President: CBN Has My Backing to Redesign Naira Notes

“People with illicit money buried under the soil will have a challenge with this, but workers, businesses with legitimate incomes will face no difficulties at all”

*Permanent Secretary, Ministry of Finance is on the board of CBN to ensure effective coordination

Deji Elumoye in Abuja

President Muhammadu Buhari, yesterday, doused tensions surrounding the plan by the Central Bank of Nigeria (CBN) to redesign and replace N1, 000, N500, and N200 notes by December 15, saying the country would gain a lot from the exercise.

Buhari, according to a statement issued yesterday by his spokesman, Mallam Garba Shehu, said the CBN’s decision had his support.
Speaking in an Hausa language radio interview with journalists Halilu Ahmed Getso and Kamaluddeen Sani Shawai, to be aired Wednesday morning on Tambari TV on Nilesat, Buhari said reasons given by the CBN for the change of banknotes convinced him that the economy stood to benefit in terms of reduction in inflation, currency counterfeiting, and excess cash in circulation.

The president said he did not consider the three months period announced for the change to the new notes as short.
“People with illicit money buried under the soil will have a challenge with this, but workers, businesses with legitimate incomes will face no difficulties at all,” the statement quoted Buhari as saying.

In the interview, the president also addressed critical issues, like food security and national security.
In what has been described as a move to tackle vote-buying and control the amount of money in circulation, the CBN announced the plan to redesign the N200, N500, and N1, 000 bills last week.

A senior presidency official who does not want to be named, expressed dismay at the minister’s statement in the House of Representatives last week, disowning the redesigning of the naira notes earlier announced by the CBN governor, stating that to ensure effective coordination between the ministry of finance and the CBN, the permanent secretary, ministry of finance is a member of the board of CBN.

“It was highly embarrassing for the minister to claim not to be aware of the policy and that she was not consulted before the rollout.
Wondering, “if her permanent secretary is a member of the board of CBN, how can she then claim not to be aware of the initiative?”
CBN Governor, Mr. Godwin Emefiele, who disclosed the apex bank’s decision to redesign the banknotes at a media briefing in Abuja, said the change was sequel to an approval by Buhari.

Emefiele said circulation of the new banknotes would commence on December 15. He said the development was also aimed at checking the increasing ease and risk of currency counterfeiting evidenced by several security reports, and the increased risk to financial stability as well as the worsening shortage of clean and fit currency, with the attendant image problem for the central bank.

Emefiele said there was significant hoarding of naira notes by members of the public, with statistics showing that over 80 per cent of the currency in circulation were outside the vaults of the commercial banks. He said as of September 2022, a total of N3.2 trillion was in circulation, of which N2.73 trillion was outside the vaults of the banks, describing the development as unacceptable.

Emefiele explained that the new and existing notes would remain legal tender and circulate together until January 31, 2023, when the existing currencies shall seize to be legal tender.
As a result, he said all banks currently holding the existing denominations of the currency might begin returning the notes to the CBN immediately, adding that the newly designed currency would be released to the banks on a first come, first served basis.

Emefiele also urged bank customers to begin paying into their bank accounts the existing currency notes to enable them to withdraw the new banknotes once circulation begins in December.
He said all banks were expected to keep open their currency processing centres from Monday to Saturday so as to accommodate all cash that would be returned by their customers.

The CBN governor also said for the purpose of the transition from existing to new notes, bank charges for cash deposits had been suspended with immediate effect. He added that no bank customer should bear any charges for cash returned/paid into their accounts.
Emefiele emphasised that in the meantime, the present notes remained legal tender and should not be rejected as a means of exchange for the purchase of goods and services.

He reassured the public that the CBN would continue to monitor both the financial system, in particular, and the economy, in general, and always act in good faith for the achievement of the bank’s objectives and the betterment of the country.

Further providing the rationale for the apex bank’s decision, Emefiele said there had been concerns about the management of the current series of banknotes as well as currency in circulation, particularly those outside the banking system in the country. He said currency management remained a key function of the CBN, as enshrined in Section 2 (b) of the CBN Act 2007.

Emefiele pointed out that in recent times, currency management had faced several daunting challenges that had continued to grow in scale and sophistication with attendant and unintended consequences for the integrity of both the CBN and the country. He said recent developments in photographic technology and advancements in printing devices had also made counterfeiting relatively easier, stressing that in recent years, the CBN has recorded significantly higher rates of counterfeiting, especially at the denominations of N500 and N1, 000 banknotes.

Providing further clarification, following recent claims by Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, that her ministry was not involved in the exercise, CBN Director in charge of Corporate Communication, Mr. Osita Nwanisobi, had in a statement, expressed surprise at the minister’s claim, stressing that the CBN remains a “very thorough institution that follows due process in its policy actions”.

Nwanisobi said the CBN management, in line with provisions of Section 2(b), Section 18(a), and Section 19(a)(b) of the CBN Act 2007, had duly sought and obtained the approval of Buhari in writing to redesign, produce, release, and circulate new series of N200, N500, and N1,000 banknotes.

Nwanisobi urged Nigerians to support the currency redesign project, stressing that some persons were hoarding significant amounts of banknotes outside the vaults of the commercial banks. He argued that such a trend should not be encouraged by anyone who meant well for the country.

The apex bank’s spokesman pointed out that currency management in the country had faced several challenges that threatened the integrity of the Naira, the CBN, and the country, in general. He added that every top-rate central bank would be 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.
While 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.
He said that was 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.

The CBN director urged Nigerians, irrespective of their status, to support the Naira redesign project, saying it is for the greater good of the economy.
Executive Chairman of the Economic and Financial Crimes Commission (EFCC), Abdulrasheed Bawa, had applauded the move by the CBN, describing it as “a well-considered and timely response” to the challenge of currency management, which had negatively impacted the country’s monetary policy and security imperatives

Bawa, in a statement had said, “The EFCC, the CBN and some other regulators in the financial sector have worked closely in the recent past to determine how best to stabilise the country’s monetary policy environment.
“It is heart-warming that the CBN has demonstrated courage in taking this bold decision, which I believe will bring sanity to the currency management situation in Nigeria.”

The EFCC chairman called on operators in the Nigerian financial services sector, especially deposit money banks and bureau de change operators, to work within the guidelines provided by the CBN to ensure seamless withdrawal of the old currency.
He warned that EFCC would monitor the process to ensure that unscrupulous players and currency speculators and their cohorts among the BDCs did not undermine the exercise. He also charged banks to be alive to their reporting obligations and not assist unscrupulous customers in laundering suspected proceeds of crimes through their system.

The EFCC boss further pointed out that the objectives, which the CBN sought to achieve with the redesign and reissue of the higher denomination Naira notes, were in tandem with the objectives of the Money Laundering Prevention Prohibition Act 2022, which criminalises the conduct of cash transactions above a certain threshold.