Nigeria has been witnessing queues at banks, tension, protests and unease regarding the scarcity of the new notes due to the naira redesign embarked upon by the Godwin Emefiele-led Central Bank of Nigeria. Normally Nigerians in their usual fire brigade approach waited till the deadline before rushing to deposit old notes and possibly get the new notes, but alas they were disappointed as once the old notes got into bank towards the January 31 deadline, such notes were not released back into society.
To reduce money in circulation, the CBN printed only N500bn of the new notes and retrieved over N2tn of the old notes, hence the scarcity. To avoid any misunderstanding of my standpoint, this article would be divided into; cashless policy, the new naira policy, distribution of the new notes, role of the banking sector, the politicians, my naija people, and the solutions.
Cashless policy: In 2012, the Sanusi Lamido-led CBN introduced cashless policy with the aim of reducing the quantum of physical cash being used in the system in an attempt to cut down Nigeria’s dependence on cash payments. The policy earmarked seven states as pilots namely, Abia, Anambra, Abuja, Kano, Lagos, Ogun and Rivers states and was later spread to the entire country. What this means is that if Nigerians had fully complied with the cashless policy in the first place, the naira redesign and shortage of cash flow would not have been felt the way it is now. This is because by now, the country would have advanced in technology to accommodate the online banking traffic. There are some people who have no bank accounts.
New naira policy: By virtue of Section 20(3) of the CBN Act (2007) with the permission of the President of the country, the CBN governor is empowered to call in any of its notes based on moving the economy of the country forward. The CBN governor has informed Nigerians that of the N3.2tn in circulation, 80 per cent of the money is in private hands (i.e unbanked). This led to a high rise in inflation and made economic policies ineffective as the unbanked monies always overwhelm the economic policies.
For the CBN to recover the majority of its cash in circulation and achieve 100 per cent cashless policy, the best move therefore is to redesign higher denominations (N200, N500, & N1000) and give a deadline when the old notes shall cease to be legal tender. Now after January 31, 2023, 75 per cent of the cash in circulation has returned to the system while the remaining unbanked old notes are currently the surviving cash expenses in the country.
Some Nigerians are of the opinion that the CBN should print the same amount of new notes as the old notes, forgetting that such a move would defeat the purpose of the recall in the first instance.
Distribution of new notes: The CBN printed N500bn new notes to be circulated evenly to society. To avoid the new notes being accessible to only the rich and powerful, the CBN pegged daily cash withdrawals to N20,000 per day, and directed banks to distribute new notes through Automated Teller Machines. But some bank managers allegedly flouted the directive and were selling the new notes to people spraying them at parties. As a result, some bank customers started sleeping at ATM points to withdraw money before dawn thus contributing to the scarcity.
The banking sector: Some commercial banks responsible for the smooth transmission of the financial market into cashless have allegedly been complicit in their role which worsened the hardship experienced by Nigerians. The network issue of non-alert, and failed online transactions during the surge was an avoidable challenge that ought to have been worked on long before the deadline, by upgrading servers and apps. This is in addition to them reportedly flouting CBN directive on the distribution and circulation of new notes into the economy, while some were accused of hoarding the notes in their vaults.
The politicians: It amazes me how Nigerians are falling cheaply into the propaganda of politicians seeking elective offices regarding the new naira. These are people whose ambitions are for selfish interests and who intend to use money to influence the outcome of the forthcoming election. They appear to be crying foul using the yearnings of Nigerians as an avenue to fight the naira redesign policy.
The Nigerian factor: I noticed during my interactions with some Nigerians that the policy is not understood by them. I support the naira redesign and its implementation but not the crises it has generated or attendant suffering on Nigerians. Is it the CBN that is selling the new notes back to Nigerians with exorbitant charges, or is it we Nigerians?.
We are hit hard by the naira redesign policy because we have a lackadaisical attitude towards approaching issues. Rather than foresee a problem and begin to work on solutions, we wait for the problem to get to our doorsteps and run around for a solution.
I think we should give the policy a chance. If you don’t have a bank account, open an online wallet that makes your phone number your account number where you can send and receive money, buy airtime and pay utility bills and do other transactions. If you have a bank account, get an ATM card and activate online channels to do transactions. If you are a trader, apply for a Point of Sale terminal so that your customers can buy goods and services using their online channels.
Solution to crisis: After all said and done, my solutions for the naira scarcity are; more of the lower denominations of N5, N10, N20, and N50 should be printed and circulated to enable customers withdraw the same over-the-counter. Each bank should be allowed to give their POS operators a minimum of N100, 000 to meet their customers’ monetary needs. The old notes outside the banking sector at the moment should be allowed to float until a time the CBN has enough new notes in circulation, and within the period old notes that find their way to banks should not return to society. Banks should update their online platforms to avoid network issues making Nigerians to lose confidence in electronic fund transfers. As a people, we have to be innovative in how we spend and receive money and not all payments must be by cash. Finally, we must join hands together to make this cashless policy work.
