A lagosian empties her ‘piggy bank” as a result of the announcement by the CBN
…. Moves target vote buyers, counterfeiting, ransom takers, hoarders
Reactions have continued to trail the plans of the FG of Nigeria to redesign the naira notes by December 15 2022. The Governor of Central Bank of Nigeria, Godwin Emefiele, In a press briefing in Abuja, gave reasons for the move, ranging from ‘Significant hoarding of banknotes by members of the public, with statistics showing that over 80 percent
of currency in circulation are outside the vaults of commercial banks; Worsening shortage of clean and fit banknotes with an attendant negative perception of the CBN and increased risk to financial
stability; Increasing ease and risk of counterfeiting evidenced by several security reports and ransom payments to kidnappers and terrorists among others.
Analysts have faulted the move citing its untimeliness. ‘ in Nigeria,
a currency change exercise has to be undertaken with the utmost secrecy, otherwise, it loses its fangs because the targeted people will rush and deposit the monies in banks, Mahmud Jega writes in an
article titled currency change, at this time?
Taking a cue from the past, Jega said “Buhari/Idiagbon’s 1984 exercise was so secretive that the 20 other members of the Supreme Military Council [SMC] were caught unawares. One SMC member’s wife was
caught with a lot of money on her farm. The new currencies were printed abroad, flown into the country by Airforce planes before
Idiagbon made his shock announcement. Emefiele borrowed a leaf, with slight modification.
He added that “Bank of England recently announced the introduction of
new notes and coins with pictures of King Charles but said it will be a very gradual process. Monies with pictures of Queen Elizabeth will exist side by side with the new ones and only mutilated notes will be
replaced over an indefinite period. Not so here, where Emefiele has set a severe six weeks’ period from mid-December to phase out old notes, obviously because the Brits’ purpose is very different from our
own.
Right now however, the biggest question is, why did CBN spring this trauma upon us in the middle of a general election campaign? Emefiele said the Federal Executive Council [FEC] approved it. Including the timing? Why not wait until after the election at least? The campaigns will be turned upside down in the next few weeks, right until election
eve, as people abandon everything else and scramble to change their money.”
Meanwhile, the Economic and Financial Crimes Commission, EFCC, has
applauded the move by the Central Bank of Nigeria, CBN, to redesign and reissue higher denominations of the Nigerian Currency, the Naira.
Responding to the development, the Executive Chairman of the EFCC,
Abdulrasheed Bawa described the move by the apex bank as “a well-considered and timely response” to the challenges of currency management which has negatively impacted the country’s monetary policy
and security imperatives. Bawa said the EFCC, the C,BN and some other regulators in the financial sector have worked closely in the recent past to determine how best to stabilize the country’s monetary policy
environment. It is heart-warming that the CBN has demonstrated courage in taking this bold decision which he believes will bring sanity to the currentcy management situation in Nigeria.
He called on operators in the Nigerian financial services sector, especially deposit money banks and bureau de change operators to work within the guidelines provided by the Central Bank of Nigeria to
ensure seamless withdrawal of the old currency. Bawa however warned that EFCC will monitor the process to ensure that unscrupulous players and currency speculators and their cohorts among the BDCs do not undermine the exercise. He also charged banks to be alive to their
reporting obligations and not assist unscrupulous customers in laundering suspected proceeds of crimes through their system.
The EFCC boss further pointed out that the objectives which the CBN seeks to achieve with the redesign and reissue of the higher
denomination Naira notes, were in tandem with the objectives of the Money Laundering Prevention Prohibition Act 2022, which criminalizes the conduct of cash transactions above a certain threshold.
According to Section 2 (1) of the Money Laundering Act 2022 “No person
or body corporate shall, except in a transaction through a financial
institution, make or accept cash payment of a sum exceeding— (a) N5,000,000 or its equivalent, in the case of an individual ; or (b)
N10,000,000 or its equivalent, in the case of a corporate body…, It is therefore pertinent to issue this stern warning to Bureau de Change
operators to be wary of currency hoarders who would attempt to seize this opportunity to offload the currencies they had illegally stashed away.”
Several changes in naira notes have occurred in Nigeria in the last 3 decades. In 1973, the Federal Government decided to change from metric to decimal. This resulted in the change of the major unit of currency
from pounds to naira and kobo.
On February 11, 1977, the then central bank introduced the N20 note, which was then the highest denomination. It had the portrait of the late Head of State, General Murtala Ramat Muhammed, who was then seen
as a national hero due to several reforms he was driving and his unfortunate assassination.
On July 2, 1979, the government introduced N1, N5 and N10, with engravings at the back of the notes reflecting various cultural
aspects of the country, according to the CBN. The country changed the colours of all banknotes in April 1984 except N50 kobo. The reason given at that time is similar today: To curb currency trafficking
common at the time. This was followed by the coining of N50k and N1.
The new government of Olusegun Obasanjo later decided to introduce
N100, N200, N500 and N1000 banknotes in December 1999, November 2000,
April 2001 and October 2005 respectively. In February, 2007, N20 was printed for the first time in polymer substrate, while the N50, N10
and N5 remained in banknotes. Also, N1 and 50 kobo coins were reissued in new designs, and N2 coin was introduced.
The coins did not gain wider currency at that time due to inflation and people’s penchant for banknotes. Many complained that the coins were too heavy.
On September 30, 2009, the then CBN converted N50, N10 and N5 into
polymer substrate. In September 2010, the CBN issued the N50 polymer
banknote and In December 19, 2004, it issued N100 commemorative banknote.
The new announcement by the federal government will allow the new and
existing currencies to remain legal tenders and circulate together until January 31, 2023 when the existing currencies shall seize to be
legal tender.
