The Central Bank of Nigeria has announced a new currency note redesign which will take effect from December
The bank gave varying reasons for the action, which it said is to counter hoarding and forgery
But analysts are divided over the move, with some saying the bank needed to add few security features and move on to strengthening the naira’s value
Nigeria’s apex bank, the Central Bank of Nigeria (CBN), stunned the country on Wednesday, October 26, 2022, when it announced that it would embark on currency redesigning.
The governor of the CBN, Godwin Emefiele, said the redesign is per the request of President Muhammadu Buhari, who embarked on a similar journey in 1984 as military head of state.
Both notes were introduced in Nigeria in 1999, 2001 and 2005 by former President Olusegun Obasanjo.
Emefiele also stated that the new notes would begin circulating from December 15, 2022, and the bank would begin mopping old naira notes.
Additionally, he stated that the bank is suspending charges on deposits until the old naira notes are withdrawn to enable the public to bring in the old notes.
Beyond the redesign, the central bank chief stated other reasons for the action, which he has the nod of the Nigerian government.
Hoarding the notes: 2023 elections
According to Emefiele, about 80 per cent of the money in circulation is outside the banking system, meaning that the notes are being hoarded mostly by politicians who seek to use it to entice or induce voters in the forthcoming 2023 elections.
Dirty notes in circulation
He also cited the preponderance of mutilated naira notes which he said created a negative perception of the CBN and increased the risk of financial stability.
The governor also said the ease and risk of counterfeiting, which came from intelligence and security reports, are also part of why the apex bank is embarking on the journey.
According to Emefiele, the security report is also part of the reason for redesigning the notes. It has become evident that kidnappers demand ransom in cash before releasing their victims.
John Ekpuma, a financial and monetary analyst, stated that the CBN should have strengthened the security around the naira and embarked on a massive drive for the e-Naira to counter the reasons given by Emefiele for the action. Ekpuma said:
“At this point in Nigeria’s journey new or old naira notes are not really the problem. The naira is getting weaker by the day. What the CBN should have done is to introduce a few new security features into the notes it intends to redesign and move on to strengthening the naira against the dollar.”
But Anthony Ehis, a banker and economist, stated that what the CBN is doing is commendable and noted that Nigerians are stashing huge cash at home, which is both a security risk and against the cashless policy of the CBN.
“You see individuals coming into the bank demanding millions of cash withdrawals. At one time, my branch ran out of cash when a politician demanded an N1.5 billion cash withdrawal,” Ehis said.