- Nigerians express worry over disappearance of redesigned notes
- Policy not carefully planned, say experts
- Analysts predict another round of cash crunch
- December 31 deadline doubtful – BudgiT Foundation
BY TIMOTHY AGBOR, BAMIDELE FAMOOFO, BENEDICT NWACHUKWU, FESTUS OKOROMADU, MAYOWA SAMUEL AND BRIGHT JACOB
Nigerians have called on the President–elect, Bola Tinubu, to, as a matter of priority, revisit the current Naira redesign policy of the Central Bank of Nigeria with a view to correcting the many defects inherent in the policy the moment he is sworn in to office. The calls came following the ‘disappearance’ of the new naira notes meant to replace the old N1,000, N500 and N200 denominations. Investigations by The Point showed that the new notes are unavailable both across the counter and at the Automated Teller Machine galleries in the banks. Besides, daily transactions by small and petty business owners, who form the bulk of Nigeria’s Small and Medium Enterprises, are now done mostly with the old notes.
Interestingly, even the ubiquitous mint note hawkers at various social functions, now ply their trade in the old Naira notes with the ready excuse of ‘no new Naira notes’. The development has led financial experts and public affairs analysts, who also have observed the development to predict that the nation could be plunged again into another round of naira crunch crisis similar to that experienced in the first three months of the year, if the Central Bank of Nigeria fails to do the needful by the end of the extension given by the Supreme Court, which is December 31, 2023. Economists and financial experts, who spoke with our correspondents, in their separate interviews, knocked the policy and its implementation for lacking clarity, proper thinking and specificity in terms of objectivity and expected gains.
Samuel Atiku, a financial and data expert, while giving insight into what might be responsible for the dearth of the new naira notes, said, “Where we are now is a situation whereby there are question marks about the capacity of the Nigerian Security Printing and Minting Plc to meet the demand. So, essentially, what we have seen is that the old currency that was out of circulation had been pulled back into circulation and that is why we see the biggest volume of the old currency still circulating.
“Since the CBN had said that the old currency will cease to be legal tender by December, we expect that sometime in the year, things should kick off and they begin the rapid swapping of the old notes.
I even suspect that we may see a complete redesign of the currency altogether again but that would be towards the end of the year. Let’s see what happens.”
“All these revolve around my earlier opinion that the Central Bank didn’t think through this policy before its implementation and that puts to question, how the monetary authorities actually consult and the whole planning that goes into policy implementation. That explains, maybe, why inflation rate remains high in the country and most of the monetary indicators seem to be going South.
My take is that the new currency redesign policy was not properly thought-out before jumping out to implement it,” he posited. An economist, Dr. Tunji Ogunyemi, noted, “The CBN had said that it printed only N400 billion and it withdrew from circulation an amount equal to N1.1 trillion. It doesn’t take rocket science for one to know that N400 billion will not be able to cover the deficiency in the production of the new naira notes. That means circulation was short by N700 billion. That was the reason the CBN gave and we have no reason to doubt it because it is the only monetary authority in Nigeria.
“After about two months of review of the Naira redesign policy, it has shown that it has failed. It has not just failed, it has failed abysmally. The problem is about the woeful implementation of the policy. It has had severe effects on the informal sector”
“After about two months of review of the Naira redesign policy, it has shown that it has failed. It has not just failed, it has failed abysmally. The problem is about the woeful implementation of the policy. It has had severe effects on the informal sector.”
Stating the need for Emefiele to be relieved of his duty, Ogunyemi said the CBN Governor could only be suspended by the President, having orchestrated a policy he described as a “calamitous failure.” “The one who appointed the CBN Governor is the President, Federal Republic of Nigeria and our law says that he who appoints you can also suspend you. So, he can be suspended but I would have thought that if the man has some good honour, after bringing a policy that has resulted into calamitous failure; I think one should not be told to leave.
I think it’s more honourable for Mr. Godwin Emefiele to hand in his resignation letter by May 20,” he said. Gabriel Okeowo, Country Director, BudgiT Foundation Nigeria, a Non-Governmental Organisation, also expressed concern over the non-availability of the redesigned Naira notes. Okeowo said, with about six months to the deadline for the use of old notes, the CBN ought to have released more new notes, while gradually mopping up old ones. The Country Director said he had yet to understand the rationale behind allowing more old notes in circulation when the deadline for its use was closing in. According to him, if the CBN continues to release old notes rather than new notes, it will be difficult to mop up the old notes before December 31.
