On October 26, 2022, Mr. Godwin Emefiele, Governor of Central Bank of Nigeria, announced that the apex bank would redesign higher denominations of the nation’s currency. The move, we were told, was among other things, meant to bring lots of cash outside bank vaults back and perhaps trail millions or even billions of naira in the coffers of kidnappers who have milked their victims dry. The recent Abuja-Kaduna rail kidnap incident is said to have fetched no less than two billion naira, some estimates put it at twelve billion for those engaged in that nefarious enterprise. That kind of transaction hardly gets done through the formal banking sector because bank process easily gives away the culprits. It is the same reason kidnappers demand cash as ransom, in spite of the humongous sums they demand. It does not matter much they want, you have to give it in cash.
That way they would stay out of the radar of the prying eyes of security agencies who would lay siege in the bank to pick up such errant customers. it would seem that the redesign would force out those large sums. It has also been said that ransom funds also help to put pressure on the naira given that the kidnappers seem to use them to purchase foreign currencies, especially dollars used to purchase arms. Bandits and terrorists have loads of cash which they deploy to fortify themselves with arms to continue their deadly enterprise.
The apex bank, however, said some of its reasons for the move include hording, shortage of clean notes and counterfeiting. The Central Bank of Nigeria noted that the five-hundred-naira notes have been the most affected currency in terms of counterfeiting. To rein in, as it were, all currencies into the banks is to make monetary policies effective. The bank also noted that the redesign will make paying ransom to kidnappers more difficult. Some mischief maters say the kidnappers would now request for dollars. According to Emefiele, statistics show that 85 percent of the currency in circulation are outside the vaults of the commercial banks. The data indicates that N2.73 trillion out of the N3.23 trillion currency was outside the vaults of commercial banks.
Those funds are expected to come into the banks before December 15, when the new notes would come into effect. people who want to pay in more than N150,000(one hundred and fifty thousand naira) into their accounts will pay charges, a way of making money for the government and punishin those who prefer to use their houses as banks in disdain of the increased advocacy for cashless economy. Those who have large cash will pay charges. The current notes according to the the CBN has not been changed or redesigned in 20 years.
The foregoing represent some of the good things that would be consequent upon the move. What I do not understand is the discordant tunes that came from those who run the economy on the matter. The minister of Finance, Zainab Ahmed, said she knew nothing about the naira redesign. She said the Central Bank kept her in the dark on the plan.
‘ We were not consulted’ she said. ‘it was an announcement that we heard. Part of the reasons that was advocated is that is that it is one of the ways to mop up the liquidity and manage inflation…but there are consequences…and I don’t know whether the monetary policy actually looked very closely at what the consequences and how they will mitigate it’ . she made the revelation during the Ministry of Finance, Budget, and National Planning’s budget defence in Abuja.
The pros and cons of the move, for me, are hardly as important as the discordant tunes coming from top government organs. By statute the Minister of Finance is a member of the Borad of the Central Bank of Nigeria, and I understand that the Permanent Secretary in that Ministry represents the Minister on that board. The implication is that the matter was never discussed at that level, which is why the minister never knew. It is within the purview of the Central Bank to redesign the currency but the off handed way in which the announcement came indicate that it was, perhaps, a decision taken, perhaps by the management of the bank, without external consultations. The Presidency quickly responded to the seeming communication fiasco with admission that the President gave a nod of approval to the move.
But the damage had been done because currency redesign, in my view, should not be an off handed thing, such that the managers of the economy would be oblivious of the fact. The Governor of the Central Bank is responsible to the President, but his action has economic implication such that the President’s economic team should not hear it like any other Nigerian. The matter has since assumed a political dimension, given that some people, exemplified in the Governor of Edo State, Gowin Obaseki, said they see no economic value to the impeding redesign other than a political move to stifle opponents, and starve them of election war chest. That logic, in my view, does not hold water. The fact that the Minister of Finance knew nothing about the move is almost scandalous. It may well be that both agencies of government are not on the same page on economic matters.
The minister would have declined consent had her views or permission been sought because she was emphatic that those in charge of monetary policies did not seem to have looked at the cons of the move. Some people, including a former Deputy Governor of the apex bank, Kinsley Moghalu, has endorsed the move, although he wished that no less that a 90-day span was given instead of the rather short time. The short time may also be strategic for surprise effect on those who are in no position to explain their cash. Many of them have put pressure on the forex market. It may well be a reason the Economic and Financial Crimes Commission recently camped down on the forex market to prevent kidnappers from turning their huge vaults into pounds and dollars. No matter the positives of that move, government top shots ought not have sang discordant tunes on a weighty decision.