Mixed Reactions Greet Naira Redesign as Experts Review Implications on Polity

Mixed Reactions Greet Naira Redesign as Experts Review Implications on Polity

Divergent opinions have greeted the Central Bank of Nigeria’s decision to withdraw three denominations of the Naira, redesign them and print new notes. The announcement which caught many Nigerians unawares has elicited mixed reactions from analysts and experts. While some apprise the policy as good, others questioned its timing, but the greater number of people

Divergent opinions have greeted the Central Bank of Nigeria’s decision to withdraw three denominations of the Naira, redesign them and print new notes. The announcement which caught many Nigerians unawares has elicited mixed reactions from analysts and experts. While some apprise the policy as good, others questioned its timing, but the greater number of people are simply indifferent and may have adopted a “wait and see attitude”.

Godwin Emefiele, CBN Governor

Jolted by the CBN’s action, the minister for Finance Mrs Zainab Ahmed told the Senate on Thursday, that her ministry was not carried along before the CBN as the monetary authority made public its announcement and opined that the ministry is still studying the proposed changes. The suddenness of the policy has given rise to the postulations of conspiracy theories, with some persons believing that the change is a way to checkmate the use of money in the upcoming 2023 general elections. Others feel, it is meant to check insecurity in the country especially with acts of terrorism where huge sums are collected as ransom regularly.

Mrs Zainab Ahmed, Minister of Finance

But the CBN has expressed surprise at the minister’s claim, stressing that the CBN remains a very thorough institution and followed due process as far as redesigning three series of the Naira is concerned.

The spokesperson of the CBN Mr. Osita Nwanisobi, said the management of the CBN, in line with provisions of section 2(b), section 18(a), and section 19(a)(b) of the CBN Act 2007, had duly sought and obtained the approval of President Muhammadu Buhari in writing to redesign, produce, release, and circulate new series of N200, N500, and N1,000 banknotes.

The new series of the Naira will start circulating as a legal tender from December 15th this year, while the existing currency will stop being accepted starting from January 31st, 2021. The CBN Governor gave some reasons for the apex bank’s decision including hoarding of banknotes by the public and shortage of clean and fit currency notes for transactions, among other facts birthed the new initiatives and urged Nigerians to support the currency redesign project in the overall interest of the country, reiterating that some persons were hoarding significant sums of banknotes outside the vaults of commercial banks.

It is believed that not less than 80 percent of money supply in the country is locked out of the banking system a factor that makes CBN monetary policies ineffective and unable to fulfil the objectives for which they are pronounced. The redesign will also help to ensure the integrity of the currency and take out dirty notes. One thing is, however, certain for now: there are neither drums nor trumpets to celebrate the CBN decision.

The Nigeria Democratic Report, NDR spoke to a cross-section of Nigerians on the proposed currency redesign; a few of the respondents believe the decision will go a long way in curbing money politics in the 2023 elections, though it may not eliminate it. Others believe that the politician would seek other ways of circumventing the policy; though it has the potential to checkmate excessive use of cash during electioneering and vote trading on election day especially in the rural areas where several people don’t have bank accounts. On a medium-term basis, it may also help INEC to track campaign finances, more of which may now pass through the banking system.

Prof. Sadeeq Abbah, Head of Department (HOD), Political Science and International Relations, University of Abuja said:” the CBN decision to redesign some of the Nigerian currency has both positive and negative impacts on both the economy as well as the polity. Though the cogent reasons for the redesigning of the naira are scanty and a bit cloudy, signs are that it may not be far away from the excess liquidity in the public domain that is impacting negatively on the inflationary trends in the last two years.

“The first economic implication is the cost of the redesigning of the currency. With a very lean purse, the redesigning of the currency shouldn’t have been the priority of the government today. Two, for those whose businesses depend wholly on proximity and accessibility to liquid cash, the informal sector, such a short notice may spell doom for these businesses.

