According to the Central Bank of Nigeria (CBN), as of September 2022, a total of N3.2 trillion was in circulation, of which N2.73 trillion was outside the vaults of the banks, describing the development as unacceptable as this has the potential to harm monetary policy actions, further leading to higher inflation and currency speculation, thereby exposing vulnerable Nigerians to further economic hardship.
To mop up this N2.73trillion in circulation outside the banking sector, on October 26, 2022, the governor of the Central Bank of Nigeria, Godwin Emefiele, announced that new Naira notes would be introduced to replace the current 200, 500, and 1,000 Naira notes. He said the redesign will take effect from Thursday, December 15, 2022.
Grow your business with us
He also said that existing notes would seize to be regarded as legal tender by January 31, 2023.
The CBN governor gave reasons to redesign the naira notes. These include; to address the issue of individuals who have made currency fraud their main source of income. People who have hidden money they have stolen, for instance, would either find a way to change it by taking the money out or would not need it given the change in the value of the Naira; The currency change also aims to deal a fatal blow to the growing kidnapping and ransom industry; to aid in lowering the rate of inflation; The change in to control the amount of money in circulation.
While launching the new Naira banknotes in November 2022, President Muhammadu Buhari also gave reasons why the redesign of the naira notes was necessary saying there was an urgent need to take control of currency in circulation and to address the hoarding of Naira banknotes outside the banking system, the shortage of clean and fit banknotes in circulation, and the increase in counterfeiting of high-denomination Naira banknotes.
Sadly, since the implementation of the policy, reactionary forces who are benefitting from the uncontrolled cash in circulation have taken advantage of the challenges in the implementation to derail the process from the intendment of the CBN, the most vociferous critics being from President Buhari’s ruling party, the All Progressives Congress (APC). Out of the 18 registered political parties, the APC had been the party that opposed it most and spearheaded by its presidential candidate Asiwaju Bola Ahmed Tinubu which made the opposition Peoples Democratic Party (PDP) to allege that the APC is opposing the policy because it is halting its quest to buy votes from impoverished Nigerians in the forthcoming general election. The APC eventually took its opposition to the policy to the next level when the APC governments of Kaduna, Kogi and Zamfara states dragged the federal government and the Central Bank of Nigeria (CBN) before the Supreme Court. According to them in the suit, they were worried about the effect the policy was having on the people of their states. The three states urged the apex court to grant them an interim injunction stopping the Federal Government, either by itself or acting through the Central Bank of Nigeria (CBN), the commercial banks or its agents from carrying out its plan of ending the timeframe within which the now older versions of the N200, N500 and N1000 denominations may no longer be legal tender on February 10, 2023.
In its ruling on Wednesday, February 8, 2023, the Supreme Court ordered the CBN not to end the use of old naira notes on 10 February.
The seven-member panel of the court, led by John Okoro, gave the order of interim injunction amid acute scarcity of newly redesigned N200, N500, and N1,000 currency notes.
The court gave the order temporarily, cancelling the CBN’s 10 February deadline to end the validity of the old versions of the banknotes based on an ex parte application by Kaduna, Kogi and Zamfara states.
The apex court issued an order of interim injunction “restraining the federal government through the Central Bank of Nigeria (CBN) or the commercial banks from suspending or determining or ending on 10 February, the time frame with which the now older version of the 200, 500 and 1,000 denominations of the naira may no longer be legal tender pending the hearing and determination of their motion on notice for interlocutory injunction”. The court, after issuing the order, adjourned until 15 February for hearing of the main suit.
While Nigerians await the position of the Supreme Court as it looks into the substance of the matter, are we to throw away the baby with the bathwater? Are we to jettison a policy that holds so much promise for the economy of the country? Let us examine some of the milestones that have been achieved thus far by the policy. According to Emefiele 75 percent of the N2.73 trillion held outside the banking system has been recovered, while inflation is trending downwards and exchange rate relatively stable. If anything, there have been early successes of the CBN intervention as the monetary policy committee (MPC) of the central bank recently affirmed that the various policy interventions of the bank had led to a reduction in inflation after months of an uptick in the headline index. Also, the cashless policy has led to a reduction in banditry and kidnappings which were rampant in the recent past.
Considering the timing of the policies – being an election year – some Nigerians particularly politicians believed that the apex bank’s move was targeted against certain individuals and have refused to see beyond their noses that the actions are in the best interest of Nigerians and the economy if the country must address the current gale of insecurity, corruption and economic sabotage among other actions of some privileged elites who continued to take advantage of a dysfunctional system to short-changed the country.
Notwithstanding the antagonism against the CBN’s cashless policy direction, we are in support of the policy because the decision to limit cash withdrawal limits to individuals and corporate organisations following the currency redesign programme was the right way to go if the country must move forward. And in an election year it is our considered opinion that any policy that could reduce or significantly reduce the capacity of mischievous politicians to buy votes should have the buy in of Nigerians across board. We advise Nigerians to see the present hardship in the course of implementing the cashless policy as the price to pay to have a better and more robust economy and stop politicians from compromising the electoral process with illicit funds that they have kept away from circulation for the purpose of buying votes while ordinary Nigerians are suffering. Nigerians should not fall to the trap of these APC governors who claimed that they are opposed to the naira redesign policy because they are concerned about the suffering of their people when they are the same leaders that did not make COVID-19 Palliatives available during the COVID-19 lockdown until the warehouses were bust open by #EndSARS protesters.
The CBN had given three months for this exercise and it ought to be more than enough, considering the fact that India with a population of about 1.3billion redesigned its currency and enforced it within one day (24hours) in 2016. Here the CBN gave Nigerians three months to return the old notes and has extended the deadline twice. The CBN needs the support of all patriotic Nigerians to push through this monetary reform that will also help to sanitize our electoral system and ensure that elective offices in this general election are not bought by desperate politicians. We stand with CBN in this battle to save the economy and our electoral system.
-from Unity Times Editorial Desk