Nigeria’s apex Bank, the Central Bank of Nigeria (CBN), got Nigerians reacting to the samples of the new designs of higher denomination currency notes just a few days ago. The decision to redesign these currencies was earlier announced amid mixed feelings from Nigerians who wanted more from a Central Bank that has supervised the eroding of the value of their beloved Naira.
The big question that has been left unanswered, however, is how the new currencies will manage to reverse Nigeria’s fast-paced journey to economic abyss.
The announcement by the Governor of the CBN, Godwin Emefiele attracted controversies from experts, as expected. The initial public disavowal towards the policy by Zainab Ahmed who is the country’s Minister of Finance, Budget, and National Planning clearly showed that some problems were afoot behind the scene.
However, the first big red flag waving for attention was why the move was coming on the eve of an election.
The policy could have been implemented earlier in the year or shortly after next year’s general elections and made the same impact.
The insistence by Emefelie to push the idea at this time despite the horrendous timing clearly showed that the decision was borne out of political expediency and not in a bid to provide economic succour to the battered Nigerians.
Emefiele had, earlier in the year removed every veil of pretense on his face when he shocked Nigerians by participating in active partisan politics in the most brazen manner. If Nigeria were a serious country or maybe had a patriotic President, Emefiele should have been relieved of his duties after that disgraceful exercise. Allowing such a man to preside over a major policy decision as delicate as currency redesign surely leaves a sour taste.
Any honest observer will clearly agree with Africa Digital News, New York that ever since the maladministration of President Muhammadu Buhari came on board, the life of the Naira has not been the same. The value of the currency has remained in a dangerous free-fall eroding the purchasing power of Nigerians and ultimately leaving the economy in bad shape.
The CBN had leveraged the fact that quite a lot of funds that are supposed to be under its supervision were not in circulation or in bank vaults hence the decision to introduce new notes to make the old currencies useless to the hoarders.
Going by their explanation, this was supposed to increase the purchasing power of the Naira when the phasing out of the old currencies was done. What this clearly showed was that Emefiele was even more clueless than many people thought.
For starters, from available data, it is still uncertain why there is the unique worry at this time about the monies outside the banking system. If data published by the apex bank yearly is anything to go by, the volume of money that is not in CBN vaults has consistently remained at least 80-90% over the past two decades. So what was Emefiele talking about? How does the fact that Nigerians keep money in their houses crash the economy? He has failed to explain this link to Nigerians despite the many opportunities he has got to do so.
Again, one of the biggest questions Emefiele needs to answer is where in the world such a policy has worked seamlessly and what the similarities with the Nigerian economy are.
Admittedly, the policy is not novel. Sometime in 2016, the government of India had taken a similar monetary policy turn. Prime Minister, Modi had, back then, announced in a live TV program that the country’s 2 highest-denomination currency notes which were Rs 1,000 and Rs 500 were going to be withdrawn with immediate effect from the market.
The plan which the press had at that time tagged ‘Demonetisation’ had, rather than act as a masterstroke against digital currency and black money, ended up wiping out all the hopes the country had at ending the ensuing monetary crisis.
As predicted back then by many experts, the fallout was calamitous as chaos and an economic crisis hit India immediately. What happened in India was a mad rush to exchange old notes for lower denomination new notes out of panic. This move ensured that over the next few days, many people, especially the poor who had no access to mobile wallets and credit cards, suffered terribly. Bank queues grew astronomically and countless numbers of people died from the resulting crisis.
Many years later, the reality has dawned on India that the move did not record the resounding success it hoped for, and more importantly, the black money problem which it was intended to fight is still an issue till date in the country.
Narrating this is important because, apart from the fact that the Nigerian economy and that of India share a number of similarities, it is always good to find out success stories about certain actions in other climes before trying it out in new terrain. What happened in India in the aftermath was that the country’s central bank, the Reserve Bank of India (RBI) in August 2018 confirmed that about 99.3% of those notes which the apex bank planned to ‘demonetise’ still managed to find their ways back to the bank vaults. Contrary to earlier plans, there was absolutely nothing positive to hold on to.
It is sad that Nigeria is presently on a similar route. The wealthy elite class has already ambushed the Forex market with their old Naira notes chasing scarce Dollars thereby sending the exchange rate to the rooftops. As usual, poor, hungry, and frustrated Nigerians are still on the worst hit because their purchasing power has been further decimated.
With the policy yet to fully come into effect, Nigeria has been terribly hit on many fronts. The currency has lost so much value on the parallel market, the moves by the CBN to provide a buffer have sunk the foreign reserves to $37.37 billion, pushed the inflation off the hooks, and completely destroyed earnings. It will take a lot to convince sane Nigerians that Emefiele is not on a mission to destroy Nigerians and make them perpetual paupers.
The sad part of this conversation is that Nigerians are yet to see the end of the shenanigans. When the new notes go into circulation from 15th of December, Nigerians will once again be on the march to ensure that they deposit their old currencies into banks before the deadline. As it happened with the cases of NIN registrations, BVN registrations, and other actions carried out in Nigeria, many Nigerians will fail to meet the deadline and lose their currencies.
Contrary to the CBN’s plans that the currency redesign policy will affect only the rich and corrupt who stash funds away in bundles in their homes, today’s realities suggest otherwise.
It is without a doubt that the people targeted here, most often than not, save their monies in gold, real estate, and foreign accounts. To cap it all up, given the corruption in the system, whatever they were holding in cash will still find its way into the banks without harming themselves.
The Emefiele-led CBN has clearly shown that it is bereft of ideas and has no business marshaling the apex bank of a country in a big mess. The newly designed currency notes paint a perfect picture.
Despite the billions spent printing the notes, the new currency is evidently lacking in creative juice and as many have suggested, was merely recoloured. This sums up how Emefelie has been managing the monetary policies of the CBN. Rather than find creative ways of pulling over 133 million Nigerians who are currently living in abject poverty from the doldrums, the banker-turned-politician is more interested in sinking the country further, and sadly, everyone is watching him, arms akimbo. Nigeria needs a deep reset and only Nigerians can do it.