By Bayo fasunwon
President Muhammadu Buhari would not forget Nigeria in a hurry, years after leaving office. In his first forceful entrance into the saddle of power, Nigerians had groaned under the rulership of a man whose blood was filled with revolutionary liquid. He had strongly believed that upon him was the divine task of transforming the nation, and her people. As if goaded by the hand writing on the wall, his ‘mene, mene, tekel, upharsin’ goaded him into bringing many forceful changes within few months in the saddle. Mouths were shut, prisons enlarged, currencies changed and politicians jailed.
Within a few months in power, the messiah became the villain, and his removal was greeted with applause and mixed feelings. After several failures, he was brought back in 2015 for the continuation of his idealistic change agenda. However, and unfortunately too, global economics, domestic politics and shoddy Presidential steps had deflated the larger than life heroic perception of his being. Many times, his ‘good and innovative’ policies have met with thick criticisms across the vide. More recently is the intended, (or ratified) policy to give Nigeria newly designed mint, possibly to mark the end of the administration of a leader who lost the national goodwill and followership of many.
The Nigeria currency had successfully undergone fifteen (15) changes between the colonial period till 2010. The reasons alluded to the changes range from political, social and economic exigencies. It is important that these changes had also had their share of applause and criticisms. However, only President Olusegun Obasanjo and now President Muhammadu Buhari would have had the opportunity of changing the currency as military and civilian Heads of State, of the Federal Republic of Nigeria.
President Muhammadu Buhari had however sought to change the nation’s currency for same reasons it did in 1984. According to the CBN the need to mop up extra cash that promote inflation; prevent the unbanked hoarding of banknotes and also curb the activities of those kidnappers who demand and collect huge cash ransoms from their victims. The CBN is also more convinced that there are hoards of fake currencies circulating in the country, thereby undermining the integrity and acceptability of the Naira as medium of exchange. However, while many felt that the issues raised about the present state of the Naira could be germane, the nature, pattern and time of change in our mint, is inappropriate.
Looking at the policy intention and outcries, it is important to air an opinion. In the first place, it is sad to note that since 1984, when similar reasons were given for a currency change, the various Nigeria governments have not been able to adequately provide solutions to these sabotaging forces. Hoarding of monies in septic and overhead tanks, burial grounds and bushes had become a successful venture given the light sentences for economic crimes. So, the lenient sentences and procedures had made those who steal billions keep it in absurd places, go to prison for a few whiles, return unearth their loots and reign supreme. Unfortunately, this trend would not end as long as the punishments are nothing but a child’s play. Essentially therefore, when the punishment for corruption is less than the proceeds and benefits of corruption, even the new notes would be misappropriated, and hoarded and we would be back to the beginning.
Furthermore, the argument that about 85% of the country’s currencies are unbanked is a pointer to the failure of government’s economic policies. The Federal Government had ensured that low interest rates on savings, and myriads of charges on deposits, in the period of inflation had discouraged many from putting money in the banks. The financial policy of many Nigerians now is ‘spend as you earn’, for what N200 can afford today would be beyond reach at the same price tomorrow.
So, savings during inflation has become a higher risk. Furthermore, the ease of getting loans from neighbourhood moneylenders, (even if payment conditions is killing) makes the bank lose patronage. Bank policies that supported the proliferation of POS centres had also encouraged many bank personnel’s foray into currency racketeering. These anti-banking activities have also encouraged the production, procurement and circulation of fake currencies in the country. As long as the bank monetary policies do not support savings, cashless and online banking becomes a mirage.
The CBN should also note that the country had not given much succour to many Nigerians whose monies were fraudulently removed from their bank accounts through online frauds. If the banks are not safe for currencies, who would save therein. But for the fact that government workers are mandated to have salary accounts, the 15% currency holdings in banks would have reduced.
Hope the CBN is also aware that there are many towns and villages without banks? Beyond the minting of newly designed currencies, there is the need for policies that would make banking of naira notes a natural appeal to many. Despite the desire for the digital banking system in Nigeria, the facilities for good service delivery is still lacking. Yours truly experienced a situation where customers had to visit the banks consistently for a week before a stable network could be accessed for the renewal of ATM cards. Hope the CBN is also aware of the stress and sometimes dehumanizing treatments Nigerians undergo before they could gain access into banking halls in the morning?
Come January 31st, old notes shall pass away, and the most useful ones shall become new. Most useful, because the 5, 10, 20- and 50-naira notes are fast becoming useless. Hence the panic purchase, (given the free fall of the naira) of foreign currencies have started. Well, the naira has taken a plunge to being N800 to a dollar. This is expected to rise as the new mints start rolling in. So, in order to arrest inflation, in a country whose citizens depend more on importation, galloping inflation is being created.
We should also not discountenance the fact that Sheikh Gumi, who to me is the Senior Special Adviser of Bandits, had hinted that ransom shall no longer be collected in naira, but in dollars. We should also reason that January, being a precursor to the election would witness the need for more cash flows. If what we watched during the primaries were anything to go by, we should expect a dollarized vote buying and persuasion. Then, it would be how has our Naira fallen, and the weapons of commerce made desolate. Do not also forget that the removal of fuel subsidy would also ignite price increases, in the midst of low currencies, and stagnated irregular salaries.
If the arrest of inflation and promotion of banking is the focus of this policy, then the way to go is the systematic withdrawal of the old mint from circulation within a period of six months just as was done to the N100 centurion note. That long period would encourage banking without panic, adjustment and acceptance of the new mint. In addition, if the value of the new mint is increased through the recalibration of the naira, the rush for the new would spontaneously increase.
By recalibration, culling from the rebasing of our GDP, there would be no need to print higher denominations. Rather the market would welcome the introduction of value loaded coins. Just as Nigerians in the 70s came to understand that 2 pounds came to mean 1 naira and ‘apo kan’ meant N200, so recalibrating the naira would imply that the new N500 is worth the old N1000 or as the CBN may deem fit. Less notes would be in circulation, willingness, without compulsion to change to new notes would be high; inflation would be curbed and the coins would have less trouble been accepted as legal tenders, for then, they would have value. President Buhari should realise that force is not the best way to create change, but the development of policies with human face and diversified utility.