By Tokunbo Adaja
THE saying that ‘everything that starts well ends well’ cannot but be most appropriate in describing the naira redesign saga in Nigeria. Thus, by extension, everything that does not start well may not end well or end in a fiasco. The conception, delivery and nurturing of the naira redesign policy was shrewd in secrecy which negates the tenets of democracy Nigeria subscribes to. Embedded in democratic governance is the spirit of consultation as well as openness to suggestions, dialogues, deliberations and negotiations in order to generate the best idea, best policy and best public-oriented implementation strategy. The naira redesign policy came like a thunderbolt to the public space when it was announced by the Governor of Central Bank of Nigeria, Mr. Godwin Emefiele, in October 2022. To not a few citizens, it was like an unfolding drama as many highly placed and relevant government officials, including the Minister of Finance, Budget and National Planning, denied any knowledge of the policy. Though, the Central Bank Governor claimed the CBN Board is autonomous and has the backing of the law to do so; it is, however, logical for the CBN Governor to know that to successfully implement such a policy, most of the stakeholders needed to be briefed and carried along especially in a complex and fragile society like Nigeria.
Probably,through this, the initial (and subsequent) controversy that accompanied the introduction of the new naira notes would have been avoided. And, probably, the policy would have been modified, through comments and suggestions made by the various stakeholders, which may have brought about a seamless implementation of the policy. The doubt that surrounded the announcement of the plan to introduce new naira notes, however, came to a halt when on December 15, 2022 the new naira notes in the denominations of 200, 500 and 1,000 were launched. Currency redesign is not a new phenomenon anywhere in the world, be it in developed or developing nations. Basically, currency redesign is predicated on a number of premeditated objectives or benefits such as improving security of the banknotes (probably by introducing some security measures), mitigating currency counterfeiting, controlling the quantity of currency in circulation, reducing the over-all cost of currency management, among others. Thus, currency redesign is hinged on the needs and circumstances of the concerned nation.
When the CBN Governor, Mr. Emefiele announced the planned naira redesign, he highlighted the objectives of the policy such as controlling inflation, controlling money supply, reducing currency counterfeiting, encouraging cashless economy and to tame terrorism. However, the most excruciating economic element, the exchange rate, was not mentioned either directly or indirectly. Many small and medium enterprises have closed shops because of the exchange rate, while the take-home package of not a few Nigerians cannot take them home. Many Nigerians expected that Mr. Emefiele would have included in his policies strategies to mitigate the sufferings and frustrations of Nigerians as a result of the high exchange rate as well as the non-availability offoreign currencies in the banks.
At the launch of the new naira notes, Nigerians expected new features that will clearly differentiate the notes, just like the previous exercises in which the portraits of former leaders were introduced to preserve our common heritage and other security devices added. But alas, instead of redesign, what we found, according to El-Rufai, Governor of Kaduna State, is ‘naira coloring’. Although, CBN has not told Nigerians how much was spent on the ‘naira coloring’, we all know that billions of naira would have been committed to the project. According to a recent release from the CBN, a whopping amount of 281.07 billion naira was spent on printing banknotes between 2016 and 2020 (not redesigned banknotes). According to the CBN release, in 2016, 33.37 billion naira was spent on printing banknotes, in 2017 (49.52 billion naira), in 2018 (64.04 billion naira), in 2019 (75.53 billion naira) and in 2020 (58.07 billion naira). And, according to the release, the CBN spent 3.88 billion naira to destroy mutilated banknotes during the period (2016 – 2020).
One cannot but ask a number of questions on this. For example, where did the CBN put the new notes printed between 2016 and 2020? At what point or in which year did we enjoy or observe massive circulation of new naira notes in Nigeria between 2016 and 2020? What material(s) or chemical(s) did CBN use to destroy mutilated notes that cost 3.88 billion naira? Many more questions begging for answers. The three ‘redesigned’ naira noes (200, 500 and 1,000) came into circulation on December 15, 2023 with the announcement that they will co-exist with the old notes as legal tender, and that by January 31, 2023 all the old notes would cease to be legal tender. Thus. The CBN only gave forty-eight (48) days to mop-up all old naira notes in circulation. Recall that within the 48 days there were seven (7) weekends and public holidays like Christmas day, Boxing day and New Year day.All these made no sense to CBN.
The CBN action clearly negates global best practices. For example, in 2016 India redesigned her currency (Rupees 500 and 1,000) and a period of six (6) months was given within which old notes would be mopped-up. Even the six months period was later adjudged inadequate. A commentator once said that ‘a 6-month timeline proved to be wholly short-sighted and ineffective, and achieved none of its grand objectives’. In the United Kingdom, the Bank of England, following the death of the Queen, unveiled the design of King Charles III banknotes on £5, £10, £20 and £50 on December 20, 2022. However, the new notes will enter into circulation by mid-2024. Also, in the United States of America, the plan to redesign her currency has been on since 2011. And, the strategy has been to introduce the new notes sequentially. For example, $10 will be introduced in 2026, $50 (2028), $20 (2030), $5 (2032) and $100 (2034). According to a report, the plans to effect the currency redesign have been on since 2011, with the first currency to be deployed 15 years after, that is 2026. If developed nations could engage due process, and provide enough time, information and awareness about their currency redesign, one wonders why our case is different, and what economic theory is being used by the CBN. Why this rush? Why this desperation? Why this executive (military) fiat? What do we stand to gain by inflicting pains on fellow Nigerians? Which country are we imitating? Which interest is the CBN serving or protecting?
