New Naira Notes: Do We Really Need Extension of Deadline?

The crisis trailing the introduction (and withdrawal of some denominations) of the naira notes continues to reverberate throughout the country. Perhaps more than the insecurity crisis, the currency situation threatens every fabric of the society. At the moment, there is pressure on the Central Bank of Nigeria (CBN), to extend the deadline for the denominations being phased out to cease to be legal tender.

What is worrisome is the fact that while the CBN insists that it has enough notes to go round, that is, after it had extended the deadline from 31 January to 10 February, fresh pressures are mounting on the apex bank for a further extension of the deadline. So severe is the situation that President Buhari has asked Nigerians to give him up to seven days to come up with a decision, after governors of states controlled by the ruling All-Progressive Congress (APC) had met with him at the Aso Presidential Villa.

While policy reviews, modifications and even outright withdrawal or cancellation are not unusual, a currency change is a fundamental decision that could not have been taken without painstaking consideration of its implications. Some questions are therefore inevitable in considering the route out of this impasse. First, was it envisaged that implementation was going to be flawless, perfect and without some initial dislocations? If the problems had been anticipated, what measures were put in place to address them? If the problems have been identified, particularly human obstacles such as hoarding and under hand dealings as have been alleged, what stops the Government from taking decisive measures such as penalizing one financial institution or two to discourage errant organisations and their personnel from sabotaging the policy?

It is on record that most of these pressures for extension of the deadline are coming from politicians who have accused the CBN Governor, Mr. Godwin Emefiele of trying to scuttle the 2023 general elections coming up in less than three weeks. The politicians are making it seem as if they have the interest of the masses at heart. Rather, the push for an extension is purely driven by selfish motives.

If our experience is anything to go by, what is playing out is that most politicians who, by their actions and inactions, have weaponized poverty, know that with wads of cash, they can swing the elections in their favour. This is because poor, hungry and desperate Nigerians will sell their votes in order to survive at least for one more day.

Thus, though couched in altruistic garbs, the visit to the President by some governors is self-serving and does not in any way reflect their genuine love and empathy to the people. The politicians are only buying time to enable them to move as much cash stashed away in places other than financial institutions to the banks and to get them changed to the new ones, thus equipping them with enough financial muscle to influence the process thereby determining the outcome of the coming elections.

The question that should be asked is why are the politicians so vexed with the change of the new notes that would soon render old notes as worthless as tissue paper? Why were they not moved when the universities were under lock and key for eight months? Where were the governors when the fuel crisis has continued to stare Nigerians in the face? 

The CBN should do everything to convince the president not to succumb to further pressure by extending the deadline. Rather, the apex bank should go after bank officials who hoard the new notes and push them to politicians to the detriment of the masses. Emefiele should wield the big stick and should not hesitate to use it maximally on defaulting banks. If the apex bank should revoke the operating license of any bank found to be hoarding these new notes or funnelling it to the politicians, things will not improve. 

The banks should also sit up and deal with their staff who capitalize on the scarcity of the new notes to engage in under the table dealings by charging premiums especially to Point of Sale Operators (PoS), who in turn, charge cut-throat rates before paying out to their clients. 

Nigerians should bear the harsh economic situation for the next few days. Nigerians have survived worse situations in the past. Let them not allow the politicians to use their heads to break coconut. 

Background

It will be recalled that last October, the Central Bank of Nigeria (CBN), announced plans to redesign higher denominations of the Nigerian currency namely, N200, N500 and the N1,000 notes. Mr Godwin Emefiele, governor of the CBN while announcing the planned monetary initiative stated that the move was informed by among other things, the need to bring in more money into the banking system as more than N2 trillion naira was circulating outside the banking system.

Part of the move, according to Emefiele was to counter the nefarious activities of criminals who have continued to produce the counterfeits of the higher denominations of the local currency. The move was also aimed to deepen the cashless economy being promoted by the apex bank, thereby bringing more people into the financial inclusion drive.

CBN promised to introduce the newly redesigned currency notes into circulation effective December 15, 2022. The old notes were to circulate alongside the new notes until January 31, 2023, when the old notes were to cease as legal tender. Nigerians were therefore asked to move their old notes to the banks and exchange them with the new notes.

However, the new notes have remained unavailable to the vast majority of Nigerians nearly eight weeks after it was introduced. The crisis of the scarcity of the new notes came to the head a few days to the expiration of the deadline as Nigerians besieged the banks to deposit their old notes and withdraw new ones.

The situation became very chaotic. The pictures and videos of some desperate Nigerians who were engaged in fisticuffs in the banking halls went viral while some went the unthinkable extra mile by going nude in protest of their banks not being able to make available the new currency to them.  

Pressures were mounted on the CBN to extend the deadline even as the Federal House of Representatives threatened to get Emefiele arrested for refusing to honour the invitation to appear before the ad-hoc committee set up by the lower chambers to investigate the introduction of the new notes.  

The pressure perhaps led the Apex bank governor to seek an audience with President Muhammadu Buhari. After the visit, Emefiele announced a 10-day extension, thus making the old notes to continue to be a legal tender up to February 10, 2023. However, the extension has not abated the scarcity of the new notes as people still ask, where are the new notes?