The Central Bank of Nigeria recently announced that it would be undertaking a redesign of Nigeria’s naira notes. And the move, as expected elicited reactions from Nigerians and industry watchers.
The development was made known to the general public at a press conference chaired by the CBN Governor Godwin Emefiele in Abuja, where he stated that the N200, N500, and the N1000 notes will take a new look effective from December 2022.
The Central Bank Governor said the decision to redesign the naira note was due to concerns with the management of current series of banknotes, and currency in circulation. According to him, the currency management has faced several challenges that have continue to grow in scale and sophistication with unforeseen consequences for the integrity of both the CBN, and the entire country at large.
While announcing the redesign of the naira note, he stated that over 80% of currency in circulation is outside the vaults of the commercial banks. However, with this development, the CBN is said to gain control over the circulation of the new notes. Thus, regulating the soaring inflation; which according to him have reached 20.77% in September 2022.
‘’As at September 2022, we had N3.23 trillion in circulation. Out of that, N2.73trillion is outside the vaults of the banks’’, the CBN governor said.
Many opine that this development is a welcome one as they believe it will ensure that there is more cash in circulation. Others however think otherwise.
According to Emefiele, the current series of Naira notes is expected to be phased out by January 31,2023. He therefore advised Nigerians to take old notes to the banks so as to withdraw the new banknotes once circulation begins.
However, there are a number of industry watchers who feel the reason behind this is more political, than economic. Many are of the opinion that contrary to what the CBN says, the move isn’t really about revamping the economy but rather one that is aimed at stifling the opposition even as the 2023 election draws near.
According to this school of thought, this development is a way to prevent politicians who might have hitherto stockpiled naira notes to use in executing the election campaign. This, they point out, wil force such individuals to bring out such huge sums.
In declaring such huge sums, set mechanisms within the system will triger alarm and authorities will most certainly query any huge deposit or the likes.
The redesign of the naira notes no doubt is a means to manage the current series of bank notes,and currency in circulation and mop up excess cash in circulation and thus curb inflation, but is also being used as a means to clip the wings of politicians and some aspirants.
As to its potential impact, many have noted that this will be a potentially dangerous move which will impact the nation’s economy adversely. One such way is that it will put too much pressure on the naira, a development which is already been seen and felt.
Already, the naira has dropped to an alarming N810 to a dollar. To put this in context, it sold for N771 at the parallel section of the foreign exchange (FX) market, popularly called the black market last Wednesday, according to Bureaux De Change Operators (BDCs).
According to a senior Investment Analyst at Afrinvest West Africa, Temitope Omosuyi argues that the FX crisis will get worse, saying “If you put more pressure on the dollars because you quickly want to change your money to keep it in dollars, that’s more pressure on the naira.”
A group, the Concerned Northern Forum, has joined many others kicking against the proposed redesign of naira notes by the CBN. The group stated that such development is not needed at this period of economy instability and hardship.
Rather, they say such energy and amount budgeted to change the look of the current naira notes should be used in revamping the already collapsed economy, provision of basic amenities, reawakening the already dead education sector and so on. The Chief Executive Officer, Centre for the Promotion of Private Enterprise (CPPE) Mada Yusuf, describe the CBN’s decision as committing scarce resources to a venture that should not be prioritized.
For now, the CBN appears decided on this move even as it received the public blessing of the President who publicly backed the apex bank’s moves. As it stands, all appears set and in motion for the implementation of the naira redeign effort and it remains to be seen just how much this will impact the nation’s already battered economy.
