CBN’s Naira Redesign Policy: Now, that the Dust has Settled………
Towards the eve of the year 2022, the Central Bank of Nigeria (CBN) announced a currency redesign policy with respect to NGN 200, NGN 500 and NGN 1,000 notes. Contrary to established norms, the rationale of the CBN was that the policy would guarantee the return of trillions of naira in private vaults back into the banks. This reasoning is quite unusual as the normal basis for currency redesign is to combat counterfeiting!
Nevertheless, the CBN maintained this stance and imposed impossible timelines for its implementation. The CBN also issued additional albeit atrocious directives as per the policy to wit: the extant notes cease to be legal tender by a specific date and currencies in private hands after a stipulated date can only be redeemed at any of the offices of the CBN nationwide! Apart from the several flaws of the policy, one must immediately question the security risk of exposing the secure facilities of the CBN to the general public but the policymakers appeared not to have averted their minds to the threat.
In any event, the policy as well as its troubled implementation generated a lot of controversy and public outcry. The CBN’s reasoning for the policy later metamorphosed to ensuring credible electoral process by preventing “vote-buying†and further, was stated to be instrumental in reducing the activities of terrorists, kidnapping and inflation as well as a national conversion to a cashless economy.
It is rightly said that you cannot put something on nothing and expect it to stand. The CBN’s naira redesign policy, having been fundamentally defective spurned a hydra of negative consequences. For example, there was acute shortage of the new notes thus, denying majority of Nigerians access to their hard-earned monies. This is unsurprising because, whereas the CBN reportedly recovered almost three trillion naira from the public into the banks, it appeared that the national bank had only printed about five hundred billion naira worth of new notes! Perhaps, if the policy had been properly planned for and appropriate budgetary allocations made, then there would not have been such a massive shortfall.
There is also the negative impact of the sudden burden on electronic transactions leading to the collapse of the infrastructure of banks. Out of desperation, Nigerians had sought to access their funds vide electronic channels including increased patronage of point of sale (POS) operators resulting in multiple failed transactions, inordinately delayed alerts as well as compromised security of customers’ accounts. Keep in mind that several Nigerians were paying exorbitant fees to receive their often meagre income.
Frustrated, pockets of riots broke out in some parts of the nation while some State governors approached the Supreme Court which handed down an interim order that was blatantly albeit not unusually disobeyed by the executive branch of government (the Federal Government, in this case). Nigerians thus, stumbled into the federal executive and legislative election weekend without access to cash in a politically-tense atmosphere.
Interestingly, days to the general elections, an individual was apprehended by law enforcement with the sum of USD 500,000 (Five Hundred Thousand Dollars) in cash in Rivers State! It is noteworthy that this arrest was done without any contribution whatsoever from the CBN’s naira redesign policy but solely because, law enforcement DID IN FACT, do their jobs. It is thus, safe to conclude that the CBN policy was ultra vires the agency as the several “reasonings†for the policy are not founded in monetary policy but borders on criminal law.
Thankfully, Nigerians remain resilient and have stumbled across the finish line of the federal election weekend. It is hoped that things would return to normal in the short-term while proper infrastructure is put in place to smoothly transition the nation from a cash-based economy to a cashless one with incentives as opposed to what is currently obtainable that there are multiple charges for all electronic transactions.
Follow the author, AA Ibironke, Esq. on Twitter @SirMcAwesome247
