Naira redesign saga: Will Nigerians Still Dance the Horrible Mozart concerto?
By Ernen Kaanti
The lingering scarcity of naira notes in Nigerian markets as it is being experienced is a terrible sign. It is like a strange smoke that is oozing from a moving ship carbine. The very distress of fear, anxiety and strive to survive under this outlandish and eccentric experience is what I personally cannot qualify and quantify in a hurry.
I’m sorry, but I will like the reader to ponder along with me on the pitiable condition of things in Nigeria at this moment. I am not out to x-ray the bottomless ineptitude and recklessness of any political leader or public office holder in Nigeria. That’s not my business. I should rather be worried as a Nigerian about how the country in which God in His infinite wisdom destined that I live is becoming a socio-political and economic burden to her own citizens and if possible prick the stony conscience of the murderers of democracy in the country.
In a society of conscience the Spirit that prevails among men of all degrees of socio-political and economic profiles is the spirit of civil liberty. A society of laws, and not of men. In a society where democracy never endure, liberty cannot be preserved. It will only be possible to preserve liberty when there is a general knowledge among the people, who have a right and a desire to live happily and that the principles of democracy in their clime are never and can never be compromised.
We have people elected and appointed into offices in the name of democratic system of government but one may ask just like Mahatma Gandhi once asked, “What difference does it make to the dead, the orphans and the homeless, whether the mad destruction is wrought under the name of totalitarianism or in the holy name of liberty or democracy?”
It is unfortunate that anti-democratic attitude has been a constant thread winding its way through our political and cultural life, nurtured by the false notion that democracy means that ‘my crooked life is as good as your transparent life.’”
How can we be happy to hear our own children who have grown into adults only to draw themselves to their full height and say there is a cult of crookedness in our government system today and it is being celebrated, and there has always been?
Yesterday we thought that the best argument against democracy is a five-minute conversation with the average voter in Nigeria but today the market woman in Nigeria who cannot sale or buy breakfast for want of cash is likely to engage you more meaningfully in the argument against democracy.
On October 26, 2022, the Central Bank of Nigeria (CBN) announced plans to redesign and distribute new N200, N500 and N1000 bank notes to replace the existing ones. Mr. Godwin Emefiele, the CBN governor, stated that the move to introduce newly designed notes became imperative following the abnormalities bedevilling Nigerian financial, monetary and security systems. That the circulation of the new designs was to begin on December 15, 2022, while the old notes would be used for transactions until January 31, which was eventually extended till February 10, after which only new notes would be legally recognised and used for transactions.
Following the complexities that surrounded the issuance of the new notes that was swiftly grounding Nigeria’s economy to a halt, Kaduna, Kogi and Zamfara state governments initiated a suit in the Supreme Court against the February 10th deadline saying the cash swap had caused restiveness among Nigerians and might degenerate into the breakdown of law and order. In its ruling, the apex court extended the deadline to 31st December, 2023.
The CBN expects that this dash to redesign Nigeria’s currency would reduce counterfeiting, encourage a cashless economy and stave-off cash hoarding. Furthermore, it aimed to bring more people into the financial sector, and even more ambitiously, reduce incidents of kidnapping and terrorism because there will be no notes in circulation for ransom payments.
Experts nodded that redesigning currencies improve a currency’s security by enabling countries to keep counterfeiting low and stay ahead of threats. But while there is consensus among experts that redesigning currency for various reasons is not a bad idea, what is currently happening in Nigeria has left many questions without answers and serious explanation from any corner:
- Although the Nigerian government may have tried to promote a cashless economy by this policy, is the government aware that much of the activities in the nation’s informal sector like the ruler areas where people are deprived of certain level of development are still driven by cash?
- Is Mr. Godwin Emefiele aware that in handling his office in a way that appears to public eyes as nothing but incompetence, he might also dressing himself in the dirty robe of a retrogressive politician rather than a professional economist? I don’t wish him that at all.
- Had the Supreme Court not ruled against the February 10th deadline, would there have been new naira notes in circulation compatible with the daily demands of Nigerian economic population today?
- If yes, what can CBN say has happened to the new notes that was supposed to be circulated to cater for the daily needs of Nigerians in place of the old notes?
- Where do we hide our shame seen that as a country an average citizen leaves his/her house to work without breakfast just because of the complications ushered in by the naira redesign while those at the corridors of power are lavishly flying in and out of the country for bird-watching and mountain biking tourism?
Like many other Nigerians keep wondering, I ponder so much on this issue of naira redesign and the untold misery that has come with it and l do ask whether the approach adopted by Nigeria for the transition is the same in other countries.
Investigation revealed approaches used in other climes and it feels good to share it with the reader so that it may help to interrogate what is going on in Nigeria today:
In the UK approach
The Bank of England is responsible for producing and issuing banknotes in England and Wales. The most recent series of Bank of England banknotes, technically known as Series G, was launched over a five-year period, between 2016 and 2021. This series is the first that was printed on polymer.
Findings revealed that the next generation banknote research started in 2011. Early industry engagement started in 2012; and early public engagement in 2013. The first set of design work and pre-production was from 2014 to 2016.
