The Governor of the Central Bank of Nigeria (CBN), Dr Godwin Emefiele, had on October 26, 2022, announced that new Naira notes would be introduced to replace the current N200, N500, and N1000 notes and that the redesign would take effect from Thursday, December 15, 2022. At the unveiling of the new naira notes at the State House on November 23, 2022, the CBN governor told newsmen that existing notes would cease to be legal tender by January 31, 2023.
Emefiele had explained that the objectives of the naira redesign were mainly to bring into the banking vaults the N2.7 trillion outside the banking system which was outside the banking system, stabilise the exchange rate, curb insecurity, curb inflation, among others.
Although, the policy implementation faced some hitches, the apex bank helmsman said, “More specifically, inflation last month is not rising, not stagnating but somehow moderating and we are hoping that with this exercise, the naira can even get stronger.”
While listing steps taken by CBN to ensure the effective distribution of the new banknotes, Emefiele disclosed that about N1.9 trillion of the old banknotes had so far been collected since the commencement of the exercise.
According to him, the currency redesign policy has so far recorded about 75 per cent success rate given the fact that many of those in the rural and underserved locations across the 36 states of the country have had the opportunity of swapping their old banknotes for the new series of the banknotes.
Corroborating the CBN, President Muhammadu Buhari had in a national broadcast emphasised the need to restore the statutory ability of the CBN to keep a firm control over money in circulation.
“He said, “In 2015 when this administration commenced its first term, Currency-in-Circulation was only N1.4trillion. The proportion of currency outside banks grew from 78%in 2015 to 85% in 2022. As of October 2022, therefore, currency in circulation had risen to N3.23 trillion; out of which only N500 billion was within the Banking System while N2.7 trillion remained permanently outside the system; thereby distorting the financial policy and efficient management of inflation.
“The huge volume of Bank Notes outside the banking system has proven to be practically unavailable for economic activities and by implication, retard the attainment of potential economic growth. Economic growth projections make it imperative for government to aim at expanding financial inclusion in the country by reducing the number of the unbanked population.
“Given the prevailing security situation across the country, which keeps improving, it also becomes compelling for government to deepen its continuing support for security agencies to successfully combat banditry and ransom-taking in Nigeria.
The president, who expressed optimism on the success of the policy, noted that notwithstanding the initial setbacks experienced, the evaluation and feedback mechanism set up has revealed that gains have emerged from the policy initiative. This represents about 80% of such funds.
He said: In the short to medium and long terms, therefore, it is expected that there would be:
A strengthening of our macro-economic parameters;
b. Reduction of broad money supply leading to a deceleration of the velocity of money in the economy which should result in less pressures on domestic prices;
c. Lowering of Inflation as a result of the accompanying decline in money supply that will slow the pace of inflation;
d. Collapse of Illegal Economic Activities which would help to stem corruption and acquisition of money through illegal ways;
e. Exchange Rate stability;
f. Availability of Easy Loans and lowering of interest rates; and
g. Greater visibility and transparency of our financial actions translating to efficient enforcement of our anti- money laundering legislations”.
He said he was not unaware of the obstacles placed on the path of innocent Nigerians by unscrupulous officials in the banking industry, entrusted with the process of implementation of the new monetary policy, adding that “I am deeply pained and sincerely sympathise with you all, over these unintended outcomes. To stem this tide, I have directed the CBN to deploy all legitimate resources and legal means to ensure that our citizens are adequately educated on the policy; enjoy easy access to cash withdrawal through availability of appropriate amount of currency; and ability to make deposits.
“I have similarly directed that the CBN should intensify collaboration with anti-corruption agencies, so as to ensure that any institution or person(s) found to have impeded or sabotaged the implementation should be made to bear the full weight of the law”.
During his meeting with the House of Representatives Ad-hoc Committee on the Review of the CBN’s Cashless Policy and Extension of the Timeframe of the Currency Swap programme, held in Abuja, the CBN governor assured Nigerians that nobody would lose his or her legitimately earned money due to the naira redesign project, insisting that the exercise was in the overall interest of Nigerians and the economy.
Emefiele, who was accompanied to the meeting by all the four deputy governors of the CBN, also told the legislators that the value of old naira notes of N200, N500 and N1000 would still be redeemed even after they have ceased to be legal tender after the February 10 deadline, at the CBN. He explained that the redemption was in tandem with the law, precisely Section 20 (3) of CBN Act. The essence was to mop up the old notes in circulation, he stated.
“At this initial stage, there will be hitches but it is to make the Nigerian economy better and stronger,” he said. He said the CBN had deployed its entire staff to go to their locality to sensitise them on the new naira notes, adding that this had achieved a success of over 75 per cent.
He said out of N2.7 trillion old currency notes in circulation it had recovered N1.9 trillion while commending Nigerians for complying with the implementation of the cashless policy.
”Even if the old notes have exhausted their legal tender status, you can bring it to the CBN; you will not lose your money. We are happy that in 19 years we are able to carry out this mandate. The redesigned naira notes and CBN’s cashless policy has moderated inflation in the country and also curtailed the activities of kidnappers and bandits.
He expressed gratitude to President Buhari for approving the policy implementation after the CBN complained and provided the requisite information on the implication. He said, the President graciously gave approval on October 6, 2022.
It is therefore expected that Emefiele’s appeal to Nigerians, particularly those affected by the policy, would be heeded to make the policy for the success of the policy which is in tandem with the constitution, the CBN Act 2007 and global best practice.
Abdullahi writes from Abuja .
