It is very likely that anyone who has lived long enough in Nigeria knows that any policy that is politically motivated will not work satisfactorily. It is because most times, politics as a profession in Nigeria operates on deception orchestrated by the political elites.
But let’s think about the new Naira notes. What kind of policy will a public servant occupying an exalted position in an apex bank formulate when he’s a card-carrying member of a political party? For such individual politics will trump economy. Public policy scholars know that ideally any policy in the public space is to solve problem(s) in society, not to cause confusion and stress.
We have been talking about the CBN monetary policy of redesigning Naira notes since October 2022. Initially, the policy we were told was designed to mop up Naira in circulation, tackle vote buying and reduce kidnapping. What a seemingly amazing policy with awful implementation strategies.
The policy on redesigning Naira notes is regimented, though fairly well-conceived secretly. But unfortunately, it became a weaponised economic agenda to which all known econometrics might fail to give a pass mark to.
It certainly falls miles behind the currency change which was done in the country in the early 1970s to bring the Nigerian Civil War to an end. One may argue that Nigeria’s population then was not as much as it is today. And that the sophistication in banking then was inferior compared to what we have currently. That is why in my view, this current Naira redesign is a poor imitation of what we saw in the 70s without adequate adaptations in logistics and infrastructure to fit into our present circumstances.
The CBN wants 133 million poor people with multidimensional poverty to go cashless without adequately addressing their needs. You need to walk before you run
Today, the population of the country is about. 200 million, with over 5000 bank branches nationwide. Lagos State alone has about 1500 bank branches, according to a reliable source. How do we mop up about three trillion Naira in circulation, within 3 months before a general election, with a successful outcome? Bearing in mind the nation’s infrastructural challenges, it’s going to be difficult. But I guess that inflation may likely drop in the first quarter of 2023. I hope the Minister of Finance who wasn’t consulted ab-initio could still give an advice on how to rejig the policy meant to achieve desired objectives, but marred by poor implementation.
In the past one week, most banks in Lagos area have queues outside their banking halls. We don’t want any form of unrest because many hapless bank customers are becoming restless. A lot of bank customers have money in their bank accounts but they can’t access their funds. I thought banking is optional not compulsory. Many Nigerians are losing confidence in the banking system at a faster rate. This is not good for financial inclusion.
In times past, this columnist has observed that Nigeria’s monetary policies are work-ably among the best in the world. Jokes apart. The problem with our monetary policies like any other policy is poor implementation strategy. I have heard all sorts of stories which time and space will not permit me to reflect in this column. But can the CBN tell us how much new notes have been printed and circulated across the country?
These days, strategies for Implementation of our monetary policies in most cases are mischievously impractical and about the worst anywhere. It is as a result of disheartening human factor corroded by a toxic system. A system that is fast eroding the confidence most Nigerians have in the banking system. A system that is fast eroding the trust that should exist among all institutions—businesses, governments, NGOs and media including all their stakeholders. The question that is imperative now is how to rebuild social trust in Nigeria? I hope the financial inclusion that the CBN craves will be achieved at the end of this redesigning exercise.
On a bright sunny day last week, it was ten thousand Naira that was urgently required to pay the mechanic that worked on my truck. I walked leisurely to a bank very close to my office. But what did I get? “Sorry sir, the network is down.” You can’t receive either old or new notes. Neither can you transfer any money. Why, I asked? All I got was a beautiful smile. This in my view, is the height of failure of banking at the tactical level. At the tactical level with over 5000 bank branches, many customers could not get the new notes, and there was scarcity of old notes. I got one thousand Naira only.
We need Self-cleansing! I am tired of reading CBN Press Releases. The CBN wants 133 million poor people with multidimensional poverty to go cashless without adequately addressing their needs. You need to walk before you run. Cashless societies have complex banking systems. You need solid internet infrastructure, cyber security and stable electricity supply amongst others.
A Cashless Economy is not necessary no-cash-at-all, but it’s mostly paperless in volume, speed, accuracy, timely and cheap, better managed, not controlled.
The new currency crisis in Nigeria has reached its peak at the time of writing. Old notes have almost passed away but many Nigerians have no access to the new currency. Business owners and service providers could not provide both new design and old bank notes. It’s so bad that only one thousand naira was also issued to a customer who needed about 15,000 Naira to pay for some items purchased from a grocery store.
Many Nigerians are frustrated while those with the right connections to the bankers are enjoying the new notes.
“The CBN governor, Godwin Emefiele, has directed deposit money banks (DMBs) to commence the payment of the redesigned Naira notes over the counter, subject to a maximum daily payout limit of N20,000.” We can’t get cash over the counter and the Automated Teller Machines (ATMs) in most banks are not dispensing new notes.
“The CBN has observed, with grave concern, the activities of persons who sell the newly redesigned banknotes and those who flagrantly abuse the legal tender by hurling wads of Naira notes in the air and stamping on the currency at social functions.”
According to one of the circulars, the CBN has equally noticed the queues at ATMs across the country and an upward trend in the cases of people stocking and aggregating the newly introduced banknotes they serially obtain from ATMs for reasons best known to them.
At border towns, the story is not inspiring. A grain seller in Dada village in Zurmi Local Government, Muhammadu Isa, disclosed that he stopped selling grains in the Nigerian currency after the CBN’s policy on new naira notes was unveiled.
He said that he sold only to those who possessed CFAs to avoid losing money as ‘’my father did in 1983 when the Naira notes were hurriedly changed by the then Major General Muhammadu Buhari regime.’’
Isa explained regretfully that his late father lost all his money when Buhari changed the national currency in 1983. It’s really a pity!
The grain trader insisted that he would not accept the old naira notes as there was no bank or Point of Service (POS) terminal in his community where he could withdraw the new currencies. This is the situation in most banks domiciled in Lagos and other parts of the country.
Read also: Naira scarcity : Osinbajo seek deployment of more fintechs
Some economists and bankers have said that the apparent objectives of the currency redesign — enhancing currency security, limiting the appeal of cash in favour of electronic bills payment and curbing corruption — can be better achieved by less disruptive mechanisms. And I quite agree with these sentiments.
Initially, the apex bank acted as if those concerns expressed by public intellectuals and scholars were not relevant. Perhaps it is the confusion and stress generated by the Naira redesign policy that has made the CBN to extend its deadline to February 10, 2023. This became an option as it is unable to control total circulation of the new notes alongside sensitization particularly in the area of counterfeit note identification.
The CBN governor we learnt is happy that his secretly planned policy is achieving the desired results. Emefiele said, “We are happy that so far, the exercise has achieved the success rate of over 75 percent of the N2.7 trillion held outside the banking system. Nigerians in the rural areas, villages, the aged and the vulnerable have had the opportunity to swap their old notes; leveraging the Agent Naira Swap initiative as well as the CBN Senior staff nationwide sensitization team exercise.”
Just as the CBN in its official twitter account stated that “there are no boundaries to going cashless,” however, a public policy intellectual responded that: “In a normal logical sequence, you provide the infrastructure, reduce significantly the unbanked from the current 60 million, make the hardware universally available, educate everyone about cashless policy before going cashless.”
Anyway, one thing is certain. For the CBN and its new notes redesign, the direct impact of the policy and its poorly implementation strategies live before us today as Nigeria, the most populous black country in the world, prepares for general elections in the next few days. Whether the policy will tackle vote buying and kidnapping remains to be seen. Thank you.
