By Victoria Ngozi Ikeano
In an apparently well guarded plan, governor of the Central Bank of Nigeria (CBN), Godwin Emefiele announced days ago that plans had been concluded and approval gotten from President Mohammadu Buhari to redesign the higher denomination Nigerian currencies of N200, N500 and N1000. The lower denominations of N10, N20, N50 and N100 remain intact. The new currency notes will start rolling out from December 15 and Nigerians have between that time and January 31, 2023 to change their current notes as they would cease to become legal tender from February, 2023. Ironically, the CBN’s move was not sniffed by Journalists and so not leaked; nor was it foreseen by our many so-called ‘seers’ whose ‘predictions’ know no bounds. Emefiele might have learnt from one of his predecessor’s ‘mistake’ in keeping sealed lips about the plan before now. Recall that former CBN governor, Dr. Charles Soludo (now governor of Anambra state) had come up with the drastic plan to re-denominate (revalue) the Naira. But no sooner did he unveil the bold step to the public than it was shut down by the ruling government for lack of presidential approval. Dr. Soludo might have been working in the belief that the CBN is an independent institution charged principally with directing the country’s monetary policies in the nation’s best interest.
Although Emefiele’s current move involves essentially,only a change in colours of our currency notes, it has implications for the people and the economy. This currency redesign is coming just when the CBN itself marked the first anniversary of introduction of the E-Naira which is meant to further enhance its cashless policy and bring more Nigerians especially low income earners into the banking net. With virtually every adult Nigerian now owing a GSM handset plus increasing internet penetration as well as the P.O.S revolution, many more Nigerians are now embracing banking operations particularly in respect to transfer and withdrawal of money. However, the E-Naira that was supposed to expand the frontiers of cashless payments has not really caught on with Nigerians. The first implication of this Naira currency redesign is that we shall be back to the era of carrying cash about, at least during the transition as everyone has to physically take his/her cash to the banks for the new ones. Simultaneously, it would help the CBN mop up excess liquidity as all those that are keeping cash in their houses for one reason or other, for one future purpose or other would be forced to bring them out for exchange. According to figures some 80 per cent of monies circulating in Nigeria are outside the banks.
Another issue associated with currencies is counterfeiting. The CBN confirms that it has recorded high rates of counterfeiting of naira notes especially for N500 and N1000 denominations. When these higher denomination notes were introduced some years ago, some argued that they would benefit mostly the rich and elites who deal with huge sums of money because it would make it easier for them to carry millions of naira in cash. Incidences of counterfeiting are rampant during high spending times, like Sallah, Christmas, end of year/new year festivities as well as during political campaigns/general elections. Billions of naira is billed to be spent on activities related to the presidential, governorship, national assembly and state houses of assembly elections in February/March 2023. Some of the activities have commenced. Thus it is envisaged that there would be much, much money in circulation in December, January and February. Experts say advances in photography technology and printing devices have made counterfeiting of currencies relatively easier. However, this can be curtailed through high-end security marks. It is believed that with the redesigning of our currency notes it would take counterfeiters quite some time to be able to master it. Nigerians should be doubly watchful from now onwards, particularly in December and January as these counterfeiters would be making desperate efforts to spend their fake naira notes before the old currencies cease to be legal tenders. Dirty, worn, torn naira notes of all denominations are now also increasingly in circulation. They seem to be more common here in the north. They are also becoming more difficult to spend as even some fuel stations reject them. So, this currency change provides an opportunity to have neater, better naira notes nationwide from January 31. Given that many people would travel to their villages for the Christmas, New Year celebrations or just to go for some relaxation during the Christmas/New Year holidays, most Nigerians would only begin to give serious thought to changing their notes only after the 2023 new year public holiday. Besides, Nigerians seem to be accustomed to doing things at the 11th hour. Thus, it is likely that there would be some rush for currency exchanges towards end of the deadline that may overwhelm the banks. I foresee the CBN succumbing to pressure to extend the deadline.
Moreover, the timing of this currency change is wrong — coming at a time of high profile events, namely, Christmas, end of year/New Year celebrations, peak of the political campaigns for the 2023 general elections. Nigerians would want to enjoy aforementioned moments fully without any distractions, without worrying about possibility of losing their monies because they are unable to change them to new ones before expiration of time allotted for such. The consequences of these and others mentioned in this article is that it may lead to panic among the populace, rejection of ‘old’ notes even before they cease to be legal tenders and placing of premium on the new currencies. That is, people may be compelled by these circumstances to exchange their old notes for the new ones within the time frame, at a discount through some private channels
Ikeano writes from Lafia