With Mixed Feelings, Nigerians Receive New Naira Notes
The rate at which inflation has been accelerating in the country has been a major source of concern for the Central Bank of Nigeria. It has adopted different measures to tame the surging inflation which hit a 17-year high of 21.47 per cent in November. Some of the latest steps taken by the monetary authority to address the challenge were the redesign of the naira and the introduction of a new cash withdrawal limit.
The CBN Governor, Godwin Emefiele had on October 26 announced plans to redesign N200, N500 and N1,000 notes. He said it would take effect from December 15 and Nigerians have till January 31, 2022, to exchange their old naira notes.
Emefiele explained that the redesign of the local currency became necessary to tackle inflationary problems, currency counterfeiting, insecurity and other issues plaguing Nigeria. He also stated that the naira redesign was targeted at controlling currency in circulation as well as ransom payments to kidnappers and terrorists.
“Indeed, the integrity of a local legal tender, the efficiency of its supply and its efficacy in the conduct of monetary policy are some of the hallmarks of a great central bank. In recent times, however, currency management has faced several daunting challenges that have continued to grow in scale and sophistication with attendant and unintended consequences for the integrity of both the CBN and the country.
“More specifically, as of the end of September 2022, available data at the CBN indicate that N2.73tn out of the N3.23tn currency in circulation was outside the vaults of commercial banks across the country, and supposedly held by members of the public. Evidently, the currency in circulation has more than doubled since 2015, rising from N1.46tn in December 2015 to N3.23tn as of September 2022. I must say that this is a very worrisome trend that cannot continue to be allowed.”
Emefiele highlighted the challenges that spurred the CBN action as significant hoarding of banknotes by members of the public; worsening shortage of clean and fit banknotes with an attendant negative perception of the CBN and increased risk to financial stability; and increasing ease and risk of counterfeiting evidenced by several security reports.
Coinciding with the recent over-the-counter memo withdrawal of N100,000 and N500,000 weekly for individuals and companies. Emefiele added that CBN would work with law enforcement agencies like the Economic and Financial Crimes Commission and the Independent Corrupt Practices and Other Related Offences Commission, to complicate and track large withdrawals.
However, despite Emefiele’s explanation, a lot of agitations greeted the announcement with many arguing that the redesign of the currency notes and the limited period given for its implementation may bring the country’s economy to its knees. The National Assembly even asked the apex to review the policy as it would have an adverse impact on the economy, but the central bank was resolute, saying no going back on the December 15 date for the introduction of the new notes.