The Central Bank of Nigeria (CBN) has announced that newly redesigned currencies will start circulating from 15 Dec 2022 as it plans to redesign N200, N500 and N1,000 notes, with the current notes in circulation ceasing to be legal tender by the end of January 2023. CBN described the plan as a move to counter terrorism financing, hoarding of banknotes and to reduce the proliferating risk of counterfeiting. According to political pundits, the policy is intended to push politicians to release huge amounts of money they could have been holding into circulation as the country prepares to conduct a general election in February 2023.
Although some Nigerians loathe the policy, President Muhammad Buhari affirms it will be implemented. He affirms that no one will use resources and thugs to intimidate voters in any constituency during the election. CBN Governor Godwin Emefiele reported that over 85 per cent of banknotes in circulation were outside commercial bank vaults, indicating massive hoarding. He asserts that currency in circulation has more than quadrupled from 2015, from N1.46 trillion ($2.6 billion) in December 2015 to N3.23 trillion ($5.7 billion) in September 2022.
Existing currency will stop being legal tender by January.
Emefiele explained that the CBN is convinced that the reduction in access to large volumes of money outside the banking sector would help lessen incidents of terrorism and kidnapping. As technological advancements have made counterfeiting relatively easier, the CBN has recorded significantly higher rates of counterfeiting, especially at the higher denominations of N500 and N1, 000 banknotes. Furthermore, he said that with the transition from old notes to new banknotes, bank charges for cash deposits had been suspended with immediate effect.
New and existing naira notes will remain legal tender and circulate together until 31 Jan 2023, when the existing currencies will stop being legal tender. Banks currently holding the existing denominations of the currency are all expected to start returning the notes to the CBN with immediate effect, as the newly designed currency is said to be released to banks based on first-come-first-served. Also, bank customers are expected to start depositing the existing notes into their bank accounts to enable them to withdraw the new banknotes once circulation begins in mid-December 2022.
Some Nigerians feel happy about the notes redesign policy.
While Some Nigerians argue that the policy would positively impact the economy, others perceive it as a herald of hardships. Uche Uwaleke, the president of the Association of Capital Markets Academics of Nigeria (ACMAN), supports that the policy will be positive for the economy in the medium to long term. He said the policy would effectively ensure that a lot of naira notes circulating outside the banks are crowded in, even though the measure does not amount to the demonetization of high currency notes often carried out by central banks to curb black market money and corruption.
In addition, Mr. Mathew Ogagavworia, a forensic expert, has also lauded the planned currency redesigning policy. He believes that most of the money laundering is held in US dollars, in which this policy will also lead those holding illicit funds to change it to US dollars and allow the Bureaux de Change (CDCs) to move the naira to the banks since charges have now been lifted. Mr. Mathew asserts that as an immediate implication, the black-market rate of the dollar will drive up.
CNF express concerns over the redesigning of the currency.
The Economic and Financial Crimes Commission (EFCC) described the central bank’s policy as “a well-considered and timely response” to the challenges of currency management. Chairman of EFCC, Mr. Abdulrasheed Bawa, said with some other regulators in the financial sector, EFCC and CBN worked hand-in-hand to determine how best to stabilize the country’s monetary policy environment. Meanwhile, the non-governmental organization (NGO) leadership of Concern Northern Forum (CNF) plans to protest the suspension of the policy, which it believes will cost the country enormous sums of money at the expense of taxpayers and add no value to the current multiple economic challenges the nation is facing.
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