As President Muhammadu Buhari unveiled redesigned Naira notes, the debate is still on over the decision of the Central Bank of Nigeria (CBN). VINCENT KURAUN speaks with renowned academics on the merits and demerits of the CBN policy.
On Wednesday, 26 October, the Central Bank of Nigeria (CBN) through its governor, Mr Godwin Emefiele, announced the decision to redesign some denominations of the country’s currency, the Naira. The CBN said its plan was to mop up N 2.73 trillion out of N 3.32 trillion outside the bank vault to take control of monetary supply in the country.
The CBN said it was worried about the high rate of counterfeiting of N500 and N1,000 denominations, revealing that the redesign would affect N200, N500 and N1,000 notes. The circulation of the new bank notes initially was to begin mid-December 2022 but on Wednesday, November 23, President Muhammadu Buhari and the apex bank unveiled the redesigned Naira notes. An action that is already generating debates among Nigerians.
Indeed, the decision by the CBN has continued to a lot of reactions from all sectors of the economy and financial experts, including the Minister of Finance, Budget and National Planning, Zainab Ahmed, who initially expressed her sentiment on the matter after claiming ignorance of the policy decision undertaken by a parastatal agency under her charge. But the CBN effectively blocked her objection after explaining that the policy got the approval of President Buhari.
The bankers’ bank explained that it followed the law, due process on the policy, saying that the exercise is 12 years overdue. It thereafter urged Nigerians to support the currency redesigning project which, it claimed, was in their overall best interest. The policy, it claimed, was coming 20 years behind schedule, as the standard practice globally was for central banks to redesign, produce and circulate new local legal tender every five to eight years.
But given the barrage of reactions to the CBN policy, especially with the high inflation rate, banditry and kidnapping for ransom bedevilling the country as well as the upcoming election, is the timing right for this policy? What implication or effect would this redesigning of Naira have on the economy, security and the election? Would this curb vote buying by politicians?
Answering some of these questions, a professor of Political Science, and former Vice Chancellor Caleb University, who is the current Provost, Babcock University College of Postgraduate Studies, Professor Ayandiji Daniel Aina said the CBN policy of redesigning some denominations of the Naira is good if part of the plan is aimed at targeting vote-buying in the coming elections. According to him, “It is a good effort, but I don’t think it will have maximum impact because, as you know, vote buying is not denominated only in Naira. In fact, a majority of the cases [observed in the primaries of the political parties] or reported cases of vote buying are actually denominated in the dollar, where who has the dollar carried the day and that is not just in this year’s primary elections. Even in the past, vote buying was denominated in dollars.
“So, it might have impact on those who had the money in Naira to do something when the election time comes, but you know that there is a way the money stack can still be return to the bank, although, it will be a great level of discomfort for those who have the cash in a large quantity for the purpose of vote-buying.
“But they will still have a way around it because we have enough time from now till February for the Nigerian factor to play it full circle,” Aina explained, reiterating that the policy is not without its own merits.
The policy is “a good thing like I said; five to eight years currency redesigning is a normal activity globally. So it is good that we are doing that. It would give tension to those who have illegal agenda with Naira, vote-buying, kidnapping and all that. But you remember that even some of the patrons of the kidnappers or linkmen persons have said that if they do that, kidnappers would now be demanding for ransom payment in dollars.
“But it is the duty of the government to do what it has done as it will have some form of effects on the electoral process, on natural lifestyles of the people and how to curb abuse of Naira in one way or the other” he said, adding that government should be sincere with the implementation claiming the policy if sincerely implemented can help halt the country’s galloping inflation.
“The policy is okay; let them be just sincere with it so that the Nigerian state can benefit from it. The amount of money that will be used in executing this project is huge. The money is not printed by just an ordinary printer. It is going to take a lot of money. We pray that it would achieve minimal, even if it is just minimal effect, at least, it will help Nigeria to curb inflation, even if it is only temporary. But we have to do something because the country is going through so much tension.”
Like Aina, Professor Ugwu Samuel Chijioke, Dean of Postgraduate Studies, Enugu State University of Science and Technology, believes the CBN policy has its positives side that can help reboot the nation’s economy, but it also has its minuses.
According to him, the policy “has both positive and negative effects. Positive in the sense that, from what the CBN governor, Emefiele, said, there are lot of money outside the banking sector and there is need for them to mop up such money to come back into the system, I mean the banking sector. When they have enough money in the bank, then they have enough money to do business and also have enough money to give credits facilities to their customers.
“There is also the need for the government to regulate. It is the fundamental responsibility of the bank to regulate the inflow and outflow of the currency in the system. From our experience in the country, we have seen what is going on with the activities of bandits and kidnappers who are carrying money up and down.
“We also have some politicians who have decided to keep money in their homes and other places instead of keeping money in the bank, because regulatory measures of the government like Bank verification Number (BVN), Treasury Single Account (TSA) have forced some people not to go to the bank to keep money. It is believed that hoarding large sums or significant sums of money outside the bank vaults is not good for any economy and this should be discouraged by all means.
“So, in the first place, I want to congratulate the CBN for taking such a decision. However, on the other hand, I do not know if other stakeholders in the political economy participated in the analysis that gave rise to the CBN decision, because I was surprised to hear the minister of finance condemning the policy, saying they were not part of the decision because, such fundamental policy shouldn’t be a one man decision.
“It shouldn’t be between the CBN governor and Mr President alone. Other stockholders in the economy should be aware. If they didn’t do that, it is wrong. All the commercial banks, their representatives should be aware of the policy before it was taken. The minister should be aware. We also have a House [of Representatives] committee on a public account and banking and insurance; they should all be aware, I mean the legislature.”
ALSO READ FROM NIGERIAN TRIBUNE
On the negative aspect of the policy, Professor Ugwu said the poor may not have access to the new currency. He said some people due to one reason or the other may not be able to the banks and there will be scarcity of currency.
“We know what happened in 1984 when the same policy was implemented by the Buhari/Idiagbon administration. Many people suffered; people had no access to the new currency because some individuals started doing some brisk business by temporarily holding on to the new currency.
“So the poor will suffer; only the big people will have access to money,” he explained.
But Ugwu agreed that the new Naira policy will have a great impact on banditry and kidnapping for ransom. “It would have an impact on the banditry and kidnapping; it may discourage [kidnappers] from embanking on such things, but they will still devise other means of achieving their aim because this is not the first measure that is being taken.
“The federal government has been using the military to fight them for a long time now, but they are still doing it. Many have lost their lives, but they are still on. It is not a one-way thing. We need a multipurpose approach to stop banditry,” he stated.
The Federal Government on Friday unveiled plans to train 365 Nigerian youths in automobile maintenance.
"These are in line with the Renewed Hope Agenda of economic diversification drive under the…
National Chairman of the All Progressives Congress (APC), Dr Abdullahi Umar Ganduje, has assured Nigerians…
An Akure Magistrate’s Court sitting in Akure, the Ondo state capital, has ordered the remand…
President Bola Tinubu has welcomed new investment initiatives from the Qatari government, particularly in Nigeria’s…
These include Alaska, Arkansas, California...
This website uses cookies.