“Politically, how inclusive is the decision to redesign the currency? Were the necessary organs, like state governors carried along? What about the National Assembly? What stakeholders were involved in the decision? The success or failure of the decision would depend wholly on these stakeholders’ buy-in.

“Finally, with due diligence and commitment, the decision will no doubt go a long way in curbing money politics in the 2023 elections. It may not stop it, but it can check mate its excesses. Also, the redesign may likely influence campaign debate issues by politicians especially those in the opposition parties, who may wish to interrogate why the government of the day is embarking on this policy at the twilight of its regime, “he stressed.

The National Coordinator Citizenship Civic Awareness Centre (aka Democracy Vanguard) Comrade Adeola Soetan asked: “why would a government want to “redesign” the Naira during Christmas and New Year festive period when there is always much pressure and demands on the banks, often resulting in a rush for individual cash transactions?

Comrade Adeola Soetan

According to him, “Nigeria’s past experiences with this kind of “monetary graphic design” of currency & currency juggling” which happened last under Buhari as a military Head of State, should have informed government that the moment the newly designed currency is introduced, many traders and transporters will start rejecting the old currency, to avoid the problem of going to the bank to exchange the old notes for new ones.

“When we add the massive movement of millions of customers going to our already overwhelmed banks to change their money to the usual festival pressure, the outcome is better imagined than experienced. Banks may find it extremely difficult to cope. Secondly, one of the reasons put forward by the CBN for the Naira redesign is that many people are hoarding the currency by stockpiling huge sums of Naira in their homes. The question is: would the new Naira prohibit hoarders from keeping the money at home?

“On its face value, it looks good but the big-time currency hoarders would prefer to stock such huge sum in stable dollar value since Naira’s unending devaluation has caused its free fall. It is economically unreasonable to stockpile a currency whose value continues to slip on daily basis. This is not to say there are no “Naira hoarding merchants” or that none would be caught in the exchange web. But the big-time politicians who are preparing for 2023 election with huge war chest for vote buying and other expenses won’t likely keep their election fund in Naira but in a stable and more valuable dollar” Soetan added.

For instance, controversial Islamic scholar, Sheikh Ahmad Gumi, has opined that the move by the Central Bank of Nigeria (CBN) to redesign the Naira notes, might push bandits and hoodlums to start demanding for dollars from their victims. He stated this in a statement released on his Facebook page on Saturday adding that the Naira redesigning will further worsen the suffering of the common man.

Sheik Ahmed Gumi

His concerns were deeper than that as he also opined that Nigerians living in rural areas would bear the brunt of the move more while stating that the timing of the redesign was not right. In a statement: ‘Changing the Naira: This is no time for economic kamikaze!’ Sheik Gumi said “No matter how ingenious the hatchers may romanticize; the benefit will remain phantom since the reality on the ground is incongruous and it spells doom for the escapade.

“Eighty per cent of Nigerians especially rural people depend on cash transactions. A sudden change to a cashless or cash-starved society will mean pauperising them in a spate of a short time that could trigger – God Knows- an unprecedented socio-economic turmoil in this semi-skilled or unskilled population. This kind of program is not for a government that is in the throes of its demise. If there is any advantage of such adventures, it usually comes after many years of excruciating poverty and hardship which no well-meaning government should hand over such cruelty to another incoming government to manage. Had it been started in 2015, it could be logical since the same government will bear the consequence of its action.”

Samuel Atiku, a public policy advocate and financial expert, while juxtaposing the relationship between redesigning of Naira notes and its impacts on the political dimension in Nigeria, explained that it is a positive thinking by the Central bank, not for economic purpose alone, but as an end to lawlessness during elections. “You never can predict what the thinking and deep intention of the government could be in terms of the build-up for the elections”, he said.

He further posited that this is the time the government should be proactive in ending vote buying and money laundering in the electoral system. He explained “we all know that elections in Nigeria are primarily driven by utility management, essentially by bribing the electorates to swing victory to their favour, that has been the trajectory of election in this country and that is why we hear this around vote buying and all those kinds of things.

