With about two weeks to the January 31 deadline for old naira notes to cease as legal tender, there is intense pressure on the Central Bank of Nigeria (CBN) to review the implementation of the naira redesign policy. Moreover, businesses in the country as well as the citizens are facing multiple challenges and most are resorting to various electronic payment channels to carry out their transactions on account of the scarcity of the new naira notes.

More than one month after the new naira policy was inaugurated; dearth of the new banknotes still persists as many banks and Automated Teller Machines (ATMs) and Point of Sale outlets are still dispensing the old naira notes. Many Nigerians are still struggling to have a feel of the new naira notes. In some places where they are available, traders, artisans and transporters are reportedly rejecting them.

Even after the weekly cash withdrawal limits for individuals and corporate entities were adjusted from N100,000 and N500,000 to N500,000 and N5 million, respectively, not much has changed. From all indications, time is running out on the monetary authority to make the banks comply with its directive on the new naira notes.      The hiccups trailing the new naira policy are impacting negatively on the already fragile economy. Recently, the CBN threatened to sanction banks over reported failure to load their ATMs with the new banknotes so that the January 31 deadline is not vitiated. With the scarcity of the new notes, alleged racketeering and rejection by some Nigerians, the January 31 deadline is not realistic. Worse still is the acknowledgment by the Nigerian Security Printing and Minting Company that the N1000 note leaves a stain on a white surface. This is unacceptable. Some of the objectives of the new naira policy include checking counterfeiting, reducing the volume of cash outside the banking system estimated at N2.7trillion.

As of March 2022, money supply in the country stood at N45.7 trillion while the currency in circulation was N3.2trilion. This translates to a ratio of money cash-in-transit to money supply at 7 per cent. This is not good for the economy. The policy also seeks to mop up black money and checkmate vote-buying ahead of forthcoming general election.  While the aims of the naira redesign policy fall within the CBN Act, it is unclear if these lofty goals will be achieved. Yet, the monetary authority still insists that there are no fundamental challenges facing the smooth implementation of the new naira policy.

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It is expected that the new notes should circulate sufficiently before the old notes will be phased out. It is in view of these challenges that the Senate urged the CBN to extend the deadline till end of June. The hasty implementation of the policy will adversely affect business operations and the people, especially those living in the rural areas. Moreover, the CBN has not made adequate sensitisation about the new naira policy.

While the cashless policy has some merits, the CBN must take into consideration that the unbanked depend solely on cash for their transactions. In a developing economy such as ours, the cashless policy must be made to accommodate everyone. In other words, no one should be left behind. Therefore, we urge the CBN to reappraise the implementation of the naira policy and make necessary adjustments in the overall interest of the economy and the people.

So far, the implementation of the policy has been rigid. Rather than strengthen the value of the naira, it has weakened it due to the stampede to meet the January 31 deadline. Unfortunately, the new naira policy has not achieved the much-needed monetary price stability. It is regrettable that the CBN is yet to come up with adequate measures to tighten Forex deposits into banks’ accounts. It is sad that the new naira policy is driven more by political motivation than altruistic reasons.

Though currency management is a daunting task, it requires diligence, focus and sincerity of purpose to achieve the set objectives. It is clear that the implementation of the naira redesign policy has not been tidy. Nonetheless, the CBN can still make amends and ensure that the policy succeeds. For this to happen, it must encourage the unbanked Nigerians to be included in the financial system. Let the CBN tread cautiously in the implementation of the new naira policy.