By Babatunde Ayedoju
It was breaking news indeed when extension of the January 31, 2023 deadline for the exchange of the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, announced the redesign of some naira notes. The notes to be redesigned were N200, N500 and N1,000.
According to the CBN Governor, the new notes were to be released on December 15, 2022, while the old notes would cease to be accepted as legal tender by January 31, 2023. However, before the new notes came into circulation on December 15, 2022, the Buhari-led government first unveiled it for the public to see on November 23, 2022 now deadline is February 10, 2023.
Beyond any other factor, the support given to the CBN by Mr President showed that the decision had come to stay. The CBN had directed that members of the public should deposit their old currency notes in the bank between the time that the decision was made and the day that the old notes would cease to be accepted as legal tender February 10, 2023.
Meanwhile, there were fears in some quarters that this policy would have an adverse effect on the unbanked, especially people from the remote rural areas. This is in view of the fact that the CBN had directed that people who wanted to swap their old currency notes with the new ones should deposit their notes in their bank accounts.
The new naira notes were released to the public in the middle of December but feedback from the public indicated that the new currency notes were scarce. To address the scarcity of the new naira notes, the CBN ordered commercial banks to immediately stop over-the-counter withdrawal of the new notes and load their Automated Teller Machines (ATMs) with the redesigned naira notes, to boost its circulation.
The apex bank also launched a cash swap programme nationwide to enable those in the unbanked area to exchange their old notes for new notes before the deadline, though it excluded Lagos and Abuja mobile money/Point of Sales operators from the programme.
However, before the extension there were agitations from some quarters that the CBN should extend the deadline to enable more people deposit their old currency notes and get new ones.
Few days ago, the House of Representatives and the House of Senate appealed to the CBN to extend the January 31 deadline to July 31. Senator Sadiq Umar (APC) from Kwara North, who made the motion, lamented that there were no enough new naira notes in circulation and as such, moved that the date should be extended to July 31.
He also cited a Senate resolution on December 28 which had urged the CBN to shift the deadline from January 31 to June 30.
The House of Representatives also asked for an extension of the deadline, following a motion of urgent public importance moved by Sada Soli (APC, Katsina) during plenary. Moving the motion, Soli said banking and other financial institutions were struggling to cope with the rush by citizens to change their old currencies to new notes, just as the shortage of new notes is creating panic. He informed his colleagues that traders in his home state had started rejecting the old notes.
Speaking in his support, Ahmed Jaha (APC, Borno), said CBN had been making efforts in his state to swap the old notes for new ones but the efforts were not enough to meet the deadline, just as activities of Boko Haram insurgents had shut down banking operations in most parts of Borno.
In his response, Speaker of the House, Femi Gbajabiamila, said the House needed to interface with the heads of commercial banks to understand the real situation. Consequently, the House resolved to set up an ad-hoc committee chaired by the majority leader, Alhassan Doguwa (APC, Kano), to interface with the banks today and subsequently meet with CBN.
Meanwhile, the Nigeria Governors’ Forum (NGF), Bank Customers Association of Nigeria (BCAN) and a host of other stakeholders also expressed concerns and made appeals for CBN to extend the period for the currency swap as well as review of the policy.
Specifically, the NGF had set up a six-member committee to engage the CBN to address anomalies in the country’s monetary management and financial system, especially in the issuance of new Naira notes.
The governors said that while they were not opposed to the objectives of the Naira redesign policy, the apex bank should consider the peculiarities of households and states, especially pertaining to financial inclusion and under-served locations.
Initially, the CBN Governor, Godwin Emefiele, had insisted that there was no going back on the January 31 deadline which the apex bank had given, stating that members of the public had enough time – 100 days – to exchange their old notes for new ones.
The CBN Governor who spoke at the Monetary Policy Committee (MPC) meeting in Abuja few days ago said that kidnapping and ransom-taking had reduced since the three banknotes were redesigned.
“There is adequate quality of new notes available but let all know that it is a process of increasing, not producing. Our Mint is producing and we are supplying to the banks and so it will continue to circulate in the system.”
He said the CBN has 1.4 million super agents nationwide to collect old naira notes in exchange for new notes in riverine and upland areas, saying “money is going down and is circulating to the lower rung of the community.”
A lot of old naira notes are still in circulation, with very few of the new notes within the reach of the masses. Yet, the deadline is very close. Meanwhile, despite appeals from major stakeholders, including the National Assembly members, the CBN and Mr President insist that the January 31 deadline still stands.
This time around the February 31 deadline feasible again as the CBN Governor claims? Should the deadline not be extended more than this. Would it not have been better for the CBN to set a target of probably six months, during which only new notes would be printed and the old ones would be withdrawn from circulation gradually? Would that not have been better than the approach currently being taken by the apex bank?
Nobody is even talking about what will become the fate of people who are not able to exchange all their old notes for the new ones before the deadline elapses.
Dr Bayo Fasunwon from the Department of Political Science, Adekunle Ajasin University, Akungba-Akoko believes that the currency redesigned should be cancelled, as the CBN appears not to be well prepared for it, and the motive even appears to be more political than economical.
The political economist noted that Nigeria has been operating a cash-based economy and it is wrong to try to switch to a cashless economy suddenly. He said, “There is nothing wrong with a country changing its currency but it should be done in such a way that compliance will be easy. They should have phased it out gradually just as they did with the N100 note.”
He further lamented, “Most of the people who go to the market up till January 30 will go with old notes. When will they be able to change them? What are the banks giving out? Old notes. Even in rural areas where the CBN claimed to be doing a currency swap programme, investigations revealed that it’s not effective.”
Based on these scenarios painted, the university don recommended an extension of the deadline; banks should make more new notes available, so that those who come with the old notes can go home with new ones; or possibly the policy should be reversed completely.
On the other hand, Dr Chris Ofonyelu from the Department of Economics, Adekunle Ajasin University, Akungba-Akoko, noted that based on the body language of the CBN chief and Mr President, the deadline may change. Moreso, he pointed out that members of the public are already adapting.
He said, “In several parts of the north, businesses have closed because they don’t want to trade in the old naira notes. Even here in Ondo State, some business people are no longer collecting the old notes. In fact, some bank managers have said that latest noon on February 10 they will stop collecting old currency notes, because they will need to take the ones with them to CBN.”
He also said that if after the deadline many people are not able to meet up, businesses would suffer, but in the short run they would adapt. “People will be forced to open bank accounts. The rural people will suffer more. Again, smart people will bank on this to defraud others because not everybody can do online banking well,” he pointed out.
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