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Thursday, December 8, 2022

Reactions trail CBN’s move to redesign Naira notes

By Samuel Edu

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Mixed reactions have continued to trail the decision of the Central Bank of Nigeria to redesign three highest Naira denominations in the country.

While some economic experts described it is a move in the right direction, others were of the opinion that it is targeted towards the 2023 presidential election, the Central Bank of Nigeria (CBN) Governor Godwin Emefiele on Wednesday at a special briefing in Abuja

announced the redesigning of N200, N500 and N1,000  notes.

Emefiele said banks will start circulating the newly redesigned currencies from December 15, 2022.

He said the naira notes were redesigned following a request from the Federal Government.

Emefiele stated that CBN has secured the approval of President Muhammadu Buhari to roll out new notes to replace the existing currency in circulation.

An Economics scholar from the Department of Economics, Adekunle Ajasin University Akungba Akoko, Dr Ofonyelu Chris said Emefiele’s move to redesign the N200, N500 and N1000 notes have its good and bad sides.

He said “it is costly to print money in Nigeria. As it stands today, money in circulation, meaning, is over N3trillion nmillions will go with this policy.

“Moreover, it gives avenue for abuse, now that it is happening very close to the general election, as election spending can be funded via this. Again, the operation will spike panic on the currency, it is most likely people may want to reduce their interface with the domestic currency, especially the old notes once the new ones come out.

“On the good side, over 70 percent of the currencies are stashed outside the banks. This action will bring the money into the banks again, increase velocity of circulation and aid monetary policy implementation.

 “A recent report showed that as at September 2022, out of the N3.2t notes in circulation, about N2.73t is out of banks’ vaults, supposedly in the hands of politicians and money hoarders, this action will frustrate their pilation.

The scholar, however, noted that time for the introduction and recirculation of this is too short considering its closeness to the general elections.

According to Prof. Umhe Uwaleke, a Financial Economist and Professor of Capital Market at the Nasarawa State University, Keffi, the decision will be positive for the economy in the to long term.

Uwaleke said the measure would go a long way in ensuring that the naira in circulation outside the banking system were brought into the banking system.

He said the measure would also provide enough liquidity for banks, and more money for the banks to lend.

Uwaleke said it might also have the effect of reducing speculative attacks on the naira in the parallel market in the medium term.

He, however, said the deadline of January 31, 2023 was too short, considering the number of naira denominations involved, urging the CBN to consider extending it.

An Economist, Dr Tope Fasua, also said the measure would have significant effect on the economy, adding that it was essentially about “black money.”

He suggested that the CBN should take such measures more frequently.

Fasua advised that the idea of individuals operating personal domiciliary bank accounts should be banned.

Another Economics scholar, Dr. Taiwo Kayode said this move will help to deal with the counterfeiters of naira notes.

This policy will render the balance in possession of counterfeiters useless as soon as the old notes are no longer acceptable.

 However, Mr Okechukwu Unegbu, a financial expert, and past President of the Chattered Institute of Bankers of Nigeria (CIBN), said redesigning the naira was not the most important problem facing the economy.

Unegbu, said the apex bank should have simply ensured that the scarce lower naira denominations, like N100 and N200 were readily available by printing more.

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