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Sunday, November 27, 2022

CBN’s New Naira Policy

ON Wednesday October 26, 2022, Nigeria’s apex bank, the Central Bank of Nigeria (CBN), announced that it would redesign some naira notes currently in circulation. The affected notes are N100, N200, N500 and N1000. Speaking on the development, the CBN Governor, Godwin Emefiele, stated that the move became imperative, following abnormalities bedeviling Nigeria’s financial, monetary and security systems. The circulation of the new designs will begin on December 15, 2022, while the existing notes will cease to be legal tender by January 31, 2023.The CBN governor urged Nigerians to deposit their naira notes, adding that deposit fee would be waived for transactions below N150,000.

THE history of design and redesign of currency notes in Nigeria can be traced to the Colonial Ordinance of 1880 that introduced Shillings and Pence as legal tender in British West Africa up to 1912.From 1912-1959, the West African Currency Board (WACB) issued bank notes to countries in British West Africa. When the CBN was established in 1959, it began to issue Nigerian currency bank notes and those of WACB were withdrawn. In 1962, the banknotes which hitherto bore the inscription, ‘FEDERATION OF NIGERIA’, was changed to ‘FEDERAL REPUBLIC OF NIGERIA’ to reflect the republican status of the country.

THE notes were again changed in 1968 following the misuse of the currency banknotes during the civil war. In January, 1973, Nigeria took a major step to change from the metric to decimal thus making one naira which was equivalent to ten shillings the major unit of its currency, while the minor unit was called the kobo; hundred of which made one naira thus removing the pounds as a legal tender in Nigeria.

ON February 11, 1977, a new banknote of twenty naira (₦20) was issued as the highest denomination while ₦1, ₦5 and ₦10 were introduced on July 2, 1979 and  the engravings at the back of the notes reflected various cultural aspects of the country.  The colours of all the banknotes in circulation were changed with the exception of the 50 Kobo banknote to arrest the currency trafficking prevalent at the time. In 1991, the 50K and ₦1 were both coined In April 1984.

THE ₦100, ₦200, ₦500 and ₦1000 banknotes were introduced in December 1999, November 2000, April 2001 and October 2005 respectively while in February 2007, the ₦20 was issued for the first time in a polymer substrate as part of the economic reforms. Also, the ₦50, ₦10 and ₦5 banknotes; as well as ₦1 and 50K coins were reissued in new designs, and the ₦2 coin was introduced. On September 30, 2009, the redesigned ₦50, ₦10 and ₦5 banknotes were converted to polymer substrate following the successful performance of the ₦20 (polymer) banknote. The last change in the currency by the CBN was the issuance of the ₦50 commemorative polymer banknote on  September 29, 2010; and the N100 commemorative banknote on December 19, 2014

FOLLOWING the decision of the apex bank to redesign some of the naira notes, there were mixed reactions among Nigerians. Some think that it is commendable, as it will check those hoarding the naira insisting that it should be done periodically. Others think that the timing is wrong, as it will put unnecessary pressure on businesses. The Minister of Finance, Budget and National Planning, Zainab Ahmed, said that the Ministry was not consulted by the CBN on the naira redesign. She stated that the policy, as rolled out at this time, portends serious consequences for the value of naira to other consequences Meanwhile, President Muhammadu Buhari, on Sunday, voiced his support for the CBN, as he noted that the nation would gain a lot by the new initiative, especially its impact on illicit monies.

THE HOPE notes that the latest move by the CBN has both positive and negative effects on the economy and the polity. While the CBN governor stated that the move to redesign some of the naira notes would help to curb counterfeit currency notes and hamper payment of ransom to kidnappers and terrorists, The Hope is of the opinion that the government can look into technology to curb the menace of counterfeit currency notes and track kidnappers. The Hope therefore recommends that the government should print more low currency notes than high currency, as this will help to curb the excesses of money launderers and other criminal elements. This is in view of the fact that it will be very inconvenient to move around with huge amounts of money in low currency notes. It will also help to control inflation in the economy.

THE HOPE equally notes that the huge amount it will cost to undertake this project can be channeled into undertaking developmental projects that will bring dividends of democracy to the masses. While calling on the government to do the needful so that this move does not end up like other government policies that were abandoned halfway, The Hope recommends that the government and Nigerians at large should tread with caution and patriotism to make the exercise hugely successful and seamless.

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