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Finance Ministry Not Informed — Zainab
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No Positive Benefit — Ayo Teriba
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It Will Curb Black Money, Corruption — Uwaleke
Kudos and knocks have continued to greet the plan by the Central Bank of Nigeria (CBN) to redesign the country’s currency and re-issue new naira notes, starting from December 15, 2022.
On Wednesday, the CBN Governor, Godwin Emefiele said that the apex bank will redesign Nigeria’s N200, N500 and N1,000 denominations.
Giving reasons, Emefiele said the action was taken in order to take control of the currency in circulation, positing that the bulk of the nation’s currency notes were outside bank vaults and that the CBN would not allow the situation to continue.
Following the announcement, Minister of Finance, Budget and National Planning , Zainab Ahmad had disowned the policy, saying she was oblivious of the plan before CBN made it public.
Zainab who said this in response to question raised by Senator Opeyemi Bamidele, during the 2023 budget defence session, said she is not aware of the policy but only heard of it from the media.
Bamidele had expressed concerns that since the pronouncement, the value of Naira against the dollar has further plummeted.
Zainab also added that the redesigning would portend great consequences for the nation and its economy.
She said, “Distinguished senators , we were not consulted at the Ministry of Finance by CBN on the planned Naira redesigning and cannot comment on it as regards merits or otherwise.
“However as a Nigerian privileged to be at the top of Nigeria’s fiscal management , the policy as rolled out at this time , portends serious consequences on value of Naira to other foreign currencies.”
Since the back and forth, several analysts and experts have weighed in on the proposed redesigning of the Naira notes.
A renowned economist, Ayo Teriba, who spoke during an interview session with Arise TV, monitored by The New Diplomat, Friday, said he doesn’t see any positive impact that the CBN plan will have on the country’s currency.
Teriba who knocked the CBN for making such an announcement said the apex bank should be more concern about fixing the negative image of Naira.
According to him, “The announcement comes as a shock. At a time where the international community spearheaded by the global risk rating agencies have presented us with a shocking downgrade of Nigeria’s sovereign credit risk rating for reasons of unclear foreign exchange policy. For reasons around the way Central Bank of Nigeria is managing the foreign exchange rate. So you have expected that the central bank will be more worried about fixing the negative image that the central bank is portraying for Nigeria, to the global investing community.
“But here they are, they’re saying that they want to withdraw existing currency denominations, the largest four denominations within a month from December 15, to January of 15, which coincides with the festive period, the Christmas the new year period, and is two months away from the general elections. It just heightens the tension there.
“I cannot see any positive benefit of what the Central Bank is doing, I cannot see the necessity for it,” he added.
Speaking on the matter, the Chief Executive Officer, Wyoming Capital and Partners, Tajudeen Olayinka, gave kudos to the CBN for the proposed policy.
Olayinka said redesigning the currency will help the CBN in many positive ways. According to him, it will help the apex bank eliminate counterfeit bank notes and reduce the quantum of illegal money/proceeds of crime.
Olayinka said “I think CBN is trying to systematically suck back into the banking system, that quantum of money that is currently outside the vaults of banks, estimated at 80% of money in circulation. Doing so, CBN will be able to eliminate counterfeit bank notes and reduce the quantum of illegal money/proceeds of crime that are possibly adding up to challenges of inflation.
‘‘As a matter of fact, CBN is attempting to use the new policy as a strategic weapon to controlling inflation. What will happen? More people and businesses will resort to the use of electronic money, by directing their customers and counter-parties to pay transactions’ money directly into their bank accounts, to eliminate the risk of receiving counterfeit money.
‘Those holding illegal money would attempt to buy foreign currencies in the black market, but might be required to deposit Naira equivalent at the banks which could expose the source of the money they are exchanging because of disclosure requirements.”
Reacting also, President, Association of Capital Market Academics of Nigeria (ACMAN), Prof. Uche Uwaleke, said the decision to redesign the naira by the CBN will curb black money and corruption, and as well go a long way in ensuring that a lot of naira notes circulating outside the banks are crowded in.
“I think the decision to replace some naira denominations with new ones will be positive for the economy in the medium to long term.
”First, although the measure does not amount to demonetization of big currency notes often carried out by Central banks to curb black money and corruption, it will go a long way in ensuring that a lot of naira notes circulating outside the banks are crowded in.
”If it leads to large deposits in banks, it means the banks will have more money to lend which may reduce interest rates. I also think it may have the effect of reducing speculative attacks on the naira in the parallel market. I expect that the Financial Intelligence Unit will be on the watch out for huge deposits as a way of monitoring illegitimate transactions,” Uwaleke opined.
