As naira redesign embarked upon by the Central Bank of Nigeria (CBN) in December last year, runs into trouble waters with acute scarcity of currency, TAIYE ODEWALE captures the outcry against the policy by Nigerians particularly from NASS
What brought about Naira Redesign
The motive behind Naira redesign as stated by the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, on October 26, 2022 in Abuja at a world press conference, was to address the issue of having 80% of monies in circulation in Nigeria outside the banking vaults.
He alleged that naira hoarding by some money bags in the country, was incapacitating the CBN from dishing out clean notes and invariably denting the image of the country.
His words: “We have called this gathering to inform relevant stakeholders and the general public of persisting concerns we are facing with the management of our current series of banknotes, and currency in circulation, particularly those outside the banking system in Nigeria.
“As you all may be aware, currency management is a key function of the Central Bank of Nigeria, as enshrined in Section 2 (b) of the CBN Act 2007. Indeed, the integrity of a local legal tender, the efficiency of its supply, as well as its efficacy in the conduct of monetary policy are some of the hallmarks of a great Central Bank.
“In recent times, however, currency management has faced several daunting challenges that have continued to grow in scale and sophistication with attendant and unintended consequences for the integrity of both the CBN and the country. These challenges primarily include:
“Significant hoarding of banknotes by members of the public, with statistics showing that over 80 percent of currency in circulation are outside the vaults of commercial banks;
“Worsening shortage of clean and fit banknotes with attendant negative perception of the CBN and increased risk to financial stability;
“Increasing ease and risk of counterfeiting evidenced by several security reports.
“Indeed, recent development in photographic technology and advancements in printing devices have made counterfeiting relatively easier. In recent years, the CBN has recorded significantly higher rates of counterfeiting especially at the higher denominations of N500 and N1,000 banknotes.
“Although global best practice is for central banks to redesign, produce and circulate new local legal tender every 5–8 years, the Naira has not been redesigned in the last 20 years.
“On the basis of these trends, problems, and facts, and in line with Sections 19, Subsections a and b of the CBN Act 2007, the Management of the CBN sought and obtained the approval of President Muhammadu Buhari to redesign, produce, and circulate new series of banknotes at N200, N500, and N1,000 levels.
“In line with this approval, we have finalized arrangements for the new currency to begin circulation from December 15, 2022. The new and existing currencies shall remain legal tender and circulate together until January 31, 2023 when the existing currencies shall seize to be legal tender.
“Accordingly, all Deposit Money Banks currently holding the existing denominations of the currency may begin returning these notes back to the CBN effective immediately. The newly designed currency will be released to the banks in the order of First-come-First-serve basis.
“For the purpose of this transition from existing to new notes, bank charges for cash deposits are hereby suspended with immediate effect. Therefore, DMBs are to note that no bank customer shall bear any charges for cash returned/paid into their accounts.”
Implementation hiccups and concerns expressed by NASS and other Nigerians
Before embarking on recess for the forthcoming presidential and National Assembly elections, both the Senate and the House of Representatives through separate resolutions, called on the Central Bank of Nigeria to extend deadline for take off of the policy from January 31, 2023 to July 31, 2023.
But despite the resolutions, the CBN insisted that the scarce new naira notes will be available for all Nigerians before the earlier deadline date of January 31, 2023 only for it to shift it to February 10, 2023 on Sunday, January 29, 2023 after realizing the enormity of problems at hand inform of acute currency scarcity with attendant untold hardship on Nigerians.
The APC govs intervention
Few days after the extension of deadline for full take off of the policy, governors from the All Progressives Congress (APC) controlled states, visited President Muhammadu Buhari and called for extension of deadline till the end of the year who were also told by the President to exercise patience for the remaining 7 days of the 10 days deadline extension.
Senator Smart Adeyemi’s clarion call on President Buhari to act fast
Apparently not satisfied with the seven days given to the Governors and by extension, Nigerians, by President Muhammadu Buhari, Senator Smart Adeyemi (APC Kogi West), had an emergency press briefing at the National Assembly on Saturday where he described the problem at hand as an urgent solution seeking one which may get out of hand if not immediately addressed.
His words: “As good as this policy is, we should not allow the poor masses to carry the pains for the atrocity committed by the elite.
“I want to tell the President that seven days is too long a time for required solution.
“I am taking a look at happening across the country and already there are demonstrations, violent reactions.
“President Muhammadu Buhari is a statesman who fought for the unity of this country and a man who was doggedly committed to rule this country.
“I want to call on the President that 7 days is too long a period. The pains that Nigerians are experiencing is too much.
“In this country there are artisans who live on daily earnings meaning that what they get in the day is what they use to manage their homes.
“These people are dying silently and I want to support all the positions taken by Mallam Nasir El-Rufai and the President should listen.
“This is a threat to peace and tranquility of the country and that is what is giving room for interpretation, and insinuations that some people around Buhari are behind but rightly so rightly wrong but there are reasons to believe.”
Possible emergency session by the House of Representatives
Also not impressed by the way the problem is being handled, the Speaker of the House of Representatives, Rt Hon Femi Gbajabiamila, declared in Lagos on Sunday that the House may reconvene for emergency session on way out of the currency scarcity crisis if CBN failed to arrest the ugly situation this week.
His words: “The House of Representatives intervened on several occasions on duration of implementation of the policy . We summoned the CBN governor the first time and again, but he refused to answer, because we had many hard questions for him.
“It was until I issued the threat of warrant of arrest before he came, and I would’ve signed that warrant; it would’ve been the first time in the history of National Assembly that a CBN governor would be arrested. I would’ve done it.
“Many have argued on the independence of CBN, the autonomy of CBN. That does not make CBN above the law. The constitution gives the House the power to issue an arrest warrant against anyone, we can summon anybody, and that was exactly what the House was going to do until the CBN governor came.
“So, we’re watching, and we’re monitoring very closely. If need be, we will reconvene the House, even though we’ve all been away for our elections. I will call the House back if need be”.
With just two days to February 10 deadline of solving a problem getting more complicated on daily basis with acute naira scarcity, the ball is certainly in the courts of President Muhammadu Buhari and CBN Governor, to do the needful by way of extending date of full implementation of the policy further.