Recently, the Central Bank of Nigeria ( CBN ), has announced the redesigning of some Naira Notes.
This announcement has no doubt attracted massive reactions from Economic Analysts, Business Experts, and Economists.
While Some Analysts and Experts are against the policy, others are in support of this policy.
It is on the basis of the above, that Sani Michael Omakoji of OurWorldGist in his piece titled as “Naira Redesign: A Positive Move To Curb Illicit Economic Practices’ writes to align his position with those in support of the redesigning of some Naira notes.
Let us read Sani Michael Omakoji’s submission:
‘The series of Naria to be redesigned by CBN, are the three notes to include: ₦200, ₦500, and ₦1000
Speaking on the motivation for the change, the CBN governor explained that the decision was reached due to persisting concerns with the management of the current series of banknotes, and currency in circulation — particularly those outside the banking system in Nigeria.
He said in recent times, currency management has faced several daunting challenges that have continued to grow in scale and sophistication, with attendant and unintended consequences for the integrity of both the CBN and the country.
According to Emefiele, one of these challenges primarily include: significant hoarding of banknotes by members of the public, with statistics showing that over 80 percent of currency in circulation are outside the vaults of commercial banks.
He said as at the end of September 2022, available data at the CBN indicate that ₦2.73 trillion out of the ₦3.23 trillion currency in circulation, was outside the vaults of commercial banks across the country; and supposedly held by the public.
What does this revelation suggest to you as an Analyst or as a Nigerian ?
To me, Sani Michael Omakoji, the author of this article, it portends economic threats, a nose diving to leadership failure!
The variables that make up these economic threats here are: inflation, devaluation, recession, deficit balance of payment, high unemployment rate, low standard of living, and identity theft, whereas, leadership failure in this sense, is viewed as ‘I don’t care attitude of CBN to have allowed Naira to be subjected to this ‘vulnerability and attack’ before taking action.
Further justification of redesigning Naira are other challenges listed by CBN to include; the worsening shortage of clean and fit banknotes with attendant negative perception of the CBN and increased risk to financial stability; and increasing ease and risk of counterfeiting evidenced by several security reports.
Also, in a recent media briefing, the apex Bank’s Governor, Mr Godwin Emefele, added that development in photographic technology and advancements in printing Devices have made counterfeiting relatively easier.
Consequently, this development has made the CBN record significantly higher rates of counterfeiting, especially at the higher denominations of ₦500 and ₦1,000 Banknotes.
On this note, I, the author of this piece out of curiosity wish to ask who is to be blamed: the fraudsters who took advantage of the poor system or the Apex Bank who left the Economy lose for Criminals to take advantage of?
As we talk about that another day, let it be stated that it is a global best practice for the Central Bank of any Nation to redesign, produce and circulate new local legal tender every five to eight years.
Unfortunately, the Naira has not been redesigned in the last 20 years.
Thus, on the basis of earlier trends, problems, and facts highlighted and in line with provisions of sections 2 (b), section 18 (a), and sections 19, subsections (a) and (b) of the CBN act 2007, the management of the CBN sought and obtained the approval of President Muhammadu Buhari to redesign, produce, and circulate new series of banknotes at ₦200, ₦500, and ₦1,000 levels.
In line with this approval, CBN has finalized arrangements for the new currency to begin circulation from December 15, 2022 while the new and existing currencies shall remain legal tender and circulate together until January 31st 2023.
The benefits of this monetary policy by CBN without politicking cannot be overemphasized as it helps to curb illicit Economic Practices.
For the purpose of this article, ‘illicit economic practices’ represent: using of counterfeit money along with official legal tender; too much Naira in circulation chasing few goods and services; illegal possession of Naira hidden in overhead tanks, ceilings, and those buried at the burial grounds and some in ‘soak-aways‘.
In view of the above, redesigning of Naira will go along way to curb counterfeit, control the excess amount of Naira in circulation, and also curtail illegal possession of Naira in the hands of the criminals and Economic saboteurs.
Moreover, redesigning of the currency will help deepen CBN’s drive to entrench cashless Economy as it will be complemented by increased minting of the eNaira.
Looking at the prevailing level of security situation in the country also, the CBN in its press release was convinced that the incidents of terrorism and kidnapping would be minimized as access to the large volume of money outside the banking system used as source of funds for ransom payments will begin to dry up.
In conclusion, redesigning of Naira at this time is not an Economic suicidal leading to inflation and devaluation of Naira as some Economic Analysts and Business Experts have predicted rather, it is a policy ‘if well implemented’ that is intended to curtail inflation rate, recession, and further devaluation of Naira if not in the short-run or Medium – Run certainly the long-Run.
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