How new Naira notes ‘ll affect Nigerians and the economy

Many Nigerians have expressed their disappointment via Twitter on the new naira redesigned by the Central Bank of Nigeria (CBN), as they did not see the expected major changes in the new outlook, while some said the new naira is more about improving its security and not appearance.

According to financial analyst, Kalu Aja, the cost of redesigning the naira was N280 billion. This means each Nigerian contributed about N1,296 to the creation of the new naira, based on the population of 216 million.

Although, for every positive outcome, there’s a negative, and one is that too many naira, especially the stashed ones, will now chase a few dollars, as CBN has shown it is serious with its new naira plan.

This will likely cause the value of naira to fall in the exchange market in the coming days, most especially the black market, where persons with illegal businesses will look to dump hoarded naira in exchange for dollars. They will be willing to pay more just to avoid losing the currency.

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So while CBN is achieving its plan of forcing people to take the naira in circulation to the banks, Nigerians and others conducting legal businesses will be paying a premium rate in the parallel market to obtain USD, as naira dump will raise the dollar rate.

The new naira will further drive inflation forward in the short term, causing cost of living to skyrocket, thereby, increasing Nigeria’s poverty population which is 133 million according to the National Bureau of Statistics (NBS).

Also, cost of importation will rise, considering FX scarcity is forcing traders to shuttle between the black or official market regardless of the incentives provided by CBN’s dollar for naira programme.

In a broader view, industries’ contribution to GDP could fall. Already, Nigeria’s GDP growth rate slowed by 2.25 per cent year-on-year in the third quarter of 2022.

It fell below the 3.54 per cent growth rate reported in the second quarter and 3.11 per cent growth rate reported in the first quarter of 2022.

Meanwhile, the CBN has ruled out the extension of the deadline for the withdrawal of old Naira notes from circulation.

The CBN had said in October that the old Naira notes would be withdrawn from circulation on January 31, 2023.

The apex bank wrote: “The current series of N200, N500, and N1,000 notes remain legal tender until the deadline of January 31, 2023.”

According to the CBN, there is a Mint Tracking System (MTS) to track initial recipients of new banknotes when cases of illegal sale of new banknotes arise.

The Deputy Director of Currency Operations Department, CBN, Amina Abdumalik Halidu-Giwa, disclosed this at a webinar organised by the Nsukka and District Society (NDS) arm of the Institute of Chartered Accountants (ICAN) in Abuja