Okeowo said besides the need for availability of the redesigned notes, there was an urgent need for an overhaul of bank internet infrastructure for effective implementation of the cashless policy. “If what is in circulation right now are the old Naira notes, it then means even the new Naira notes are not available. Also, as we speak, the queues have not completely gone, electronic transactions still decline and money is not reversed within 24 hours in most cases. Furthermore, the internet infrastructure is not advanced enough for effective electronic transactions. If all of these are not put in place, I see a possibility of the extension of the deadline for use of old Naira notes beyond December 31,” he said. An elder statesman and former Nigeria’s Ambassador to the Philippines, Dr. Yemi Farounbi, said the CBN Governor should be shown the way out of office for issuing old notes he once claimed had been destroyed.
He said, “It is obvious that the redesign policy of the CBN was not clearly thought out. It took the intervention of the Supreme Court for the Central Bank of Nigeria to understand that the redesign was not a policy that could be rushed. In the USA, it took over six years before the redesign of currencies could be completed. There was a space of 1-2 years allowed for the redesign of every denomination. The USA started with $1, going incrementally to $5, $10, and $100. But our central bank wanted to do the denominations at a go. “One would have expected the CBN to have printed enough new notes equal to the quantum of the old notes being withdrawn.
Nigerians don’t appear bothered by the scarcity of new notes. They probably think that this is a policy that will be aborted or completely overhauled by the incoming administration.
The public is more bothered about recovering the lost grounds arising from the economic shrink and squeeze that the ill-advised, ill-conceived and ill-implemented policy had inflicted on the people and economy.”
“However, I believe that the new administration should adopt the policy, clean it up and reconfigure it. It could expand the closing date beyond December to allow for an accurate provision of new notes, equal in quantity to the amount of old notes being withdrawn. There must be an overlapping of the old and new notes. Gradually, the banks, while still taking in old notes, must be issuing more new notes, until the old notes will be completely replaced,” Farounbi advised the incoming government.
Dr. Olanrewaju Aladentan, an economist and lecturer at the University of Abuja, said the CBN naira redesign policy seemed not to have been well thought out and was hurriedly dished out for implementation. He noted that while the apex bank and the Federal Government had a regulatory obligation to redesign the country’s currency on a regular basis, the current version appeared to be more politically motivated. On the dearth of the new Naira notes, he said many factors could be responsible.
Aladentan stated, “First, the CBN governor, Godwin Emefiele, told us that over N2.5 trillion was withdrawn from the economy but never told us how much of the new Naira notes were released. “Second, the Minister of Finance, Budget and National Planning, said she was not carried along, implying a dislocation between monetary and fiscal policy managers. This was not good enough but an indication of the absence of proper planning that should involve all concerned.
“The CBN and the Presidency appear to have been at the center of the policy and its implementation, thereby fueling the assumption that it was more political than the monetary policy it was designed to be. And as it played out, the politicians saw it as a threat and did everything to nullify it. “The dearth of the new Naira notes could as well be attributed to the fear that it created in people before the policy extension. What gives one the assurance that the new notes will be available by December?”
According to him, the CBN needs to do everything possible to print more new notes and make them available to the banks for onward disbursement to the public. He warned that the silence from the CBN since the policy extension was dangerous.
“They should update the public on what their plans are as to enable them to plan. The few new notes that were released have gone into private vaults. People want to hold on to them so they will not be taken unawares again. The way out is for more notes to be printed and exchanged for every old note returned as a deposit to the banks,” he advised. On whether Emefiele should be penalised, he said, “The President took responsibility for the policy so why punish the errand boy? It is obvious that our institutions are not independent even when they are legally designed to be.” He added that the incoming administration should simply ensure the full implementation of the policy by making sure new notes were printed.
“A total cancellation will not be good as, ordinarily, we ought to redesign the currency every 10 years. So the action is within the law; dumping it halfway will only mean a waste of resources,” he opined. Prof. Uche Uwaleke, Professor of Capital Market and lecturer, Nasarawa State University, expressed concern that the Federal Government and the CBN seemed to have gone mute on the issue. “As we speak, no bank is disbursing the new Naira notes and the CBN is comfortable saying nothing.