Mr Obinna Okeke, Esq., an Abuja based legal practitioner said;” Part 1, Section 1, CBN Decree no. 24, 1991 and CBN Act of 1958 and subsequent amendments, amongst other things expects the apex bank to supply, regulate the value and cost of achieving macroeconomic objectives of the government. “This entails, issuing legal tender currency and promoting monetary stability and sound financial system. The question is whether redesigning of Naira can help to achieve any or all the above-mentioned objectives. I do not see the naira value achieving an upsurge by the naira redesign. Naira was redesign in the past without gaining desired global value vis-a-vis other competing currencies.

Obinna Okeke Esq

“The only advantage I see in the naira redesign, is that some corrupt Politicians who kept huge amounts of naira in their private homes will be forced to bring them to the bank and deposit into their accounts. This will make it possible for government to get those corrupt officials and effectively prosecute them. Also, it might lead to cost-push inflation because of the cost of printing new currency. It will reduce capital flight but most importantly it will help to boost the multiplier effect of the naira that was originally put out of circulation by hording, will begin to circulate and help in reinvigorating the economy”.

Otunba Joseph Ajulo, Managing Partner of Joseph Ajulo & Co, Chartered Accountants, Abuja said to many Accountants and Economists, the action was long overdue considering the many micro-dynamic events that engulfed the country in recent years. “The Naira in circulation in the bush in the hands of terrorists, the Naira in the vaults of politicians for use to engage political tugs and buy Votes, the Naira in the vaults of corrupt government officials etc. The re-design and change of the Nigeria currency as I said earlier, might after all be a welcome development as the political dimensions and implications will have a far-reaching positive effect especially as the 2023 elections knocks.

The recent “novel” idea of Vote buying will be nipped in the bud as all naira notes when returned to the Banks, the regulatory authorities should exercise tighter control on them coming out in physical cash by invoking in strong terms the provisions of the Law relating to cash banking. Any withdrawal of cash in the banking system beyond a certain threshold should not only be reported but prosecuted. This will make cash inside the vaults of Banks not to find its way to the hands of politicians for vote buying and empowering political tugs.

“Another political implication of the re-design and change of the Nigeria Naira is the obvious ability of the various agencies of Government on Economic crimes and frauds to monitor the spending of political parties to ensure conformity with the electoral Act regarding maximum spending on elections.

Nigeria is a country that prides itself on political spendings in cash and with all cash in circulation now returned to Banks and tighter control in place on cash withdrawal, electoral spendings will be monitored and controlled but with a “caveat” that those running commercial banks in Nigeria will not compromise and if such is detected, stiffer penalties should be melted out.

“Election rigging and manipulations by politicians and election umpires are made possible with exchange of cash. With cash not readily available from the vaults of Banks, riggers and election manipulators may not be prepared to do the bidding of politicians on election day and obviously such cannot be done on “credit”.

“The currency re-design and change will in the short term sanitise the election process in Nigeria as the use of money during elections in Nigeria are hydra-headed problems that have defied solutions of authorities over the years. Lastly, the rot in the system with much Naira in the hands of corrupt politicians using such to mop up foreign currencies resulting to non availability of foreign currencies to do legitimate businesses may be a thing of the past”, he stressed.


It is also surprising that, despite the legal stance against vote buying as it is loudly pronounced in the Electoral Acts 124(a) and (b) that anyone caught and guilty of vote buying either by giving or by collecting shall either pay a fine of N500,000 or serve the term of 12 years imprisonment, the malfeasance persists at the voting stations across the country.

Samuel Atiku also indicated that changing of Naira note in less than four months to the general elections can crumble the structures of some political parties in the country, especially if they don’t operate within the ambience of the law. Analyzing further, he said since money is the foundation of campaigns, if any party should overspend beyond the stipulated amount by the elections umpire, INEC, it may attract legal implications. So, it is no more a scratch on the back for corrupt politicians who used to spend stupendously during electioneering periods

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