
The Nigerian government has always been criticised for its lack of transparency and accountability. However, there are heroic feats that the government has achieved that are often overshadowed by its shortcomings.
One such feat is the recent seizure of a truck filled with cash. A video of the actual truck has been circulating on various social media platforms in Nigeria. The Truck was allegedly filled with an outrageous number of sacks filled with cash stacked on each other.
The government has refused to disclose the source of the cash or the intended destination. However, this has not stopped various individuals and groups from praising the government for this heroic feat.
Unfortunately, as a result of poor storage and considering it’s been abandoned for a while, the money was in such abysmal condition
that it couldn’t be spent. This is only one of a number of similar incidents. There are also reports of money discarded into the trash and other odd places in various locations in the country..The question is, why are money hoarders panicking and what is the cause of this sudden frenzy?
The answer is- it is as a result of a new initiative by the Central Bank of Nigeria (CBN) fully supported by the Nigerian government under close watch of the (Economic and Financial Crime Commission (EFCC) to counter terrorism financing, hoarding of banknotes and counterfeiting.
At the onset of the frenzy on Friday November 11 2022, the Nigerian government announced the desire to roll out redesigned banknotes in December. The information was given that the newly designed currency would start being circulated from December 15, 2022 and there will be no going back on the policy. The notes being redesigned includes the 200N, 500N and 1000N notes respectively.
Effects on the coming Election
What happens during the upcoming election?
Most politicians are thinking much about it
because there’s a problem. Election period is known to be a time when the top.politicians contribute a lot of money to projects that would encourage citizens to vote in their favour. Now in light of the naira redesign all the funds that have been physically kept in advance of the election cannot be circulated.
The irony of it all is that it cannot be taken to the bank either. This is because the EFCC is on the lookout for Individuals who are turning in suspicious amounts of cash at the bank. The source of such a large amount of money would have to be investigated or the consequence would be legal action.
This fastidious initiative by the Nigerian government aspires to greatly lessen bribery
and corruption in the forthcoming election.
Word on the street
Nigeria is a country blessed with diversity as a result there are diverse opinions on this
action. The most popular school of thought includes the discussions around how much was spent on the redesign as most citizens were disappointed by the look of the new currency and its similarities with snapchat filters which they believe shouldn’t cost much.
Some citizens are calling on CBN to release the budget for the naira redesign.
At the Launch of the new naira bank notes, The President, Major General Muhammadu Buhari said the naira notes are long overdue for a change as the current tender has been in circulation for nearly 20 years and the new currency has unique security features that make them difficult to counterfeit.
Word on the street is most citizens don’t see the positive impact the initiative has on the dwindling economy. Price of food and petroleum is still on a high rise and the redesigning of the Naira doesn’t address any of these pertinent issues including the high dollar exchange rate in the black market.
The Position of the Central Bank of Nigeria
The Central Bank of Nigeria reassures the redesigning of the naira will help uphold the integrity of CBN and the country as currency management has faced huge challenges.
According to CBN Governor, Godwin I. “Significant hoarding of banknotes by members of the public, with statistics showing that over 85 percent of currency in circulation are outside the vaults of commercial banks. To be more specific, as at the end of September 2022, available data at the CBN indicate that N2.73 Trillion out of the N3.23 trillion currency in circulation, was outside the vaults of Commercial Banks across the country; and supposedly held by the public.
Evidently, currency in circulation has more than doubled since 2015; rising fromN1.46 trillion in December 2015 to N3.23 trillion in September 2022. This is a worrisome trend that cannot be allowed to continue”. He also mentioned the worsening shortage of clean and fit banknotes with attendant negative perception of the Central Bank of Nigeria (CBN)and increased risk to financial stability and the increasing ease and risk of counterfeiting evidenced by several security reports.
He went further to say “We have finalised arrangements for the new currency to begin circulation from December 15, 2022 after its launch by President Muhammadu Buhari. The new and existing currencies shall remain legal tender and circulate together until January 31, 2023 when the existing currencies shall cease to be legal tender.
Deposit Money Banks currently holding the existing denominations of the currency may begin returning these Banknotes back to the CBN effective immediately. The newly designed currency will be released to the banks in the order of First-come-First-serve basis”.
To encourage easy deposits the Bank charges on cash deposits have been suspended.
How the Redesigning is affecting Nigerian Economy
Nigerians have been promised reduction in inflation, combat counterfeiting and more money in circulation as a result of the naira redesign policy. The Governor of the Central Bank of Nigeria (CBN) Emefiele Godwin announced that about N1 trillion of the old notes had been returned to the banking system but experts warn that the new redesign policy could have ill-effects on Nigeria’s economy.
The International Monetary Fund (IMF) is also not optimistic about the Naira redesign policy, The IMF predicts that the decision can weaken the already shaky confidence citizens have in the local currency and financial institutions if the authorities are not cautious.
Consequences of the Naira redesign policy
The CBN on Tuesday, December 6, 2022, further issued a directive to commercial banks and financial institutions limiting withdrawals for individuals and corporate organisations to N100,000 and N500,000, respectively and by January 31, 2023, the old notes would no longer be valid for payment. But judging by the report the time frame is likely not feasible.
Obviously, Nigerians especially traders and owners of SMEs are not happy with this directive, further disheartening is the fact that many might hesitate to collect the old notes even before the deadline which would make business difficult and constitute a nightmare for local business.
Ironically, there is also a shortage of new notes in banks as they continue to dispense both the old notes and new ones and even more old ones in some states in the country.
The World Bank has warned that the timing and short transition period of the naira redesign policy may have negative impacts on economic activity.
Emefiele has been sued to court by a number of parties but the claims are mostly bogus, illegal and are allegedly plots to frame the Governor of the Central Bank of Nigeria. This application has all been disapproved by the judge as Emefiele has the full backing of President Muhammadu Buhari.
It rests in the hands of the citizens and major stakeholders to decide if the naira redesign policy by the Nigerian Government is heroic or not and only time will tell.
This is accurate Noah. Thanks for keeping is updated on trends in Nigeria 🇳🇬.