The extension is a few months away and no one can say what will happen next. This is not good for our economy. The Supreme Court gave the extension for orderly implementation of the policy, but from all indications, we have all gone to bed until a few weeks to the expiration of the new date,” he noted. On whether the policy should be aborted, he said, it would be unfair and a waste of resources to do so. “Economic policies are not abandoned that way. At least, nothing is wrong with redesigning the Naira notes, the only issue was the quantity or value of what was withdrawn to what was made available to depositors,” he stated. Uwaleke argued that the Nigerian economy depends largely on cash transactions, noting that the farmer in the village does not have access to banks or financial institutions. He dismissed the idea of enforcing electronic payment when the financial system doesn’t have the infrastructure to do so. He noted that businesses were being killed as a result of the dysfunctional system. He, however, advised that the incoming government should perfect whatever went wrong and continue with the implementation of the policy. “If possible, the deadline could further be extended to give room for perfection,” he suggested. Monday Osasah, economist and Executive Director, Africa Center for Leadership, Strategy and Development (Center LSD), shared the views of Uwaleke as he said the situation called for concern, more so as banks were presently not dispensing the new Naira notes. He added that the refusal of the CBN to speak on the issue was disturbing. “The new notes have disappeared while banks are disbursing old notes and we have a deadline of December ahead,” he lamented. “All the government needs to do is to instruct the CBN to print enough new notes while the necessary infrastructure for electronic transactions is put in place,” Osasah advised. Ifeoma Ogbonna, a Chartered Accountant based in Port Harcourt, told The Point that the new notes were scarce because Nigerians were hoarding them at home.
“While the apex bank and the Federal Government had a regulatory obligation to redesign the country’s currency on a regular basis, the current version appeared to be more politically motivated”
She claimed that Nigerians were stockpiling the few new naira notes they could lay their hands on because they want to avert the sufferings and pains they experienced before the Supreme Court extended the deadline for the use of the old notes to December 31. Ogbonna added that Nigerians were not taking the current scarcity of the new notes seriously and would only begin to do so a few days to the deadline given by the Supreme Court. Looking back, she said, “Look at what the people went through when the naira crunch kicked in earlier.
Nigerians almost went berserk looking for unavailable naira notes. I mean, we heard much distressing news then about banks and ATMs being vandalised, and bank staff harassed.
People also fainted in banks and, sadly, others died chasing unavailable naira notes. “Now, most people have stockpiled the few new notes available because they don’t trust the system.
People are afraid that at the expiration of the December 31 deadline given by the Supreme Court for the discontinuation of the use of the old notes, they might return to those dark days when the old notes were scarce, and experience suffering all over again. People have kept the new notes to mitigate this.” Ogbonna disagreed with calls for the CBN Governor to be penalised.
She argued that Emefiele tried to do something noble but failed to develop a Plan B for his policy. She expressed confidence that Nigeria’s President-elect, Tinubu, would make the difference with the policy and not jettison it. Reacting to the outcome of the policy, which subjected Nigerian citizens to untold hardship, economic expert and commentator, Eze Onyekpere, told The Point in a telephone conversation that the government had already embarked on the fruitless project but should not jettison it halfway. “The CBN has already wasted money in producing these notes so the thing that needs to be done is to continue it and bring out the new notes, probably see it to a logical conclusion. There’s no need cutting it midstream,” he advised.
The Board Chairman of the International Society for Civil Liberties and the Rule of Law, Emeka Umeagbalasi, said the policy should be scrapped altogether unless the apex bank was ready to carry the people along.
He queried the motive of the government in introducing the failed policy while also wondering why the CBN Governor had not resigned or been sacked. He stated, “This monetary policy should be scrapped, it doesn’t matter whether it is the outgoing Buhari government or the incoming government of Bola Tinubu who has been declared Presidentelect. “The truth of the matter is that the policy has to be scrapped for now until further notice because the policy has failed. It is obvious that the CBN is rigmarolling in absurdity, frivolities and irrelevances.
It doesn’t know its left from its right. “If the CBN is ready to introduce a new monetary policy, it has to go through the rigorous processes of democratic checks and balances, until Nigerians are satisfied through the actions of the incoming National Assembly, not these ones that have been specialising in approving loans for the government of the day.” “When we have the new National Assembly, then we’ll know how everything will be. Everything will fall in line. But for now, the policy must be scrapped until the CBN can carry Nigerians along to do a National Monetary Policy that has a human face and the interest of the people at heart,” he added.