The recent launch of a new design of Nigeria’s currency has been met with both excitement and criticism. Many view the redesign as an important step that will rein in the voluminous amount of currency in circulation into the banking system and will further help to entrench a cashless economy thereby making monetary policy more effective. On the other hand, there are accusations that the currency redesign is a politically motivated policy made to sponsor controversial agendas. However, this blog post presents an interesting opportunity to reflect on this issue of public interest as it affects society.
History of Nigerian Currency
Nigeria has a fascinating history when it comes to currency. Since time immemorial, various cultures living in Nigeria used items such as cowries, manilas, and beads to exchange goods. Everyone was content with the barter-style trading until a Colonial Ordinance of 1880 introduced Shillings and Pence – thereby changing the face of currency forever. For many years thereafter, banknotes issued by The Bank for British West Africa flowed through Nigeria’s wallets till 1912 when the West African Currency Board (WACB) took over the role of issuing banknotes and coins in Nigeria. The highest banknote denomination was one pound, while the one shilling coin was the highest coin denomination; this marked only just the beginning of an interesting story about politics around reworking Nigerian Currency which continues even today.
On 1st July 1959, the Central Bank of Nigeria (CBN) issued Nigerian currency banknotes, while the WACB-issued banknotes and coins were withdrawn. It was not until 1st July 1962 that the currency was changed to reflect the country’s republican status. The banknotes which bore the inscription FEDERATION OF NIGERIA now had, ‘FEDERAL REPUBLIC OF NIGERIA’, inscribed at the top. The notes were again changed in 1968 following the misuse of currency banknotes during the civil war.
Sequel to the decision by the government to change from metric to decimal, the name of the Nigerian currency was changed in January 1973. The major unit of currency which used to be £1 ceased to exist and the one Naira which was equivalent to ten shillings became the major unit, while the minor unit was called the kobo: hundreds of which made one Naira.
On 11th February 1977, a new banknote with the value of twenty Naira (₦20) was issued. It was the highest denomination introduced at the time as a result of the growth of the economy; the preference for cash transactions and the need for convenience. The banknote was the first in Nigeria to bear the portrait of a prominent Nigerian citizen, the late Head of State, General Murtala Ramat Muhammed (1938-1976).
On 2nd July 1979, new currency banknotes of three denominations, namely ₦1, ₦5, and ₦10 were introduced. These notes were of the same size as the ₦20 note issued on 11th February 1977. But distinctive colors were used for the various denominations to facilitate identification. The notes bore the portraits of three eminent Nigerians and the engravings at the back of the notes reflected various cultural aspects of the country.
In April 1984, the colors of all the banknotes in circulation were changed except the 50 Kobo banknote to arrest the currency trafficking prevalent at the time. In 1991, the 50K and ₦1 were both coined. In December 1999, November 2000, April 2001, and October 2005 respectively, the ₦100, ₦200, ₦500, and ₦1000 banknotes were introduced in response to the expansion in economic activities and to facilitate an efficient payments system.
On 28th February 2007, as part of the economic reforms, ₦20 was issued for the first time in a polymer substrate, while the ₦50, ₦10, and ₦5 banknotes; as well as ₦1 and 50K coins were reissued in new designs, and the ₦2 coin was introduced. On 30th September 2009 the redesigned ₦50, ₦10, and ₦5 banknotes were converted to polymer substrate following the successful performance of the ₦20 (polymer) banknotes. Thus, all lower denomination banknotes were now printed in the polymer substrate.
