The Central Bank of Nigeria is the banker’s bank. It regulates and oversees the affairs of banking sector in the country.
The CBN Act of 2007 (as amended) empowers the bank with the responsibility to issue and manage the country’s legal tender currency-Naira, Kobo and eNaira.
The CBN Governor, Mr Godwin Emefiele announced a plan to redesign the naira in 2022, his reasons were that this redesigning would help check counterfeiting, strengthen the economy, promote financial inclusion, and enhance the CBN’s visibility of the money supply. All these if implemented will help curb the misuse of naira and also boost the purchasing power of naira which had been steadily depreciating and losing value.
On November 23, 2022, President Muhammadu Buhari launched the new naira banknotes to commence in December,2022. The instruction given by CBN to all banks is to commence loading of the newly redesigned naira in their respective ATMs so as to help phase out the old notes but contrary to these instructions, many banks within Nigeria continued loading and paying out old notes across the counter. This laid a bad foundation for the commencement of the policy which later led to acute scarcity of the new notes, a situation which caused many Nigerians to call for the extension of the deadline when the old notes would no longer be legal tender.
The CBN governor claimed that over 3.23 trillion in old notes including 200,500 and 1,000 are held permanently in people’s houses, that it was this hoarding of cash that led to the real inflation Nigeria is currently facing. As we speak,1.9 trillion has been retrieved remaining 900 billion. The redesigned notes would help gain back the money by putting it into the banking and also into circulation, this would help the CBN to be able to effectively monitor the money in the economy either by physical cash or online transactions.
But the questions many are asking is why the CBN chose this time, Knowing the present situation of the country, a time when Nigerians are currently battling with prolonged fuel scarcity and also preparing for the coming 2023 General Elections? The global standard period for redesigning a country’s currency is five to eight years which shows Nigeria’s naira is overdue for redesign. Aside this,a large volume of banknotes hoarded by some people and increase in the rate of counterfeiting of the currency led to the urgency by the CBN. There are also talks in some quarters that the naira redesign just before the election was a strategy to counter the plans of some unscrupulous politicians who had hoarded billions of naira with the intention of vote buying.
Of all the denominations in Nigeria which include N5, N10, N20 N50, N100, N200, N500 and N1000, only the N200,N500 and N1000 notes were redesigned because they were the highest denominations presently in the country.
Despite the clear reasons for the naira redesign,many people are of the opinion that Nigerians banks have continued to aid some powerful people to have in abundance the new note which is against the new policy which authorise banks to allow individuals withdraw upto N200,000 in a month and companies N500,000, a lot of Nigerians are of the impression that a few powerful people are already in possession of large amounts of the newly designed naira which led to it’s scarcity and the poor people are left to bear the brunt. In a viral video on social media, some bandits were seen boasting of being in possession of ten million naira. Who gave them? Governor El-Rufai of Kaduna also said in a public statement that a State Governor got five hundred million in cash. This amount belongs to a large number of people, and it is unfortunate that a few people have gathered for themselves what was meant to be for many. Looking at the policy which specified the amount an individual and company can get.
Instead of giving people their money anytime they visit the bank or atm, speculation is rife that bankers have diverted most of the money to high powered customers and the POS operators.
A week to the deadline of Jan 31, 2023 by the CBN,the POS operators and banks began to hoard the new notes and charge exorbitant commissions from the people. This led to a public outcry, which in turn led to the CBN governor seeking for 2 weeks extension from the president after which the old notes will cease to be a legal tender, an extension which was approved by the president. It should be noted that the CBN act on naira redesign allows for the deposit of the old notes even when it ceases to be a legal tender for a period of time after.
Long queues, scarcity of the new notes further worsened an already tense situation and provoked some youths in Ibadan to protest the suffering of the people, a protest which led to the vandalisation of a Wema bank branch in the Iwo Road axis of Ibadan. This did not end there as other youths in Edo and other parts of Nigeria also protested.
To make matters worse,POS operators now charge 300 naira to pay out N2000 naira,600 naira for 4,000 and 500 for 5,000. In some locations, POS operators charge more than the quoted prices and this further angered the people.
On the 3rd of February, President Muhammadu Buhari through his special Adviser on media,Mr Femi Adesina put out a statement asking Nigerians to give him 7 days to address the issue of banknotes scarcity and the attendant sufferings of Nigerians.
Despite the good intentions behind the policy, the execution was not perfect, and the banks looked down on their customers and gave more priviledge to premium account holders. They jettisoned the instruction of the CBN which applies to everybody. In Nigeria, laws are meant to be obeyed by the poor and the rich, does this mean the rich people are above the law. Where is the equity and justice?
The POS operators also took advantage of the situation to exploit the people for greedy profits which shows that both the leadership and led are both responsible for the mess that we find ourselves.
In this guise,it is advisable for banks to preload their ATMs with new naira notes and also pay across the counter as instructed by the CBN to ease the current suffering of the people. If not,the Ibadan protest might just be the start as people’s frustrations and anger boils over.
It is job of the banks to allow deposit and withdraw but once people can deposit and cannot withdraw,then it is failure on their part.
Let the government rise and arrest the situation before it gets messier. The ICPC and other relevant agencies should be more proactive in going after cash hoarders and others who are found culpable in this unfortunate situation.
God bless Nigeria.
Written by Tosin Adesile