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Redesigning the Naira

The Central Bank of Nigeria (CBN) took many by surprise with the announcement of its decision to change the design of some series of national banknotes currently.

This, according to the Governor of the apex bank, Godwin Emefiele, was necessary in view of the increasing difficulty faced by the Bank in the effective management of the currency, particularly those outside of the banking system.

As a key function of the CBN, Mr Emefiele maintained that the integrity of a local legal tender, the efficiency of its supply and its efficacy in the conduct of monetary policy, are what define a Central Bank as great.

Unfortunately, he said, in the case of Nigeria, currency management has in recent times been faced with daunting challenges that have continued to grow in scale and sophistication.

According to him, chief among the challenges include significant hoarding of banknotes by members of the public, and worsening shortage of clean and fit banknotes, as well as increased ease and risk of counterfeiting as evidenced by several security reports.

It is therefore on the basis of the foregoing, and the fact that section 2 (b) of the CBN Act, 2007, rests currency management on the shoulders of the Apex Bank as a key responsibility, that the bank sought and secured the approval of President Muhammadu Buhari to re-design, produce and circulate new series of 200, 500 and 1000  banknotes.

This is in line with global best practice, which demands central banks to re-design, produce and circulate new legal tender every five to eight years – a requirement that has not been met in Nigeria for over 20 years.

Expectedly, since the pronouncement by the CBN, reactions have flooded in as financial expert and general public alike have continued to express divergent views.

While some regard the policy as a hasty measure that may be counterproductive, on a larger scale, however, many Nigerians believe that it is the best policy to mop up looted funds from the hands of a few who are keeping the bulk of the country’s banknotes out of circulation and at the expense of the suffering masses.

Also, crucially significant is the expectation among Nigerians that the measure will go a long way in uncovering the huge sums of liquid cash that have randomly been collected as ransom by kidnappers and often stashed outside the banking system.

Indeed, these and many other positive sides of the new notes policy are enough for Nigerians of all persuasions to wholeheartedly support the CBN and the government in this patriotic endeavor.

From December 15, this year, to January 31, next year, the new currencies and the existing ones shall operate side by side as legal tender. However, the old existing currencies will cease to be legal tender after January 31, 2023.

It is therefore hoped that members of the public, particularly commercial bank employees, will guard against shady deals and acts capable of derailing the government’s sincere intentions to fine-tune the nation’s economic system.

On its part, the CBN should mount ceaseless awareness campaigns to educate and sensitize the citizenry on the advantages and genuine intention of introducing the new naira notes.

This will no doubt shove up the integrity of both the naira and the CBN as a prelude to a sustained recovery for the country’s currency and banknotes, which have been on a prolonged downward spiral for some time now.

Writing by Musa Abdullahi of our Editorial Unit; Editing by Abdullahi Lamino and Tony Okerafor