The 2023 naira redesign exercise would go down in history as the bloodiest, most sabotaged and disgustingly mismanaged. The agonising mismanagement of the exercise by the Central Bank of Nigeria (CBN) as regulator of Nigeria’s banking system and the wanton sabotage by banks as operators of the industry has resulted in a senseless bloodletting and crippling of thousands of businesses in the country.
The CBN rightly set out for the implementation of the laudable project of redesigning the naira to rob treasury looters of the chances of buying votes with their looted old notes. It also hoped to reassert control of liquidity by getting most of the currency in circulation back into banks vaults.
Unfortunately, the apex bank had no solid plans to replace N2.7 trillion in old notes with the redesigned ones. Even as it announced the naira redesign plan three months ago, everything points to the fact that CBN grossly overestimated the production capacity of Nigerian Security Printing and Minting Company (NSPMC).
Ironically, a CBN deputy governor sits on the board of NSPMC as the apex bank owns controlling shares in the company. Despite that overwhelming insider advantage, it did not occur to the architects of the naira redesign project that NSPMC lacks the capacity to supply something close to 100 million new bank notes within weeks.
Consequently, the apex bank mopped up N2.1 trillion of the old notes only to replace them with just N300 billion of the new notes.
If the CBN was regulating a banking system where the operators are decent and patriotic, N300 billion of the new notes would have assuaged the needs of depositors, eased the stranglehold on the economy and circumvented the bloodletting resulting from mass protests.
Unfortunately, the banks ignored their traditional depositors and sold money to treasury looting politicians and heartless operators of point of sales (PoS) terminals.
The naira redesign project has created new millionaires instantly in the last three weeks while at the same time crippling thousands of businesses through a senseless artificial cash crunch.
Treasury looting politicians have recouped their losses to the old notes while operators of PoS terminals suddenly became the millionaires rising from the ruins of the old notes.
PoS terminal operators who hitherto would pray fervently to make daily turnover of N20, 000 were suddenly raking in N50, 000 daily as profit.
A hairdresser in Alakuko, Lagos, who recently added a PoS terminal to her sluggish business, was so overwhelmed last week by the sudden profit from PoS that she started snubbing her customers who were arriving in droves in search for the scarce new notes. She boasted to her friend that as at 9am that day, she had made profit of N15, 000 from the business.
The profiteering was overwhelming as operators extorted N300 from clients in exchange for N1, 000 of the new notes. The merciless profiteering drew flak from impatient clients on Friday, February 17, 2023 as a minor dispute escalated into a bloody brawl at a PoS shop in Alakuko, Lagos. All PoS operators in the community shut down their shops because of the fracas.
The exploiting PoS operators were funded by greedy bankers who refused to load their ATMs with the new notes and diverted the funds to PoS operators.
The ATMs were no longer dispensing cash, while the PoS operators became the only sources of cash for frustrated bank depositors.
Bank staff responsible for loading the ATMs struck deals with PoS operators and diverted funds to them in exchange for N10, 000 for every N200, 000 in new notes paid to the operators.
The naira redesign project is a laudable venture though rather belated. The timing is precise given the fact that it was partially meant to immobilise trillions of looted old notes meant for vote buying by rapacious politicians.
However, the implementation was disgustingly defective due to despicable miscalculations. Treacherous operators of the banking industry capitalised on the regulator’s inept planning and tortured Nigeria’s inconsequential majority with artificial cash crunch which took horrendous toll on the economy and led to avoidable bloodshed.
The federal government worsened a bad situation with a presidential broadcast on Thursday, stripping the old N500 and N1, 000 notes of their legal tender status. The presidential broadcast was responsible for the chaos in the country last Friday.
It gave the false impression that only the CBN could swap the trapped old notes for new ones in a convoluted arrangement. Everyone rejected the old notes even as no one knew how to circulate the new ones.
The confusion over the swapping of old notes for new ones is just beginning. Even as the CBN reversed the president’s position on the swapping arrangement, no one knows what will happen when the nation’s controversial Supreme Court makes its pronouncement on the matter later in the week.
At the moment, there are fears that the president’s broadcast was contemptuous of the Supreme Court ruling nullifying CBN’s February 10 deadline for withdrawing the old notes from circulation.
There are speculations that the federal government is trying to coerce the fuming state governors behind the litigation in the Supreme Court into an out-of-court settlement.
If the federal government fails to broker an out-of-court settlement with the litigants, the Supreme Court could worsen the confusion by overruling the president.
Godwin Emefiele, the CBN governor has bungled a laudable project with catastrophic miscalculations and bewildering mismanagement that was capitalised upon by treacherous bankers leading to senseless bloodshed and calamitous cash crunch.
He can still salvage the situation by accelerating the supply of the new notes and working out an orderly swapping of the old notes with the treacherous bankers as strategic medium.
The withdrawal of N500 and N1, 000 notes as legal tender would immobilise the mountain of cash in politicians’ vaults since most of them are in the two denominations. However, innocent Nigerians must be given an avenue to swap the old notes they acquired legally.
