CBN Governor, Mr Godwin Emefiele
*REPLIES FINANCE MINISTER: Buhari gave approval
*Moghalu details benefits of apex bank’s project
By Emma Uja & Dickson Omobola
Contrary to the claim by Minister of Finance, Budget and National Planning, Zainab Ahmad, that her ministry was not informed of the planned redesign of naira notes by the Central Bank of Nigeria, CBN, the apex bank has said the proposed policy was approved by President Muhammadu Buhari.
The bank said due process was followed in the planning of the policy, saying the project would help in curbing terrorism and kidnapping among other benefits.
But the minister, while defending her ministry’s 2023 budget before the Senate Committee on Finance in Abuja, last Friday, said the CBN failed to consult her ministry on the proposed redesign of the denominations.
She said: “We were not consulted. It was an announcement that we heard and there are also consequences. We are also looking at what the consequences will be. There will be some benefits but there are some challenges. I don’t know if the monetary authorities have looked very closely at what the consequences are and how they can be mitigated. I still advise that you have that discussion with the monetary authority.”
Concerned by the impression the statement may have created, the CBN explained that provisions of section 2(b), section 18(a), and section 19(a)(b) of the CBN Act 2007, were followed.
Its spokesman, Mr. Osita Nwanisobi, who said this in Abuja, noted that CBN 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.”
While expressing surprise at the minister’s claim, he said the CBN remains a very thorough institution that follows due process in its policy actions.
Nwanisobi, however, urged Nigerians to support the currency redesign project, saying it is in the interest of Nigerians.
He reiterated that some persons are hoarding significant sums of banknotes outside the vaults of commercial banks, adding that this trend should be discouraged.
Furthermore, he noted that currency management in the country had faced several escalating challenges which threatened the integrity of the currency, the CBN, and the country, adding that every top-rate Central Bank is committed to safeguarding the integrity of the local legal tender, the efficiency of its supply, as well as its efficacy in the conduct of monetary policy.
On the timing of the redesign project, Nwanisobi said CBN had even tarried for too long considering that it waited 20 years to carry out a redesign, whereas the standard practice globally is for central banks to redesign, produce and circulate new local legal tender every five to eight years.
While assuring Nigerians that the exercise is purely a central banking duty and not targeted at any group, the CBN spokesman expressed optimism that the effort would, among other goals, deepen Nigeria’s push to entrench a cashless economy in the face of increased minting of the eNaira.
It’s a necessary step —Moghalu
Meanwhile, a former Deputy Governor of CBN, Mr. Kingsley Moghalu, has defended the decision of the apex bank, describing it as necessary.
Moghalu, in a tweet, yesterday, urged those with old currency notes to take them to the bank before they become “illegal tender”.
He said: “I fully support the CBN redesign of the Naira. If 80 percent of banknotes in circulation are outside the banks, that’s troubling.
“The CBN obviously wants to force all those notes back into the banking system. Those with the notes must surrender to get new ones or else it becomes illegal tender after January 31, 2023.
“This is also a way to withdraw currency from circulation, an unorthodox way of tightening the money supply since the country is battling high inflation.
“The flip side is that people who are holding huge amounts of cash outside the banking system for nefarious reasons will go to the parallel forex market to buy hard currency, putting further downward pressure on the value of the naira as too much naira will be chasing too few dollars.
“I doubt it will solve inflation because there also are other major reasons for inflation such as the forex crisis, which this new move could exacerbate, as well the impact of the security crisis on food price inflation.
“But overall it is a necessary step. I just think the time window for its implementation is rather short. This will put a lot of operational pressure on commercial banks and the financial system in general.
“A 90-day window would have been better, but one can understand the need to avoid interfering with the elections.”
CBN Governor, Godwin Emefiele, had announced the plan to redesign 100, 200, 500 and 1,000 notes, saying it would go into circulation in December.
The plan is to redesign N100, N200, N500, and N1000 and start disbursing by December.
Emefiele said the old notes are expected to be out of circulation by January 31, 2023.