Redesigning of Naira notes: Matters arising

Recent announcement by the Central Bank of Nigeria (CBN) that it has redesigned Nigeria’s currency notes which it will put in circulation effective December  15, 2022  has among other things, succeeded  in exposing the huge communication gaps in governance issues and the lack of cohesion and collaboration among critical Ministries, Departments and Agencies (MDAs) of government with adverse effects and making the country a laughing stock among the comity of nations.

That the Minister of Finance, Dr. Zainab Ahmed was the first to have quickly warned Nigerians of the potent negatives in the redesigning of the N200, N500, and N1,000 notes and the timing of such a crucial exercise is a clear indication that the authorities responsible for both the fiscal and monetary policies of federal government are sharply divided never on the urgent need to make the Nigerian economy more functional and more responsive to the needs of the citizens.

This clearly exposes the apparent incompetence on the part of the federal executive in coordinating the activities of the various components of government to the worrisome extent that key officers of President Muhammadu Buhari administration seem to derive joy in working at cross purposes in the system particularly against the backdrop that no public official in Abuja suffers any consequence for underperforming or any misadventure in governance hence the easy resort to impunity.

We totally condemn the obvious lack of synergy between the CBN which is in absolute control of the monetary policies and Ministry of Finance, Budget  and National Planning that is fully in charge of the nation’s fiscal policies because both are in reality ought to work in harmony for the good of the economy and by extension the generality of Nigerians whom they are accountable.

The argument by the CBN Governor, Mr. Godwin Emefiele that planned policy was  in line with Section 19, Subsections a and b of the CBN Act 2007, upon which the Management of the CBN sought and obtained the approval of President Muhammadu Buhari to redesign, produce, and circulate new series of banknotes at N200, N500, and N1,000 notes has not sufficiently addressed concerns of stakeholders on the numerous demerits of the exercise.

For instance days after his pronouncement, our currency has suffered a massive fall in value against all major international currencies with one United States dollar exchanging for over N800 with no hope of recovery in the immediate future. Truly the Naira has become one of the worst performing currencies in the world and there is an urgent need to save the soul of the Naira.

The redesigning will similarly exacerbate the current inflation in the country resulting in further hike in the cost of goods and services, throwing more citizens into the poverty bracket and hardship. Therefore, that the new policy has the full backing of the President Buhari clearly will not mitigate or diminish the negative impacts on the economy and citizens which must have informed Zainab’s stand on the issue.

We are of the view that it is in the best interest of the larger society and economy that strategic managers  of fiscal and monetary policies work in complete harmony moving forward and not indulge in ego tripping if only to engender more functional financial ecosystem and the common good as any discord between these authorities as recently exhibited by Emefiele and Ahmed is detrimental to nation’s economic management  and survival.

It is never in doubt that the CBN Act grants it full autonomy in many respects except in such instances as the printing of currency and investment in foreign countries where it is required to seek and obtain approval from the Presidency but we insist  that in carrying out its functions, the apex bank must at all times consult widely such critical stakeholders as the Ministry of Finance and the organized private sector in order to weigh possible adverse outcomes  of its activities and initiatives, which  the minister described as dare consequences with a view to proffering sound solutions.

Besides, the Governor listed the challenges faced by currency management to include, significant hoarding of banknotes by members of the public, with statistics showing that over 80 per cent of the currency in circulation are outside the vaults of commercial banks; worsening shortage of clean and fit banknotes with an attendant negative perception of the CBN and increased risk to financial stability; Increasing ease and risk of counterfeiting evidenced by several security reports, adding that “indeed, recent development in photographic technology and advancements in printing devices have made counterfeiting relatively easier. In recent years, the CBN has recorded significantly higher rates of counterfeiting especially at the higher denominations of N500 and N1, 000 banknotes”.

Just recently, we recall the inability of Ministry of Finance, Ministry of Education and that of Labour and Employment to harmonize their positions on some long standing issues with the Academic Staff Union of Universities,  ASUU led to the closure of the nation’s tertiary institutions for eight months even when it became clear that President Muhammadu Buhari had forgotten that he gave an ultimatum on some Ministers to resolve the matter within two weeks. The huge loss of that failure in the system will hunt the nation’s education system and the products of that system for many years to come. That for us, is a classical example of the setback which trails a dysfunctional governance structure.

It is our considered opinion that one of the major reasons responsible for dysfunctional government system is the inability of state actors to see themselves and their activities as been part of the whole to the extent that they fail to realize that a possible disconnect in one end of the chain will obviously culminate in the failure of the whole.

It is to this end that we insist that eligible Nigerian voters must rise up to the occasion of electing, in the February 25, 2023 presidential election, a candidate who will have the capacity to conduct effective and efficient oversight functions on virtually all the various components of the administration in order to prevent the subsisting situation where a president will give assignments to subordinates without the capacity to follow up on the execution of such tasks with the view to accessing their impacts.

We therefore, challenge the authorities responsible for the articulation and implementation of Nigeria’s fiscal policies, that is the Ministry of Finance to role up its sleeves and work out practical measures and strategies capable of mitigating the anticipated consequences of CBN’s redesigning of the Naira  ahead of time. It is not acceptable for  Ahmed to have identified such ‘dire consequences’  which she listed to include a strain on the value of the Naira against other foreign currencies leading to devaluation and emergence of hyper inflation, but initiate action plans that will alleviate or  minimize such occurrences.

We further  implore other agencies of government to do the same if only to encourage Nigerians to focus more on the positives rather than the negatives of the CBN’s new policy directive. The apex bank on its part should be humble enough to look beyond the powers conferred on it by the 2007 Act and engage in meaningful wide ranging consultations with major stakeholders such as the Ministry of Finance, the Manufacturers Association of Nigeria, the National Bureau of Statistics and Nigeria Customs among others in the discharge of its responsibilities in the future considering the devastating impacts of any faulty articulation and implementation of its policies on the larger economy.

We are conscious of the negative repercussions of keeping 80 per cent of the total money in circulation outside the banking system which didn’t come overnight but as a result of a possible lacuna created by the system hence we frown at the January 31st 2023 deadline for Nigerians to return the old N200, N500 and N1,000 notes and demand an extension for the exercise.

For a better society

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