•What City People Found Out
When the Central Bank Governor, Godwin Emefiele recently came up with the new Naira redesign policy, months back, he came up with a million and one reasons why the Nigerian currency should be changed. Part of it was to encourage a Cashless society, stem inflation, to bring in the billions of naira outside the banking system within the preview of the Central Bank and many more.
Pres. Muhammadu Buhari also gave more reasons:
In his national broadcast on the challenges of the currency swap, he revealed why the CBN introduced the new policy. “Strengthening our economy, enhancing security and blockage of leakages associated with illicit financial flows remain top priority of our administration.”
“In the last Quarter of 2022, I authorised the Central Bank of Nigeria (CBN) to redesign the N200, N500, and N1000 banknotes.”
“For a smooth transition, I similarly approved that the redesigned banknotes should circulate concurrently with the old bank notes, till 31 January 2023, before the old notes, cease to be legal tender.”
“In appreciation of the systemic and human difficulties encountered during implementation and in response to the appeal of all citizens, an extension of 10 days was authorized till 10th February, 2023 for the completion of the process. All these activities are being carried out within the ambit of the Constitution, the relevant law under the CBN Act 2007 and in line with global best practices.”
“While I seek your understanding and patience during this transient phase of implementation, I feel obliged to avail you a few critical points underpinning the policy decision. These include:
(a) The need to restore the statutory ability of the CBN to keep a firm control over money in circulation. In 2015 when this administration commenced its first term, Currency-in-Circulation was only N1.4trillion.
(b) The proportion of currency outside banks grew from 78%in 2015 to 85% in 2022. As of October 2022, therefore, currency in circulation had risen to N3.23 trillion; out of which only N500 billion was within the Banking System while N2.7 trillion remained permanently outside the system; thereby distorting the financial policy and efficient management of inflation;
(c) The huge volume of Bank Notes outside the banking system has proven to be practically unavailable for economic activities and by implication, retard the attainment of potential economic growth;
(d) Economic growth projections make it imperative for government to aim at expanding financial inclusion in the country by reducing the number of the unbanked population; and
(e) Given the prevailing security situation across the country, which keeps improving, it also becomes compelling for government to deepen its continuing support for security agencies to successfully combat banditry and ransom-taking in Nigeria”
“Notwithstanding the initial setbacks experienced, the evaluation and feedback mechanism set up has revealed that gains have emerged from the policy initiative.”
“I have been reliably informed that since the commencement of this program, about N2.1 trillion out of the banknotes previously held outside the banking system, had been successfully retrieved.”
“This represents about 80% of such funds. In the Short to Medium and Long terms, therefore, it is expected that there would be:
(a) A strengthening of our macro economic parameters;
(b) Reduction of broad money supply leading to a deceleration of the velocity of money in the economy which should result in less pressures on domestic prices;
(c) Lowering of Inflation as a result of the accompanying decline in money supply that will slow the pace of inflation;
(d) Collapse of Illegal Economic Activities which would help to stem corruption and acquisition of money through illegal ways;
(e) Exchange Rate stability;
(f) Availability of Easy Loans and lowering of interest rates; and
(g) Greater visibility and transparency of our financial actions translating to efficient enforcement of our anti- money laundering legislations.”
“To further ease the supply pressures particularly to our citizens, I have given approval to the CBN that the old N200 bank notes be released back into circulation and that it should also be allowed to circulate as legal tender with the new N200, N500, and N1000 banknotes for 60 days from February 10, 2023 to April 10 2023 when the old N200 notes ceases to be legal tender.”
“In line with Section 20(3) of the CBN Act 2007, all existing old N1000 and N500 notes remain redeemable at the CBN and designated points.”
“The CBN shall ensure that new notes become more available and accessible to our citizens through the banks.”
Interestingly, days after the President’s broadcast, many of the promises have not been actualised.
It is no longer news that the CBN Naira Redesign policy has failed woefully and Godwin Emefiele has become unpopular across Nigeria. Many of what he set out to achieve has not been achieved. CBN said it was meant to introduce cashless policy, fight corruption, but all of that has not happened. City People gathered that the reason it failed was because the new naira policy was targetted at politicians, especially the APC Presidential candidate, Asiwaju Bola Ahmed Tinubu and the APC.
Like one Economist put it, the policy was also designed more as an attempt to curb vote buying using monetary policy. Many of the APC party chieftains have spoken about it, from Gov. El-Rufai of Kaduna State to Gov. Akeredolu of Ondo State. The House of Reps Speaker, Gbajabiamila, APC’s spokesperson, Femi Fani- Kayode and others have all come out to say that the new naira policy was targeted at Tinubu & the APC.
They insist that the whole idea was to make sure that there would be cash scarcity just before the Presidential elections so that Tinubu and other APC big wigs who are contesting elections would not have access to cash. The fact that cash has dried up in the system is an evidence to this claim.
As Tinubu and other APC chieftains prepare for elections tomorrow there is no money in circulation. There are no new naira notes, except the old N200 notes being giving out to bank customers at will. What made many politicians to conclude that the policy was targeted at Tinubu is because when the policy was announced Tinubu was the first and only presidential candidate to openly come out to oppose it.
Recall that during his APC presidential campaign in Abeokuta, Tinubu criticised the policy and said whether they horde fuel or cash, elections will hold and he would win the elections. The 3 other top contenders for the Presidency didn’t criticise the policy.
Why is Tinubu the target? Gov. El-Rufai explained it weeks back, when he said the Fuel and Naira Scarcity was designed by some elements in the corridors of power, who lost out during the APC primaries to Tinubu and they decided to frustrate Tinubu, paint the APC in bad light and make the generality of the people to suffer. This in turn will not make them vote for APC during the presidential elections. Over the last few weeks many Nigerians have gone through hell in their bid to get Cash to spend. The new naira notes are not in circulation and only meagre N200 notes are being given out at a few bank branches.
Although the CBN governor came out to explain why the Naira redesign policy was introduced, like for it to curb inflation, and mop up money outside the banking sector, all of these has not been achieved and the policy has created a run on commercial banks, as huge numbers of depositors all want to withdraw their deposits. It has created unprecedented chaos for banks across the country.
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