The new faces of Nigeria’s Naira: A belated good news?

The Governor of the Central bank of Nigeria (CBN) Mr. Godwin Emefiele announced last week that the Nigerian currency known as the “naira” will soon be re-designed and that by January, 31st, 2023 the old designs of N200, 5000 and N1000 will be retired and will no longer be legal tender. According to the CBN Governor, 80% of the Nigeria’s naira are outside the banks vaults, which means only one thing: they are somewhere else. In justifying the new policy, Emefiele, alluded to the increasing wave of kidnapping in the country and that with the new policy, kidnappers will find it difficult to ask for ransom. Truly? However, Sheik Gumi has debunked this, and I agree, that even if all the naira in circulation are withdrawn, kidnappers will still ask for whatever currency that is in use but it will not also be easy for them.

Surprisingly, the Nigeria’s Minister of Finance, Zainab Ahmed while defending her Ministry’s Budget before a Committee of the National Assembly, stated that she was not “consulted” by the CBN Governor before rolling out the policy. President Buhari, who only came back from South Korea few days ago and on Monday jetted out of the country to London, has since confirmed his approval of the policy.

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This makes me worry to ask who is actually in charge of this country, that the Manager of the nation’s fiscal policies is not in sync with the Manager of the country’s monetary policies.

Section 2 of the Central Bank of Nigeria (Establishment) Act, Cap C4, LFN 2010 provides that one of the primary functions of the CBN is to “issue legal tender currency in Nigeria.” By section 6 of the said CBN Act, the Permanent Secretary, Federal Ministry of Finance and the Accountant General of the Federation are members of the Board of Directors of the CBN. Section 18 of the CBN Act also gives the CBN the responsibility to “arrange for the printing of currency notes and the minting of coins”. It would therefore, be right that, though the Federal Ministry of Finance is adequately represented on the CBN Board, the CBN does not need to consult the Federal Minister of Finance personally on any matter relating to the CBN’s statutory responsibilities. However, it will be appropriate and to prevent any shock to the nation’s economy as a result of the new policy that the CBN Governor and the Minster of Finance should be on the same page for the common good of the country, particularly the integrity of our currency.

Since the announcement of the new naira design, the value of the naira has crashed further and is now above N800 to $1 (One United States Dollar). The economy is worst-hit. It has been alleged that many persons that hid their naira currency in their bedroom or buried them in their country homes are now bringing them out but because of the huge volume of the cash, they cannot take them to the bank to avoid prying eyes. It is not the petty trader or the N50, 000 a month salary civil servant or the struggling single mother that can afford to hide or bury huge cash and rush to buy dollars or pounds with it. It is the politicians and the criminals in government who are looting the treasury every day that are now offloading the naira they stole and kept.

Sadly, it is an indictment on CBN that more than 80% of our naira currency are outside the bank vaults, and therefore, a failure of the e-banking and digitalisation policies of the present government. Just like the recent crude oil theft in the Niger Delta, it is the political leaders that are hoarding and hiding cash at home, possibly for 2023 elections. During the primaries of the leading political parties, Nigerians saw how dollars and naira were flying everywhere. Till date, the Economic and Financial Crime Commission (EFCC) is yet to prosecute anyone. Most government services are still being transacted with cash. Commuters still pay cash to use the Warri to Itakpe train service, with revenues never properly accounted for. Probably, the Money laundering Act needs to be amended to make it compulsory that all payments and transfers above N200, 000 must be done electronically through bank transfers. It should be a strict liability offence to pay or give cash of more than N200, 000 and such funds confiscated to the appropriate Government. This will help check corruption, and also reduce the rate of kidnapping.