The Governor of the Central Bank of Nigeria (CBN), Dr Godwin Emefiele on the 26th of October announced the plan for the change of the highest denominations of the Naira – 200, 500 and 1000 – notes would be getting a facelift. This came as a shock to many Nigerians with many saying that redesigning the Naira note is not the solution to the current socio-economic situation in Nigeria. Note that for a while now, Nigeria has been in the throes of inflation. Inflation is currently at 21.09%. The new notes were unveiled on the 23rd of November and by 15th of December they will be made public. Come January 31st, 2023, the old Naira notes will no longer be tenable anywhere putting the current notes at rest forever.
Why the change?
President Muhammadu Buhari was of the opinion that changing the currency of a country from time to time is best practice. Seeing that this change is coming during his tenure as president, it will be regarded as one of the legacies of his government.
Buhari presidency is predicated on an anti-corruption mandate so it should come as no surprise that part of the change is in view of curbing corrupt practices especially among politicians in Nigeria. We cannot exactly say how much it costs to redesign the new notes because it has not been made public but an estimated 133.59 billion Naira was spent between 2019 and 2020 to print money.
Another reason given for the change was in lieu of the deplorable state of the Naira currently in circulation. The governor of CBN commented that the state of the current notes in circulation was embarrassing for the apex bank. The facelift given to these new notes will help the government recall Naira notes that are not in good condition.
The most significant of the reason given for the change of the Naira is that an estimated 80% of the Naira in circulation is been hoarded as of September, 2022. In other words, 2.73 trillion Naira of the 3.2 trillion Naira is being held in storage of individuals. This makes for a difficult economic situation because money is not circulating as it should.
Is it worth it?
Upon the announcement of the Naira notes change so many videos and pictures started making round on social media of monies that has been kept for too long with mold already covering some money, this lends credibility to CBN reports that money has been in personal storage, making worse an already difficult global economic situation on Nigeria. The government can only be responsible for printing money and putting it in circulation, they cannot control what people do with the money and how the money is spent.
Therefore, printing new Naira notes will help the government take control of the money in circulation. Individuals will be forced to put the money they have in storage in the bank and be accountable for every kobo. Failure to have their money in the bank by 31st of January means a loss of the money.
In addition to the changes made to the Naira note, the CBN also released a new withdrawal policy. This policy states that cash withdrawals above N100,000 and N500,000 for individuals and corporate organisations will henceforth attract five per cent and 10 per cent, processing fee respectively. Following this, the House of Representatives at Thursday plenary asked the apex bank to suspend implementation of the cash withdrawal policy pending the appearance of Dr Emefiele before the house in defense of the new policy.
