It’s no longer news that the Central Bank of Nigeria (CBN) has announced the redesign, production, and re-issuance of high-value naira notes (N200, N500 and N1,000 notes) to begin circulation by December 15, 2022. The plan is to start disbursing the new notes by December, and for old notes to be out of circulation by January 31, 2023.
As expected, the news has been trailed by mixed reactions and varying opinions from experts, stakeholders, and the general public — all accompanied by the usual dose of banter one would expect from Nigerian netizens.
What Has Happened?
A week ago, on Wednesday (October 26, 2022), the CBN disclosed its plan to redesign the naira, citing a number of pressing concerns and reasons for this move. While addressing journalists, the governor of the apex bank, Godwin Emefiele, said that the country’s currency management has continued to face several daunting challenges which include: “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.” He went on to explain that: “Evidently, currency in circulation has more than doubled since 2015; rising from N1.46 trillion in December 2015 to N3.23 trillion in September 2022. This is a worrisome trend that cannot be allowed to continue.”
According to Emefiele, the move to redistribute the new notes, which will ultimately reduce the amount of cash in circulation, will also discourage ransom payment in light of the oppressive insecurity plaguing the country. Speaking further, he said the bank believes the move will also have a positive impact on inflation, which hit a 17-year high in September, skyrocketing to a staggering 20.5 percent. Additionally, it is believed that the redesign of the currency will help deepen the CBN’s drive to entrench a cashless economy since the redesign will be complemented by increased minting of our eNaira.
As such, Emefiele urged bank customers to begin paying the existing currency notes into their bank accounts to enable them to withdraw the new banknotes once circulation begins mid-December, 2022. He said all banks were expected to keep open their currency processing centers from Monday to Saturday so as to accommodate all cash that would be returned by their customers.
On his part, President Muhammadu Buhari seems pleased with the decision, saying he is convinced that the nation’s economy will benefit from a reduction in inflation, currency counterfeiting, and the excess cash in circulation. According to him, the three-month period is not short notice: “People with illicit money buried under the soil will have a challenge with this but workers and businesses with legitimate incomes will face no difficulties at all.”
The chairman of the EFCC, Abdulrasheed Bawa, described the move by the apex bank as “a well-considered and timely response” to the challenges in the country and warned that the EFCC would monitor the process to ensure that unscrupulous players and currency speculators do not undermine the exercise. Meanwhile, the Conference of Nigeria Political Parties (CNPP), in a feisty response, noted that: “Only politicians who intended to buy votes and financially induce electoral officials, or beneficiaries of proceeds of crimes, including drug barons and kidnappers, will kick against the move by the CBN.”
Some citizens seem to share in the optimism:
This CBN redesign of notes will have some positive impacts on our economy if we must be honest. It's not a farfetched truth that billions of money in cash are kept in vaults, locked up in rooms, buried underground by BIG MEN.
It's either they bring them all out or lose them.
— Bayelsa Cruise Merchant (@KingErefitei) October 27, 2022
I asked an Ex banker what’s the advantage of the change of Naira notes move by CBN, he said people who hid money outside bank will be forced to bring it out and spend and will reduce inflation to an extent.
— Otunba (@ManLikeIcey) October 26, 2022
However, less than 48 hours after the announcement, the Finance Minister, Zainab Ahmed, faulted the CBN’s plan, describing it as “ill-timed”, while adding that her ministry was not carried along in the plans. Ahmed, who spoke during the budget debate of the ministry before the National Assembly, expressed her reservations about the decision, saying: “There are also consequences – we are looking at what the consequences will be. There will be some benefits but there will be some challenges.” And from all indications, she is not the only one with doubts.
Experts in the field have expressed concerns that the move may lead to confusion, particularly for rural dwellers who live far from where banking services are available, who may find it difficult to dump and change their currency notes within the given timeframe. Others have called it a mere distraction that will only cripple the economy further. Printing N3.3 trillion currency notes will obviously not be cheap, and many have questioned the logic since the country is already borrowing to fund budget deficits.
Several netizens are simply not impressed:
So Nigerians will spend their festive period trying to return their naira notes to banks. Why do that when you can just outsource it to your BDC guy and buy $ and then change it again after the madness. More dollar demand, dollar price will go through the roof, more inflation.
— Ayobami (@dondekojo) October 26, 2022
Back in day, one can prepare a good pot of stew with just N500, nowadays u can't even prepare spaghetti with N1000, that's to show u how far naira has fallen; But Emefiele & the CBN want to redesign naira notes, !nstead of looking for ways to boost our currency. It's pathet!c.
— Daniel Regha (@DanielRegha) October 26, 2022
Others have cited India as an example of how similar plans to tackle inflation can and have failed in the past, saying that the CBN’s decision may very well be a waste of time.
What This Means For Nigerians
When economies struggle with inflationary pressure and diminished value of the currency, a response from the monetary authorities is expected, and so one cannot say that the CBN’s decision to act comes as a surprise. On paper, an attempt to reverse the effects of ‘lots of money chasing few goods’ makes sense… but with general elections just around the corner, and knowing that nothing is ever really as it seems in Nigeria, citizens’ fears and questions are more than valid.
Interestingly, it is worth noting that in February of 2007, as part of economic reforms, a polymer N20 banknote was introduced for the first time. The features of N50, N10, N5 as well as N1, and 50 kobo coins were also changed while N2 coin was introduced. Shortly after this, in April of that same year, a general election was held. The same can be said of 2015, as the N100 note was redesigned and re-issued to the public just before another general election.
And now, once again, there is a new currency re-issuance just before the start of the 2023 general elections. Coincidence? Perhaps. However, one cannot be blamed for wondering whether this policy was made and fueled with politics in mind or truly to address economic challenges? Sadly, or perhaps thankfully, none of us can see into the future to know exactly how this action will affect the average Nigerian. We can speculate and share our learned opinions, but no one can say for certain whether things will improve or worsen in the country. As it stands, the wheels on this (and possibly even other economic plans) are already in motion and all we can really do is wait and see.