It will be difficult for an average Nigerian to understand the position of the CBN and that of the Buhari-led government on the naira redesign saga. What political, economic or development goal would have motivated the naira redesign agenda in less than six months to the end of the administration? Why, in spite of the complaints and appeals by well-meaning Nigerians, experts, professionals, governors and other stakeholders; the CBN Governor insisted that there is no going back on implementing the deadline?
Recall that on February 8, 2023 the Supreme Court (the highest court in the land) gave an interim injunction restraining the federal government from implementing the February 10, 2023 deadline for the old currency to quit circulation in a reaction to a suit instituted against the federal government by Zamfara, Kogo and Kaduna State Governments. The three states, later joined by Ondo, Ogun, Lagos, Ekiti, Sokoto, Kano and Cross Rivers states had gone to the Supreme Court to challenge the CBN order because of the sufferings and frustrations of Nigerians . Many Nigerians have reportedly died because of lack of cash to meet their needsor unable to pay to get medical attention. Many even collapsed while on the queue to withdraw from their hard earned income kept in the banks.
In spite of the protests in nofewer than 10 states in Nigeria, the CBN went ahead to re-echo the deadline. However, after a meeting with President Muhammadu Buhari, the deadline was extended to February 10, 2023. The extension did not make any difference as the problem persisted and became more intense and excruciating such that businesses became paralysed, economic activities grounded and human beings demobilized.
In defending the policy, Mr. Emefiele came up with a catalogue of laughable and inconsistent explanations. He, initially, accused bank executives of hoarding new naira notes and promised to trail and bring any person found wanting to book. However, till today none has been found. Again, while defending the policy before the Council of State, Mr. Emefiele said that the Nigerian Security Printing and Minting Plc in charge of printing the new notes lacks the capacity to print enough notes. This is nothing but an afterthought because during the launch of the new notes, Mr. Emefiele openly said that adequate new notes had been distributed to the banks, and that agents were appointed to take care ofrural communities without banking facilities. Meanwhile, a source in CBN disclosed that the printing company was instructed to make available 500 billion new notes. One will like to believe that the agreement was kept because Mr. Emefiele never mentioned of any disappointment regarding the production of the new naira notes during the launch. The question now is, who is deceiving who?
Again, the CBN openly declared that over 2 trillion naira of the old notes had been withdrawn from circulation till date, however, he has not denied that only 500 billion new naira notes was injected into circulation. This translates to about 20% or less of what was withdrawn fro circulation. Does anyone needed to be a mathematician to know that the subsisting naira crunch was deliberate and premeditated?
It is unfortunate that Nigeria is blessed with leaders who do not identify with the masses, and who will not consider the poor masses in the implementation of their policies. The naira redesign, some called it Covid-23, no doubt is an avoidable national tragedy and has become PMB’s Achilles heel. Many Nigerians will not forget in a hurry the sufferings, frustrations, hunger and miseries that accompanied the introduction of the new notes. Many took their old notes to the bank with the expectation that a corresponding amount would be issued in return in the name of ‘naira swap’ but only got everything confiscated and went back home empty handed. Both small and medium economic activities have become paralysed, social activities have been suspended and most Nigerians have become frustrated and demobilized. However, it is instructive to point out here that the policy which was targeted at politicians to prevent them from using money to induce voters are seemingly unaffected. Till the end of the electioneering campaigns none of the politicians or political partieshalted their campaigns. They kept moving from one state to another, and from one city to another, while the poor masses became grounded, demobilized, frustrated and impoverished.
Again, the protests, violence and destruction of properties orchestrated by cash scarcity and frustrations experienced by the masses cannot bring the anticipated economic prosperity alluded to by the CBN. All the losses to individuals, groups and organizations will have to be replaced at the expense of other facilities that can engender development. And, unfortunately, our insurance industry is not well developed or subscribed to for the people to get the needed help. The redesign policy has brought nothing but a multiplication of miseries, hopelessness, poverty and impoverishment to Nigerians.
The claim by Mr. Emefiele that the policy will facilitate a cashless economy in Nigeria is deceptive, frivolous and a misplaced priority as Nigeria is obviously not ripe for it. Although, no nation has ever achieved 100% cashless economy, the nations thriving in cashless policy achieved it through a gradual process by first putting in place necessary structures and facilities. It is a gradual process, ‘not by fire – by force approach’. Citizens of such nations are educated, motivated and encouraged to key into the policy. According to statistics many Nigerians do not operate bank accounts. Even those with bank accounts, if not for some other sundry reasons, would prefer to close their accounts because of the charges and deductions made by the banks. Thus, in a situation like this, how can cashless policy succeed? A country that cannot guarantee four (4) hours supply of electricity per day, an epileptic network, a banking system that is highly unpredictable with operators that cannot be trusted, and a system where frauds are perpetrated with impunity. A country with about 76 million illiterates, who cannot read or write, and according to statistics, only about 45.14% of Nigerians have bank accounts. According to a 2021 World Bank Development Report, more than 50% of Nigerians do not have digital skills and cannot use data services. Again, as at 2022, only 37% of Nigerians have mobile phones while 38% use internet. None of these has been addressed by the CBN, yet Mr. Emefiele thinks cashless policy is what Nigerians need for now.
Again, it is worrisome to suddenly realize that our believe that democracy has come to stay, after experimenting it for about 23 years, is being shattered if the federal government by ignoring the order of the Supreme Court (the highest court in Nigeria) with impunity. It is an indication that we are yet to internalize the basic tenets of democracy. It shows that democratic culture has simply not been integrated to our political culture. Our leaders are democrats in appearance and not in deeds.
- Adaja is Professor of Mass Communication, Joseph Ayo Babalola University, Osun State.
