The Governor, Central Bank of Nigeria (CBN), Mr Godwin Emefiele has insisted that it does not matter how Nigerians describe the newly redesigned naira notes, as it will replace the existing ones by January 31 2023 .
Emefiele who alluded to criticisms in some quarters that the new notes did not differ so much from the existing ones except in colour, spoke at the 57th Annual Bankers Dinner in Lagos.
According to him, 100 days is enough for anyone in Nigeria to return all the existing notes to the banks because the January 31 2023 deadline is sacrosanct.
Emefiele added that those who think that the redesign is only a change of colour will have no option than to look for that coloured one after the deadline.
Analysis of the key challenges he disclosed, primarily indicated a significant hoarding of banknotes, as over 85 percent of currency in circulation were held outside banking system.
This is even as currency in circulation more than doubled from N1.46 trillion in December 2015 to N3.23 trillion in September 2022; a worrisome trend that must be curbed.
He said the exercise will curtail currency outside the banking system and, as monetary policy becomes more efficacious, help to rein in inflation.
The foreign exchange market development he said, had exerted considerable pressure on the naira-dollar exchange rate, notwithstanding the enormous effort of the CBN to stabilise the exchange rate.
Over the medium-term, the incessant demand pressures at the foreign exchange market moved the exchange rate from about N381/$ at end-2020 to N416/$ in January 2022 and further to N440.9/$ today, a cumulative 5.6 percent depreciation year-to-date.
He assured that the redesigning of the naira will curb hoarding of banknotes.
Emefiele said, “Analysis of the key challenges primarily indicated a significant hoarding of banknotes, as over 85 per cent of the currency in circulation were held outside the banking system.
“This is even as currency in circulation more than doubled from N1.46 trillion in December 2015 to N3.23 trillion in September 2022, a worrisome trend that must be curbed.”
According to him, the redesigned notes will also help rein in inflation.
He, therefore, said the policy would quicken the attainment of a cashless economy as it was complemented by increased minting of the eNaira.
Emefiele also said the steady increase in headline inflation in September was in tandem with global trends.
He said upside pressure on consumer inflation re-emerged during the year as global conditions complicated existing local imbalances to undermine price stability.
“Food remains the significant component of the domestic consumer price basket. The annualised uptick in headline inflation mirrors the 6.21 percentage points upsurge in food inflation to 23.34 per cent in September.
During this period, core inflation also resumed an upward movement from 13.87 per cent in January to 17.60 per cent.
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“In addition to harsh global spillovers, exchange rate adjustments and imported inflation, inflation was also driven by local factors such as farmer-herder clashes in parts of the food belt region,” he said.
Emefiele said during the early part of 2020, the world economy experienced the most significant downturn since the Great Depression following the outbreak of the COVID-19 pandemic.
The war and the sanctions placed on Russia by the US and its allies led to a spike in crude oil prices.
He added that there were growing restrictions on food exports because of the food, energy, and cost-of-living crises in many countries.
“The Nigerian foreign exchange market is in the middle of serious crunch which are straining our reserves and stifling the value of the naira. Market demand for both goods and invisible transactions has continued to increase under various uses in the face of dwindling supply of foreign exchange. As we all know, for example, the official foreign exchange receipt from crude oil sales into our official reserves has dried up steadily from above $3.0 billion monthly in 2014 to an absolute zero dollars today,” the governor stated.
