicians to buy votes with their looted old notes. That means that the old notes must cease to be legal tenders a few days to the presidential elections. The CBN must work hard to increase the supply of the new notes.