(BACKPAGE) CBN’s plan to change the Naira

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BY LEKAN SOTE

Uba Group

Tope Fasua, banker, development economist and former presidential candidate of Africa Renewal Party, thinks the Central Bank of Nigeria should have changed the Naira a long time ago, as other countries, like Ethiopia and Great Britain, had always done.

But Ayo Teriba, an economist, CEO of Economics Associates and sometimes economic policy adviser to the government, has a contrary view. He thinks the CBN is unnecessarily stressing the people of Nigeria. That there is really no need to redesign and reprint new N200, N500 and N1000 notes.

His words: “I cannot see any positive benefit of what the CBN is doing. I cannot see the necessity for it, and the sensible thing to do is to replace the old notes with coins and introduce larger denominations to reduce the currency in circulation.”

Well, each day, America’s Federal Reserve’s Bank shreds about $6 million worth of dirty currency notes for reasons including tears, holes, tape and graffiti, which it incidentally turns into compost fit for Agriculture..

CBN Governor, Godwin Emefiele, had announced that he would change the currencies in order to address currency hoarding by members of the public, reduce counterfeiting, and make available more clean notes and stop currency mutilation.

While Emefiele would certainly be able to issue new notes to replace mutilated notes, what should be a routine task; it will be a pipe dream for him or anyone else to think he could check the counterfeiting and hoarding of the Naira.

Teriba is of the opinion that announcing the change from the current currency to the new one with a six weeks’ notice, steals the thunder from the exercise. Six weeks is enough for anyone with criminal intention to play any game.

In any case, he thinks the change will not only cause inflation, its timing around the Christmas period, when prices of most everything would have risen sharply, is just totally inconvenient. People are already having problems coping with unintelligent economic choices made by the government.

Another expected disaster is that the 2023 Federal Government Budget that is based on the N435 exchange rate to the American dollar will be inadequate and will not deliver as planned. This is because of the parallel market rate that is already shooting up to a N1, 000 rate, which erodes the value of the Naira.

And as long as Nigeria has to import strategic consumer goods, like food, clothing, building materials and petroleum products, so will the people continue to experience shortages and scarcity.

Add to that the imported inflation, a direct result of the shortages arising from the Ukrainian-Russian War. You must also factor in the reality that payment to the foreign company that will print the new Naira notes will be made in foreign currency. To all intents and purposes the Nigeria Security & Minting Company Limited is moribund.

“CBN Governor Emefiele is probably doing the right thing wrongly at the wrong time”

And whereas some express the opinion that the CBN, whose schedule is the monetary policy of the country, should not be subservient to the Ministry of Finance, whose concerns are fiscal, ways and means, planning and macroeconomic policies, Teriba thinks CBN should still be beholden to the Ministry, its owner.

MOFI, or Ministry of Finance Incorporated, the holding company that theoretically owns and keeps every Federal Government asset in trust for the citizens of Nigeria, holds 100 per cent controlling shares of the CBN.

Traditionally, the Ministry of Finance, Budget and National Planning should have a nominee on the Board of the CBN. It is therefore strange for the Minister of Finance, Budget and National Planning to claim she is unaware that the CBN wants to redesign the Naira.

Even if circularization of the intention to redesign and reprint some denominations of the Naira would be on a need to know basis, and therefore restricted, the Minister of Finance, Budget and National Planning ought to know.

Her ignorance of intention to redesign the Naira, if not feigned, has been described as a hallmark of the President Buhari Administration whose operatives and agencies seem to always work at cross purposes and almost with intention to undermine each other.

The most embarrassing part is when some of the handlers of President Buhari try to separate the President from the amorphous, impersonal Presidency, a ploy to extricate the President from taking responsibility for the many goofs of his government.

“CBN"

Teriba is not done: He argues that if the central banks of more mature economies, like America’s Federal Reserve’s Bank, Bank of England and even European Union’s European Central Bank, are subject to the oversight of the Treasury Departments of their countries or regional bloc, why would Nigeria’s central banker be different.

But to justify his action, a cocky and adamant Emefiele, who usually goes beyond his brief, says, “As you all may be aware, currency management is a key function of the Central Bank of Nigeria, as enshrined in Section 2 (b) of the CBN Act 2007.”

You want to ask if that was ever in dispute?

He adds: “In recent times, however, currency management has faced several daunting challenges that have continued to escalate in scale and sophistication with attendant and unintended consequences for the integrity of both the CBN and the country.”

Sweet nothings, if you’d like to know.

He sounds as if managing the currency of a country, or attempting to combat more sophisticated criminal types who want to compromise the integrity of the Naira, should preclude the (albeit) usually absent Minister Zainab Ahmed from the statutory courtesy of being told of an impending CBN policy.

Well, some, who seem to agree with Fasua, argue that, though the change of some denominations of the currency may cause some inflation and hardships due to logistics issues, it will still serve certain purposes.

The purposes include: Compelling criminals who may have been keeping their ill-gotten wealth in cash to crawl out of the woodworks to change their money into the new currencies, though some argue that the criminals already keep their monies in foreign exchange anyway.

The policy is already leading criminals with ill-gotten Naira to convert their cash into forex, which further devalues the Naira as already indicated. As you know, when plenty of Naira is chasing fewer foreign currencies, the price of the foreign currency will spike.

There is a video footage of cash in safe houses whose owners are wondering how they would muster the logistics to move the money into the vault of banks without drawing attention and without telltale trails that may attract the scrutiny of money laundering laws.

Another video shows Omoyele Sowore, presidential candidate of African Action Congress, throwing broadsides at Senator Dino Melaye of People’s Democratic Party. What may not likely get Dino to call his lawyers to sue, because it may amount to a waste of time.

Sowore jokingly implied that the N500, 000 that Melaye donated to the fundraiser in honour of a deceased Nigerian may have been done to cleverly dispose of wealth whose origin may not be known to the law.

His words: “You already see the effect of the Central Bank’s decision to redesign (the Nigerian currency).

Now the politicians are carrying cash around.” This suggestion, one may suggest, may defeat the plan of the CBN.

CBN Governor Emefiele is probably doing the right thing wrongly at the wrong time.