To celebrate Nigeria’s historic milestone of 50 years as an independent nation and 100th year in existence, the Central Bank of Nigeria issued two momentous Commemorative banknotes; a ₦50 note which was released on September 29th, 2010 to mark the golden jubilee and later on December 19, 2014, they followed up with an N100 notes. A celebration that symbolizes their long-standing resilience! (Source CBN)
RECENTLY REDESIGNED CURRENCY
On December 15, 2022, Governor Godwin Emefiele of the Central Bank of Nigeria (CBN) launch a new design to replace high-value naira notes. The bank said it is doing this to have control of the currency in circulation, combat hoarding of banknotes, and make less money accessible outside banking systems. He also said that the redesign of the currency will further rein in the voluminous currency in circulation into the banking system thereby helping deepen CBN’s drive to entrench a cashless economy. According to him, these changes are necessary for upholding the integrity of both Nigeria’s currency system and its economy. The plan is to redesign N100, N200, N500, and N1000 and start disbursing by December 15, then by January 31, 2023, the old notes are expected to be out of circulation.
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ACUTE SCARCITY OF THE NEWLY REDESIGNED CURRENCY
The new policy has created chaos with many Nigerians having to endure hours of queuing at Automated Teller Machines (ATM) points. Others have also had to pay exorbitant charges for withdrawals through Point of Sale (POS) centers. As a result of the ongoing hardship experienced by many Nigerians, and the public outcry trailing the currency scarcity, the CBN Governor, Godwin Emefile, had extended the earlier deadline of 31 January, by 10 days up until 10 February. He added that money deposit banks would continue to receive the old banknotes even after the deadline. Despite the deadline extension. There are concerns that the move may lead to confusion as the masses are finding it difficult to change their currency notes within the given time.
Commercial banks in Nigeria are not helping the matter. It is disheartening that commercial banks have allegedly been hoarding millions of naira notes. The Economic & Financial Crime Commission has visited banks across the country to access their vaults and verify whether they were deliberately refusing to dispense the redesigned Naira notes by refusing to load its Automated Teller Machines (ATMs) despite having millions of the redesigned Naira notes in the branch’s vaults. EFCC has found evidence suggesting an attempt by some bank workers to sabotage this initiative for their gain.
PROTEST ON THE TIMING OF THE POLICY
On Friday, an array of 36 state governors in Nigeria brought their case to the President at the Presidential Villa. With a stark cash crunch bringing hardship for many Nigerians across the nation, both All Progressives Congress (APC) Governors and those belonging to The Nigerian Governor’s Forum pleaded with President Buhari for assistance on behalf of all citizens. Bearing a letter from Aminu Tambuwal – Chairman of Sokoto State – they implored him to extend the deadline given by the Central Bank of Nigeria’s naira policy as well guarantee the availability of enough notes within that time frame. After hearing them out, President Muhammadu Buhari urged citizens to give him seven days to create tangible solutions to the cash crunch that has become a problem across the country.
However, Asiwaju Bola Tinubu, the presidential candidate of APC, and Governor Nasir El-Rufai of Kaduna State rightfully denounced the Naira redesign policy released by the Central Bank regarding its inopportune timing and lack of proper consideration for the significant distress the policy has brought upon both everyday citizens as well as businesses nationwide. Adams Oshiomhole, the former Edo State governor and Deputy Director General of the ruling party Presidential Campaign Council, said that the use of the attraction of corruption-free elections to pull the wool over President Buhari’s eyes by CBN is not in their job description. He argued that this “senseless” approach by CBN was not only creating scarcity but effectively attempting to stop humanity from exercising its democratic right. He warned that if left unchecked the Central Bank of Nigeria’s policy will possibly destabilize the society ahead of election day as it could result in violent protests leading to a possible postponement or suspension of upcoming elections.
Similarly, the Governor of Kano State, Abdullahi Ganduje suspects that Godwin Emefiele’s untimely implementation of the naira swap policy may be due to revenge for his political loss. According to Mr. Ganduje’s media aide Abba Anwar, Godwin Emefiele is reportedly toying around with Nigeria’s monetary policies all because he was denied a presidential ticket for their party. “He’s only doing this to confuse the forthcoming elections for no just reason.” Politicians, Opinion leaders, Financial Experts, and many Prominent citizens acknowledge that while certain countries may be open to banking reform initiatives such as these – Nigeria simply isn’t ready due to the wrong timing and the deliberate rush toward the deadline which is almost leading to anarchy in the land.
