Nigerians who have become weary by the pain of having to queue for petrol, cash at the ATMs and their permanent voters cards are turning their anger on the government as well as its agencies, including the Central Bank of Nigeria (CBN).
In particular, they are questioning the leadership style of President Muhammadu Buhari who appears not to have asked any serious questions from the central bank regarding its plans to redesign currency notes.
The president only called a meeting of the country’s constitutionally-established “Elders Council”, the National Council of State, after a full-blown crisis had erupted from the naira redesign programme; when best practice and previous experience suggested that he should have done this before embarking on the chaotic project.
According to Callistus Okobi, a lawyer based in Abuja, “in the Council of State you have former and serving leaders with collective experience adding up to centuries. Why didn’t the president consult with them before embarking on this disaster of a currency note exchange?”
He said, “General Yakubu Gowon alone, the youngest to rise to the position of Head of State, took Nigeria through its first post-independence census, a major change of currency from the British Pounds Sterling to the Naira, then he took Nigeria from driving from the left hand side to the right and followed that with the All Africa Games – all in much less than 24 months between 1972 and 1973. These were all preceded by extensive preparations by various MDAs, public enlightenment campaigns and recruitment and training of personnel.
“It seems to me, from the CBN Act, that this currency note redesign and recall is not one of CBN’s regulatory functions, like setting monetary policy and banking supervision that it can claim to undertake independently.
This is clearly banking or currency operation which is an administrative Executive Branch function, more so as the CBN Act says that currency recall can happen only on a presidential directive. That clearly means consultation and advice could have been widely obtained.
“The Council of State has a membership of former and current high office holders who by training and experience are instinctively pro-government and who would never say no to implementing such a policy but rather offer thoughtful advice on how and when to execute it successfully and with minimal socio-economic dislocation.
“Yet, they were ignored and called in only after implementation had been messed up. What did the president and the CBN governor expect the Council of State to say at that point?
Not just the Council of State. There’s also the National Economic Council, the National Planning Commission and the Federal Executive Council itself. None were consulted before implementation.
“It’s singularly embarrassing that in a country of 200m-plus, such a decision was proposed, considered, approved and executed between just two functionaries of government. Sound governance does not work that way,” Okobi said.
President Buhari also received vital suggestions from senior government officials who sought to shape the currency redesign project but it would seem he failed to heed the counsel of those paid to advise him. In particular, the president was warned about the limited capacity of the Security Printing and Minting Company (NSPMC) and how he should tread more carefully given that it will be a monumental challenge to replace in one or two months the more than N2trn being taken out of the system. The president was also advised to allow the old currency continue in use side by side with the new one until enough of the new notes, at least close to N2trn, would have been printed and put into circulation.
On February 6, 2023, the chairman of the Nigeria Governors’ Forum and Governor of Sokoto State, Aminu Tambuwal wrote to President Buhari, saying that the 36 governors of the country’s states were concerned about the implementation of the policy even if the intention was good.
The Governors’ Forum noted that “the concern shown by experts and renowned institutions, such as the International Monetary Fund (IMF), which have advised the Nigerian authorities to approach the planned implementation with caution and avoid missteps that could undermine confidence in the financial system. A poor execution of this transition would hurt the economy and have a disproportionate impact on the most vulnerable.”
According to the governors, “State by state analysis has shown that this policy will affect several intra-state security arrangements which basically depend on cash transactions to ensure effective implementation. We respectfully refer Your Excellency to a Table (find attached) developed by our Secretariat from a collation of the views of states on how these policies will impact them both from an economic and a security point of view. Even though the identified constraints are to be found in almost every state in the country, they are particularly evident in states like Borno in the north-east and Bayelsa in the south-south where one finds a pitiable number of banks located only in the state capital which would basically render the workability of the new policies impossible for now.
“Your Excellency, we also find the timing of these policies untenable. The new currency was unveiled between mid-December 2022 and January 2023, which essentially allows a 45-day window for implementation. This period also coincides with the Christmas and New Year festive season which is traditionally a time of heightened commercial activity. The speed of implementation of the policy is a recipe for anarchy in the country and we urge a re-think of the policy.”
Nigerians have also been unsparing of Godwin Emefiele, the governor of the central bank, whom Ajuri Ngelale, a senior special assistant to the president accused of not telling Buhari the whole truth. According to him, “what we are working to do is to ensure that Mr. President is given true and effective information because the report given by the central bank that they have adequately supplied all the bank branches with sufficient amounts of the new naira notes that this is absolutely false, and this is evidential at this point.”
Speaking on a Channels Television interview, Ngelale added that Buhari being “the defender of the masses and upholder of social justice did the right thing when the intelligence reached him that he was getting false intelligence from the central bank which was to extend the deadline from January 31 to February 10.” The question now, obviously, is whether even that extension is adequate.
Evidence now abound to suggest that the Mint cannot handle the task it has been given and in due time. Apart from the fact that the capacity of the mint is limited to no more than N1trn in one whole year, the immense global logistics challenges affecting the supply of key inputs like paper and ink, mean that the mint itself is also constrained by issues beyond its control.
Similarly, there are only 23,700 ATMs in Nigeria and they are mostly concentrated in the country’s urban areas. So, the switch to ATMs as directed by the CBN at one time, was grossly flawed, according to bankers who spoke to BusinessDay. They said there are millions of Nigerians whose livelihood depend on the cash they can lay their hands on daily through non-digital points and a rigorous plan and consultation by the CBN would have revealed this.
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Nigerians have also taken to social media to widely circulate a copy of the presentation made to the Council of State by the CBN governor with many of them calling it simplistic. One social media user said the same governor who fought Aboki FX over the black market for naira went on to insert in his presentation, a reference to the same parallel market as he sought to make his point about how the naira was strengthening.
Leading economist and CEO of Financial Derivatives Limited, Bismarck Rewane estimates that flour sale in Lagos nosedived by up to 30 percent while the sale in rams in Kano has dropped a whopping 70 percent. In Kogi, the sale of cement has fallen by 40 percent. He projects that the currency exchange chaos is leading to a collapse in productivity and sees up to five per cent drop in Nigeria’s first quarter GDP.
According to Yetunde Adebiyi a Lagos housewife, “Nigerians who need cash are having to buy the naira at a fee of up to 30 percent depending on location. At the Mile 12 Market in Lagos, women who go there for bulk purchase of food items are taken to PoS agents who sell naira to them for a fee of 30 percent. In effect, the CBN with its bungling of the redesign has devalued the naira by up 30 percent even for those doing naira transactions.”
Apart from the economic consequences, the naira redesign is precipitating the unravelling of the ruling APC with the party’s presidential candidate, Bola Ahmed Tinubu publicly accusing some around the president of working to sabotage his chances of victory in the February 25 polls by pushing the currency change agenda.
Governors of the president’s party have also gone to court to challenge him and the naira policy, further threatening cohesion in the ruling party.
