Mixed Reactions from OPS Trail CBN’s Proposal to Redesign, Reprint Naira

Dike Onwuamaeze

Mixed reactions from the members of the organised private sector have trailed the announced decision of the Central Bank of Nigeria (CBN) to redesign, produce and circulate new local legal tender that would affect the current N200, N500 and N1,000 currency notes.

The CBN had said on Wednesday that the new currency would begin to circulate on December 15, 2022, while the old and new notes circulate together until January 31, 2023, when the old notes would cease to be legal tender in Nigeria.

Separate press statements that were issued yesterday had the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) hailing the CBN’s announcement as commendable and timely while the Lagos Chamber of Commerce and Industry (LCCI) has described the move to redesign and reprint the above currency notes as an exercise that would inflict huge cost to the economy without any benefit to the economy.

The National President of NACCIMA, Mr. John Chinyelu Udeagbala, in a press statement that was titled ‘Statement of NACCIMA to the CBN Announcement of Redesigning and Reprinting of Naira Notes’, said “We commend the CBN for this development aimed at controlling the quantum (sic) of Naira in circulation. There is no doubt this development will significantly help to mop up money outside the banking system and money returned them to the financial system, improve electoral transparency, reduce corruption arising from possible vote trading and enhance a growing adoption of cashless means of money transfers.”

He added that “this will certainly take some money to implement. But, we believe the necessary resources have been expended on good cause.”

He also harped on the need for Nigerians to start to de-emphasise elections generally.

According to him, “this culture of finishing an election and for everyone to start preparing for the next one in four years’ time rather than focusing on governance for development should be discouraged. 

We are spending too much energy and resources on elections as it is.

“The money being concentrated on electoral processes could be better expended on rebuilding infrastructure which, unfortunately, gets progressively weakened by the day.

“Also, a reasonable sense of insecurity still persists. Therefore, political leadership (at all governmental levels) should prioritise these matters as these are the issues that add basically to the cost of doing business and, ultimately, contribute to rising cost-push inflation.”

Speaking in the same vein, a former President of the Association of Corporate Treasurers of Nigeria (ACTN), Mr. Zeal Akaraiwe, described the decision to redesign the currency as announced by the CBN as the needed solution to bringing in large amount of cash into the banking system and enhance the effectiveness of the apex bank’s monetary policies.

Akaraiwe said: “The amount of cash in circulation outside the banking system is very alarming. And the CBN needs to take measures to police it. And redesigning the currency is one of the most efficient ways to achieve that. So, that is what they are doing. And I think in terms of pulling money into the banking system this is a good way to go about it.”

He clarified that “what many people are not aware of is that there is a Decimal Law Act that says that if you’re going to redesign the currency, you must give at least three months’ notice. And the central bank has complied with that law.”

But the LCCI, in a press statement it issued yesterday that was titled ‘LCCI Statement on CBN Policy on Naira Notes’, said that “proposing a sudden withdrawal of notes for replacement with redesigned notes is of no economic benefit to the country, but it will come at huge costs.”

The statement, which was signed by the Director General of the LCCI, Dr. Chinyere Almona, said in an unequivocal voice that “redesigning the N100 to N1000 notes, which should not be a priority now, is a waste of the nation’s time and resources … and a wild goose chase.”  

The LCCI also claimed that fixing the deadline two to three weeks ahead of Christmas/New Year festivities, two months ahead of the general election, is disruptive and insensitive.

It, therefore, proclaimed that “the organised private sector is already enduring a lot of disruptions and they deserve to be spared the needless disruption from the wild goose chase proposed by CBN so close to the yuletide and the polls.”

The LCCI also countered the CBN’s justification of the exercise on the ground that over 80 per cent of currency in circulation exists outside the commercial banks.

It said: “The only reason that currencies are printed is for them to be put in circulation, not to be kept in banks. That is why it is called currency in circulation, which is usually broken down into two components: currency outside banks and vault cash (the cash that banks keep aside to honor requests for cash by their customers).

“Only a negligible fraction of currency in circulation should ideally stay in banks’ vaults because it only stays in the vaults when in transit. The ultimate destination of every printed currency is outside the banks so that it may circulate from hand to hand for years.

“Also, the fact that ‘currency in circulation has more than doubled since 2015; rising from N1.46 trillion in December 2015 to N3.23 trillion in September 2022’ does not necessarily present a problem because the GDP also increased from N95 trillion to N210 trillion over the reference period. The value of currencies in circulation has been a stable fraction of GDP, roughly 1.34 per cent, over the period.”

The LCCI, therefore, advised the CBN that “the appropriate action to take is to coin N100 to N500 notes and replace them with about a billion pieces of larger denomination Naira notes to cut the monumental waste implicit in continuing to print pieces of low-value notes with a short lifespan.”