A new 5pound was issued in September 2016. The legal tender status of paper five was withdrawn in May 2017, while new10pound was issued in September 2017. The legal tender status of paper 10pound was withdrawn March 2018, new 20pound issued February 2020 and new 50-pound issued June 2021. Legal tender status of paper 20pound and 50pound were withdrawn on September 2022.
Following the death of Queen Elizabeth, the Bank of England unveiled the design of King Charles III banknotes on December 20, 2022. The King’s portrait will appear on all four of its polymer banknotes (£5, £10, £20 and £50). The new note will enter circulation by mid-2024.
India’s 2016 demonetisation
In 2016, the Indian government under Prime Minister Narendra Modi had a plan to stop corruption and reduce the amount of money in circulation by withdrawing and reintroducing the 500 and 1,000 denominations of the Indian rupee within six months.
A prime motivation behind Modi’s move, according to experts, was to make tax enforcement easier by shrinking the cash economy that was largely beyond the reach of tax inspectors.
Greater use of banks and electronic payment systems generates paper trails (or perhaps ‘bit trails’) for tax inspectors to follow. Readily available means of verifying income statements are widely credited with enabling high levels of taxation in western economies.
More than 250 million new accounts were opened since the end of the programme in 2014.
In 2018, a Bloomberg report stated that the scheme froze “agriculture and small businesses with a liquidity shock, put people through unnecessary hardship, disrupted supply chains and destroyed demand for everything, from autos to property.”
Net savings in India were reduced by 50 per cent a year after the policy was implemented. The currency in circulation also increased to 20trillion rupees from 18trillion before the policy.
A 2018 report by the International Monetary Fund titled, “Article IV Consultation Report on India,” also provided that the disruption caused by cash shortages dampened consumer and business sentiments. The abruptness of the policy and the consequent shortage of cash led to the policy’s poor performance.
Going by the outcome in India, a six-month timeline proved to be wholly short-sighted and ineffective and achieved none of its grand objectives
Ongoing experience in US
In the United States, the currency redesign and distribution exercise are both systematic and systemic. Before a Federal Reserve note enters circulation, it must pass through four critical steps – design, order, production and issuance.
The US Bureau of Engraving and Printing, which collaborates with the Federal Reserve, as well as the Treasury Department and the US Secret Service, reported that the US had ongoing plans to redesign its currencies.
The Bureau stated; “The current denomination sequence and planned issuance dates have been in development with the Advanced Counterfeit Deterrence Committee since 2011: $10 (2026), $50 (2028), $20 (2030), $5 (2032) and $100 (2034). This sequence addresses risk mitigation and counterfeiting concerns.”
In the US, plans to effect the currency re-issuance have been on since 2011, with the first currency to be deployed 15 years after, in 2026.
As concerned minds were asking, why the rush? Why must it be completed within four months? Is this related to the upcoming elections? In what way? Where is the policy plan that will guide the process? And where is the evidence that redesigning Nigeria’s currency at this time and in this manner will yield the results as claimed by the CBN governor?
The CBN may have laudable causes in view, achieving the redesign, production and distribution of new currencies, as well as recalling the current notes in a manner that will effectively actualise the set goals should have a something that is doe with apparent level of professionalism highly devoid of political under tunes as it has been suspected by some people.
With this complicated reality in the nation’s economy owing to the naira redesign the CBN governor, Godwin Emefiele came out and said that the 31 January deadline that the apex bank announced for the validity of the old N200, N500 and N1,000 notes remains.
Speaking after a meeting by the apex bank’s Monetary Policy Committee (MPC) in Abuja early this March, Mr Emefiele said the time given for the swap of the old naira notes with new ones was enough for Nigerians to get the new notes from commercial banks.
Regrettably, until today, Nigerians operating in the cash-dependent informal sector of the economy are scrambling not only for the new notes but the old notes that they had to scale over the fences of banking annexes to deposit.
With these contradictions and scepticisms that hover around the phenomenon of naira redesign at present, I just hope that come December 31 2023, Nigerians will not have a replay of the same music with horrible and menacing beats that hurts every one’s ears at this moment.
I feel that the way of life can be free and beautiful, but it seems we are missing the way. It seems greed, vengeance, hatred, half-truth and envy have poisoned men’s souls, have barricaded the world of man and have goose-stepped us into misery and unpredictable society. We have developed sense of speed in doing things that please the few and not always the people even things we must do carefully and by this we have shut ourselves in. and some of the time machinery that gives abundance leaves us in want. Our selective speed has made us cynical; our cunningness and cleverness, hard and unkind. We think too much of ourselves and feel too little of our brother’s pains.
We must discover that fairness, honesty, justice and truth are all that we need in all that we do. More than selfish cleverness, we need transparency and love in all that we do. Without these qualities, life will be chaotic and even violent and all will be lost. Democracy and its credentials should bring us closer together. The very nature of these credentials of democracy are crying out for the goodness in us; crying out for universal brotherhood; for the unity of us all.
I have developed an unfaltering spirit of craving for common democratic front and I believe that even now my voice is reaching millions throughout the country, millions of despairing men, women, and little children, victims of a system that makes men torture and imprison innocent people in the streets, in market places and even in homes.
To those who can hear me, I say, do not despair. The misery that is now upon us is but a phase that will surely pass away. Regimes come and go, and dictators die, and the power they took from the people returns to the people. And so long as men die, democracy will never perish.
