Finally, an end to Naira redesign conundrum

By Marcel Okeke

The content of a brief to the diplomatic community on recent monetary policy decisions of the Central Bank of Nigeria (CBN) presented by the boss of the apex bank, Mr Godwin Emefiele, on Tuesday February 14, 2023 in Abuja, definitively put an end to the babel and cacophonous debates that had attended the Naira redesign policy of the Bank since October 26, 2022.

Specifically, in the 34-point address, the CBN Governor said: “the CBN remains committed to ensuring a seamless, inclusive and equitable implementation of this exercise for the overall benefit of the people, financial system and Nigerian economy as a whole.”

Emefiele said: “We are mindful of the challenges some citizens have faced and are addressing them. There have been reports of occasional failures in e-channel platforms; our monitoring suggests that whilst there has been an expected surge in electronic transactions, these have not risen to unprecedented levels and the payment system is well equipped to handle even higher transaction volumes.”

He noted that “while transaction failures are bound to occasionally occur, the public is encouraged to have full confidence in Nigeria’s globally recognized payment system infrastructure,” adding that “banks have been instructed to ensure 24/7 service availability and promptly address any customer refunds arising from such service failure.”

The apex bank boss reiterated “the availability of an appropriate amount of currency to support economic activities”, stressing that “the Bank is collaborating with the entire financial ecosystem…as well as the law enforcement agencies to ensure that Nigerians have a variety of options for financial transactions either through electronic channels or in exceptional circumstances, cash.”

Obviously, these apt assurances by the CBN boss are in response to a rash of campaigns of calumny, pent up public odium and opprobrium that had attended the Naira redesign policy of the CBN and its implementation.

Largely uninformed debates, wilful distortion of facts and outright falsehood have been made to suffuse the Nigerian polity in respect of the genuine objectives and gains of the currency redesign initiative and its implementation.

Politicians and other vested interests, rather than seeing anything good in/about the monetary policy, chose to unleash everything in their propaganda arsenal to not only vilify and ‘crucify’ the authors of the Naira redesign measure but also to torpedo the entire effort.

Alluding to these characters, Mr Emefiele said in his address: “We have observed pervasive incidences of hoarding and predatory activities of some vendors and unscrupulous Nigerians.” These persons directly and through proxies have been mopping up and hoarding the new bank notes (in the denominations of N200; N500; and N1000).

Regarding this, the CBN boss said: “We have noticed that some members of the public are hoarding the new notes thereby restricting their flow through the economy”, stressing that “cash kept at home will not circulate but may fuel a perception of scarcity which leads to higher demand for currency, signalling to those who don’t have an urgent or immediate need to store cash.”

Emefiele observed that there have been tremendous tension and elevated agitation “by our leaders who should be calming down frayed nerves by the citizens…we believe a large proportion of these agitations are staged and sponsored propagandas or an exaggeration of the reality.”

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And here lies the bizarre clash between politics and economics—a situation where the apex bank is deeply involved with liquidity management to tame inflationary pressure, but the politician is interested in spending money in immeasurable volume in pursuit of his political ends.

This is more so now that is the peak of nationwide campaigns towards the presidential/general elections slated for 25 February 2023; and the closer the election date, the more desperate the politicians become as regards quantum of money available for spending.

Naturally, and in preparation for the electioneering, not a few politicians had over time stocked or stashed (volumes of) cash away in their private ‘warehouses’ and ‘strong rooms’, strategizing on how to best deploy such monies to their political advantage. And now come the noble intendments of the Naira redesign policy with the adjunct objectives of furthering financial inclusion and deepening the ‘cash-less’ economy.

And truly, in the face of several odds (especially wilful opposition and deliberate propaganda) the implementation of the monetary policy has made some progress and recorded some successes. Thus, according to the CBN boss in his address: “prior to the announcement of the policy, the huge cash haul outside the banking system had exerted significant pressures on the exchange rate at all windows, but more so at the parallel market as it engendered asset substitution by speculators and rent-seekers…today, the limited circulation of the new Naira notes has forced the hands of speculators and we are beginning to witness some stability.”

Still on the gains of the Naira redesign initiative, Emefiele said: “As you can see, we have started to witness inflation trending downwards, following general price stability in almost all genre of markets, including for goods and financial products.”

Further buttressing this he said: “…analysis shows that an effective implementation of the policy could by itself scrape four percentage points off the current level of inflation as it steadily slows inflation rate to about 18.0 per cent by mid-2023.” Assuring that “this is achievable”, he said “data from our market sources indicate that the prices of grains and some staples…for instance, have generally been on the downward trend since the beginning of the policy.”

But while these gains are being made, the politicians remained stuck in their scheming to ‘un-do’ the policy and render it otiose. Emefiele said (in a subhead ‘Panic Mop-up of Notes by Politicians): “The CBN has also noticed that some politicians are buying the new notes and storing them for political purposes.”

He said: “We have also noticed that some Nigerians are capitalizing on the transition to charge exorbitant fees or demand cash payment on false pretext that PoSs don’t work, especially at petrol stations. These selfish actions for personal monetary gain are creating hardship for Nigerians and come at the expense of fellow citizens’ lives and livelihood.”

Yet, bent on stopping at nothing to frustrate the Naira redesign policy, Governors of some states had to take the Federal Government to the highest court of the land (Supreme Court of Nigeria) with an exparte motion to stop the CBN from stopping the use of the old versions of the redesigned Naira notes. And pronto, the injunction was granted—meaning indefinite use of the ‘old notes’. The CBN however stood its ground, and declared that the old N200; N500 and N1000 notes “ceased being legal tenders in Nigeria on Friday, February 10, 2023.” CBN Branch Controller in Bauchi, Haladu Idris Andaza, who disclosed the definitive position of the apex bank, said bank customers who still wanted to deposit the old Naira notes could only do so at various CBN branches/offices across the country.

The apex bank in its original timelines for the implementation of the Naira redesign initiative had given January 31, 2023 as the terminal date for the use of the old notes. This, it however had shifted to February 10, 2023 in the face of daunting pressures, and Presidential approval.

Yet, as the politicians kept pushing their schemes to render the entire policy nugatory (apparently through the Supreme Court), President Muhammadu Buhari, in a nationwide address (on Thursday February 16, 2023) put a final seal on the CBN’s stance. He however directed that only the old N200 notes shall continue to be in circulation alongside all other notes (old and new) till April 10, 2023. So, finally, the Naira redesign conundrum has come to an end. We strongly hope so!

• Mr. Okeke, an economist, sustainability expert and business strategy consultant, is National Daily Economic Analyst. He can be reached at: [email protected]