Naira Redesign: CBN Didn’t Consult Finance Ministry, Says Minister

*Warns new notes will have dire consequences on Naira’s value 

*CBN: We followed due process and the law

Sunday Aborisade, James Emejo, Nume Ekeghe and Oluchi Chibuzor

The Minister of Finance, Budget and National Planning, Zainab Ahmed yesterday declared that the Central Bank of Nigeria (CBN) did not carry her Ministry along in its plan to redesign and roll out new N200, N500 and N1000 notes effective December 15, announced last Wednesday.
In a swift reaction last night, the CBN said it was surprised by the ministers outburst and that due process was followed in arriving at the Naira redesign project, including obtaining the approval of President Muhammadu Buhari.
On the same day, officials of the CBN doused concerns about the cost of printing the new notes, saying they will come at no outrageous cost, printed in the country and within the budget of the apex bank.

The Minster, who was responding to posers raised by Senator Opeyemi Bamidele (APC Ekiti Central) during the 2023 budget defence session at the Senate Committee on Finance, warned that the new notes could have dire consequences on the value of the Naira.
Bamidele had told the Finance Minister that barely two days after the announcement of the policy by the CBN, it had started having repercussions on the value of the Naira when compared to the US Dollar.
He said, “Just two days after the announcement of the policy, the value of the Naira to a US Dollar had risen from N740 to N788 to a US dollar due to massive rush to exchange Naira for Dollars.  
” To me, the policy may be a well -conceived one, but the timing going by realities on ground, is very wrong as the Naira may fall to as low as N1,000 to a US Dollar before January 31, 2023 fixed for full implementation of the policy.”
In her response, the Minister, who clarified that her position was personal opinion, said she and her Ministry were not aware of the policy but only heard of it from the media.

She said, “Distinguished Senators, we were not consulted at the Ministry of Finance by CBN on the planned Naira redesigning and cannot comment on it as regards merits or otherwise.
“However, a Nigerian privileged to be at the top of Nigeria’s fiscal management, the policy as rolled out at this time, portends serious consequences for the value of Naira to other foreign currencies.
“I will however appeal to this committee to invite the CBN governor for required explanations as regards merits of the planned policy and rightness or otherwise of its implementation now.”

However, a source told THISDAY last night that it was decided by the Presidency and the CBN to keep the Naira redesign away from ministers, until it comes into effect, so as not to defeat the purpose.
“The President is in support of how Emefiele is going about the Naira redesign. He is aware of the CBN governor not telling the ministers,” said the source.
The CBN Governor, Dr. Godwin Emefiele had on Wednesday said that the apex bank would redesign the country’s currency from N200 denomination to N1,000 notes
He said that the action was taken in order to take control of the currency in circulation just as he posited that the bulk of the nation’s currency notes were outside bank vaults and that the CBN would not allow the situation to continue.
The planned policy, he added, was in line with Sections 19, Subsections a and b of the CBN Act 2007, upon which the Management of the CBN sought and obtained the approval of President Muhammadu Buhari to redesign, produce, and circulate new series of banknotes at N200, N500, and N1,000 levels.

CBN Insists it Followed Due Process

In response to claims by the Minister of Finance that her ministry was not carried along by the CBN in the Naira redesigning, the bank last night insisted that it followed the law and due process to carry out the exercise, “which is 12 years due.”
In a statement, spokesman of the CBN, Osita Nwanisobi, expressed surprise at the minister’s claim, stressing that the CBN remains a very thorough institution that follows due process in its policy actions.
According to Nwanisobi, the management of the CBN had duly sought and obtained the approval of President Buhari in writing to redesign, produce, release and circulate new series of bank notes.

However, urging Nigerians to support the currency redesign project, he said it was in the overall interest of Nigerians, reiterating that some persons were hoarding significant sums of banknotes outside the vaults of commercial banks.
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 was 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 explained that the CBN had even tarried for too long considering that it had to wait 20 years to carry out a redesign, whereas the standard practice globally was for central banks to redesign, produce and circulate new local legal tender every five to eight years.
Assuring Nigerians that the currency redesign exercise was purely a central banking exercise and not targeted at any group, the CBN spokesman expressed optimism that the effort will, among other goals, deepen Nigeria’s push to entrench a cashless economy in the face of increased minting of the eNaira.
This, he said, is in addition to helping to curb the incidents of terrorism and kidnapping due to access of persons to the large volume of money outside the banking system used as a source of funds for ransom payments.

CBN: Printing to be done Locally, Cost within Budget

Officials of the CBN yesterday doused concerns about the cost of printing the new notes wo, saying they will come at no outrageous cost, printed in the country and within the budget of the apex bank.

They further stated that they believe 85 per cent of the currency in circulation is being held by the 10 per cent of the population who are unable to account for those funds, and that this would help reduce money in circulation.

The Director of Monetary Policy, CBN, Hassan Mahmud and the Director, Currency Operations, CBN, Ahmad Bello Umar, both reiterated these yesterday when they appeared on the ‘Morning Show’ on Arise News.

Mahmud said: “I think we should look at it from the perspective of what we intend to achieve before you start thinking of the cost. I don’t want to go to the extreme that CBN is supposed to be a profit-making organization, but it is supposed to achieve certain gains. You must tally those gains in terms of macroeconomic stability or price stability, which are its primary mandate.”

He said the new notes would be produced locally by the Nigerian Security Printing and Minting Company (NSPMC) in Abuja and Lagos.

On his part Umar said: “The point being emphasised here is that the cost is not largely going to be such volume that will negate or net out the benefits that we want to achieve. What is important is how the CBN is able to achieve its primarily mandate, which includes other mandates of ensuring an efficient and durable currency, couple with the facts that is a legal tender and also used for payment settlement within the economy.

“But again, the emphasis has been that this cost is not even something that is out of what CBN’s budget; it is not extra huge sums that will attract a big hole in the cost of minting the currency.”

On the fall of the Naira in the parallel market after the redesigning announcement, Umar: “Let me start with the movement in the BDC exchange rates segment of the market. Basically, you can say people are panicking trying to exchange the excess Naira they have for the dollar. But then, we have to remember that they BDC segment of the market is just less than five percent of the entire FX market.

“I imagine as we progress with the banks receiving old Naira, the BDCs themselves will be in quagmire; they will not be able to explain their sources of getting so much money.