LITIGATIONS
Amid the crisis of an acute shortage of the newly redesigned notes, three northern states – Kaduna, Kogi, and Zamfara – filed an emergency petition. The applicants implored the court to protect Nigerians from CBN’s decision to discontinue using old currency notes on 10 February. In a Supreme Court case, Mr. Mustapha, the lawyer of the applicants highlighted how many citizens are yet to exchange their money for newly redesigned cash, despite statements made by government officials guaranteeing its availability. Mr. Mustapha fears this ongoing hardship could lead society into chaos unless resolved through court intervention as requested by his clients,
SUPREME COURT VS ATTORNEY GENERAL OF THE FEDERATION
After listening to the applicant’s lawyer, a seven-man panel of the Supreme court led by Justice John Okoro, in a unanimous ruling on Wednesday granted an interim injunction restraining FG, CBN, Commercial Banks, etc. from implementing the February 10 deadline for the removal of old versions 200, 500, and 1,000 denominations of Naira currency from circulation until their interlocutory injunction appeal is heard in court. However, the Attorney General of the Federation, Malami made a preliminary objection to a suit that sought monetary policy resolution from the Supreme Court Invoking section 251 of the constitution, Malami argued that since the matter falls under the monetary policy of a Federal Government agency –Supreme court has no jurisdiction over such matters. The scenario strikes out any possibility of immediate settlement.
On Friday- February 10, President Muhammadu Buhari chaired the National Council of State meeting to address the current crisis regarding the naira redesign and the currency swap. In attendance were the former presidents, Vice President, Senate president, speaker of the house of representatives, Governors, Secretary to Federal Government, Governor of CBN, INEC Chairman, All Service Chiefs, and Heads of Security Agencies. The National Council of State asked the CBN to print more new banknotes or recirculate the old naira note into the system, and agreed to obey the Supreme Court ruling
CONSEQUENCE OF MONETARY POLICIES WITHOUT ADEQUATE CONSULTATION
The process of redesigning a nation’s currency has had its fair share of controversy in many countries of the world. In some cases, the impact that these changes can have on a nation’s economy cannot be underestimated as they can present logistical difficulties. India is a great example of this. In November 2016, As the country attempted to crack down on corruption by making it more difficult to exchange large sums of cash anonymously, India launched its new design for their 500- and 1000-rupee notes, but it came with some unexpected consequences.
The sharp inflation that occurred following its release has been an unwelcome surprise for many. It had a particularly severe impact on small businesses and those in rural areas who are reliant on cash transactions and everyday citizens alike, who have experienced a significant reduction in their purchasing power. The value of goods and services has increased dramatically due to the acute scarcity of the redesigned currency. The Indian experience serves as an important reminder for other countries looking to redesign their currencies.
Typically, when a country hurriedly introduces a redesign of its banknotes without consulting economists that specialize in money flow and macroeconomics, as well as financial advisors who are experienced with issuing currency designs, many different factors such as inflation rate, consumer spending patterns, and population size are not taken into account. Having experts analyze all these elements beforehand, allows for better forecasting when it comes to how much money should be distributed and produced. Without this type of careful planning ahead of time, countries run into issues such as what Nigeria is currently facing – where there simply isn’t enough cash circulating for people to buy goods or services with their own money.
Conclusion
This blog post examines the changing faces of Nigeria currency and the severe consequences of executing a hurriedly packaged public policy without proper consultations and consideration for its effect on the society. This has further created awareness and broaden the horizon of readers with the right information required to guide against a repeat of such injustice in the future. It is therefore essential that we share this article with our network and friends.
Idowu E. Faleye, a certified Data Analyst, Political Activist, and writer is a graduate of Politics & Public Administration. He’s the Founder/Chief Data Officer at EphraimHill Data Blog –a Data Reporting Site that is niche in Politics & Society. He can be reached at +2348132100608. or ephraimhill01@gmail.com
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