The October 26, 2022 policy decision by the Central Bank of Nigeria (CBN) to redesign the N200, N500 and N1,000 denominations, and the subsequent announcements including the cash withdrawal limit have continued to generate reactions.
Announcing the deadline extension this week, after a meeting with the President in Daura, Katsina State, the CBN Governor, Godwin Emefiele, said the extension of the deadline was to allow for the collection of more old notes legitimately held by Nigerians and achieve more success in cash swap in our rural communities after which all old notes outside the CBN losses their legal tender status. Considering the timing of the policies, being an election year, some Nigerians believe that the apex bank’s move is wrongly timed. However, these actions are in the best interest of Nigerians and the economy if the country must address the current trend of insecurity, corruption and economic sabotage among other actions.
If anything, there have been early successes of the CBN intervention as the monetary policy committee (MPC) of the central bank recently affirmed that the various policy interventions of the bank had led to a reduction in inflation after months of an uptick in the headline index.
Let’s take a look at some specific benefits of the Naira re-design according to what the CBN and some financial experts are saying;
Policies in good faith
Emefiele said the CBN acted in good faith towards the achievement of the bank’s objectives and the betterment of the country.
Essentially, Emefiele said there had been concerns about the management of the old series of banknotes as well as currency in circulation, particularly those outside the banking system in the country, stressing that currency management remained a key function of the CBN, as enshrined in Section 2 (b) of the CBN Act 2007.
He noted that the integrity of a local legal tender, the efficiency of its supply, as well as its efficacy in the conduct of monetary policy, were some of the hallmarks of a great central bank.
Notwithstanding the antagonism against the CBN’s cashless policy direction, analysts have thrown their weight behind the move, noting that the decision to limit cash withdrawal limits to individuals and corporate organizations following the currency redesign programme was the right way to go if the country must move forward.
The central bank had placed a cap on cash withdrawals under the new dispensation, restricting the maximum cash withdrawal over the counter (OTC) by individuals and corporate organizations per week to N500,000 and N5 million respectively.
The move by the apex bank was generally believed to be aimed at discouraging vote-buying as the 2023 general election approaches as well as addressing hoarding of the local currency in a bid to check inflationary pressures as well as address critical security issues. However, the e-banking/cashless policy is something that experts believe will be embraced by the majority of the population which will further make the financial system more robust.
Policies will eliminate corruption, reduce poverty
No doubt, beyond the immediate benefits of the CBN’s cashless policy and currency redesign, which includes countering terrorism, and managing money supply among others, the initiative will also ensure that going forward, social intervention programmes that are targeted towards poor Nigerians achieve their desired objectives.
This is partly because going cashless would ensure that such funds can easily be tracked and monitored and this will further provide for greater transparency and accountability by those who administer the resources.
Also, as attested to by the CBN Governor recently, though the security agencies have been on top of their game in recent times tackling insecurity across the country, nonetheless, the cashless policy initiative of the central bank has helped to reduce the incidence of kidnapping and banditry as a result of the restrictions placed on cash withdrawals.
Policy in the interest of the masses
In spite of the repeated assurances that the policy was conceived in the interest of Nigerians particularly the common man on the street and the country as a whole, some people who continue to benefit from the old system of doing things, have continued to disagree with the CBN on this. However, the CBN governor had always emphasized that the central bank under him would always be people-focused in its policy directions. This was particularly evident in the role played by the bank in supporting small businesses and households during the COVID-19 pandemic and the new Naira re-design is no different from this purpose.
On a conclusive note, CBN Governor Godwin Emefiele has noted that the move to redesign the currency was 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 negative perception of the central bank. What is now left is to see how these well-said benefits would be birthed and executed to the general populace of Nigerians.