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OPINION: Naira, Trust and CBN governor

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OPINION: Buhari’s presidency at Nigeria’s expense [1]

LAST week, the governor of the Central Bank of Nigeria [CBN], Mr. Godwin Emefiele, suddenly announced plans to redesign and reissue the N200, N500 and N1000 denominations of Nigeria’s currency bank notes. It must have been a well kept secret because the announcement as the week was winding down took many Nigerians by surprise. Even the federal ministry of finance feigned ignorance of the development. Minister of Finance, Mrs. Zainab Ahmed told a Senate committee that she heard about the new monetary policy direction from the news media just like everybody else. She bluntly told her audience that she was neither told nor consulted by the leadership of the CBN over that monumental and consequential policy thrust. She was angry and it showed in spite of her best effort to appear calm. She must have regarded her being blindsided as a significant slight.
But I doubt that the minister was being sincere. The CBN should have a board of directors and unless the law has changed the ministry of finance usually gets a seat on that board through the ministry of finance incorporated. If this be the case, is it then possible that the CBN governor and his board of governors did not clear the redesign and reissue of the high end Naira bank notes with the board? Assuming, without conceding, that the governor and his deputies acted rogue as is being suggested by the minister, couldn’t the President, Gen. Muhammadu Buhari, whom the CBN said it got his approval to proceed,
have told the finance minister and others whose functions could be impacted by this policy? It has been glaring these past seven years that coordinated messaging as well as singing from the same hymn book is not the forte of this regime. And Nigeria bleeds for it.
The interventions by Nigerians and relevant institutions about the CBN new Naira direction have been worthwhile but a distraction at the same time. Every discussion and debate on any policy initiative of this CBN should necessarily be preceded by the trustworthiness and credibility of its governor. Or the lack of them. To start with Mr. Emefiele is a partisan politician. He is a bonafide card-carrying member of the ruling All Progressives Congress [APC] political party. He was a failed aspirant in the APC’s party primaries in June to select its presidential flag bearer. He paid or it was paid for him the N100 million non-refundable expression of interest and nomination form fees. He went to court to establish his qualification to seek the office of the President of Nigeria on the platform of the APC when some Nigerians expressed outrage at his brazen conduct. Mr. Emefiele abandoned his quest and withdrew his case from the court before the primary was conducted. But the cat had been let out of the bag. He is a dye-in-the-wool partisan politician who masquerades as governor of the central bank.
It has to be stated that there was no indication that Mr. Emefiele broke any laws by seeking to be president of the federal republic. But he breached the trust of many Nigerians who hitherto believed, probably because of the way his predecessors conducted themselves, that any occupant of that office should be above board on issues pertaining to partisan politics. He has, therefore, reduced the office of Nigeria’s central bank governor to a place that could routinely be occupied by any partisan political hack. So until Emefiele finished his second and
final term of office or is impeached or otherwise removed, every of his actions will be viewed from partisan political prism. And it is from that standpoint that we will proceed to interrogate his brainwave of issuing redesigned Naira notes by mid-December and then abolishing the old notes six weeks after.
The advertised reasons for this policy included arresting the burgeoning amount of currency outside the system and returning such back into bank vaults to aid the effectiveness of monetary measures and to combat inflation; to battle currency hoarders; to ensure ready availability of clean and fit bank notes; to curb criminality especially kidnapping for ransom; and, to stop or at least minimize currency counterfeiting through the introduction of more security features. Though not expressly stated but the new measure is expected to ultimately positively impact on the value of the Naira as well as the drive towards a significantly cashless economy and then drastically reduce the anticipated power of dark money in the 2023 general elections. These are laudable objectives and only unpatriotic people will not be excited by them. But I am not excited and that does not make me less a patriot than the CBN governor and his cheerleaders. And I will explain why I believe the new Naira will sooner than later prove to be a waste.
The only thing I believe about the policy is the claim by the CBN that it is the practice in every jurisdiction to tinker with currencies at least once every ten years. It is curious that we have not done so for upwards of 20 years. So let us deal head on with some of the claims that the new ”monetary policy” will benefit Nigerians and stimulate our paralyzed economy. If outlawing the existing bank notes by January 31, 2023 succeeds in bringing a larger percentage of currency in circulation
into the bank vaults and the formal financial system, it will be short-lived. This is because the greatest saboteurs of the Naira are the CBN, bank workers and their managers. Let us start from the trivia. Think about the last time you were paid with mint fresh Naira notes at the counter or the last time the ATM dispensed fresh Naira notes at the gallery. But the bank notes you do not get from your bank are readily available at a premium from hawkers at event centres nationwide. How do these hawkers get the wads of mint fresh and pleasant smelling Naira notes? Bear in mind that these hawkers are not bank workers.

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The quest to stigmatize, trap and punish dark money through this policy will also fail. Those who hoard the Naira in huge quantities are big players in our financial and political system. They are the personages who transact cash business through bullion vans. They do not physically visit banks. What will happen between December 15, 2022 and January 31, 2023 is that bank managers, if not their group managing directors, will personally drive bullion vans to the secured homes of these high net worth individuals to discharge the new Naira notes and then evacuate the old ones. The bullion vans will certainly be escorted by a contingent of the personnel of the military, the police and the DSS [Directorate of State Services or the secret police]. This bullion van scenario played out in Lagos in 2019 on the eve of a consequential supplementary election. The Bourdillon road, Lagos incident is common. It is the way that our big men roll. The appearance of breaking the law on money laundering will not be a deterrence to the couriers given the attractive rewards to the errand boys and girls.
Furthermore, the CBN should also be ready to take responsibility for the fate of the Naira. Is it not curious that borrowing from a deposit money bank attracts as much as 30 percent in interest charges while
your regular savings account barely earns you two percent interest. You will be extremely fortunate if any bank grants you five percent for a time deposit for say N10 million. While the interest charged for borrowing is above the prevailing 21 percent inflation rate, the interests that accrue to your savings or term deposits are far below the rate of inflation. Obviously, it is the uninformed or ill-informed or an out rightly stupid Nigerian who stores his Naira in any Nigerian bank. But it is the CBN that provides the parameters for interest charges and payments by the commercial and other banks. Some smarter Nigerians who have huge idle funds in Naira would rather convert and store them in USD, knowing that they will hardly suffer any adverse losses in the fullness of time.
Also success is not in the horizon for the new Naira as a tool to curb kidnapping and payment of ransom. Indeed a mediator and negotiator between kidnap victims’ families and government on the one hand and kidnappers on the other hand was reported to have said last weekend that kidnappers and terrorists may be forced to demand ransom payments only in US dollars. That may sound absurd but is it? After all, the transactional presidential primaries of the Peoples Democratic Party [PDP] and the APC in May and June respectively were conducted using USD to buy delegates and even to also buy rival aspirants. The operatives of the Economic and Financial Crimes Commission were said to be at the venues of the primaries, yet they neither heard nor saw any evil. And there were no reports of any consequences.
The tragedy is that the ordinary folks will bear the brunt of this Naira redesign which will come into effect in the run up to Christmas and New Year festivities. In the usual Nigerian way, many traders are likely to stop accepting payments in the ‘old’ currency notes even before
Christmas day this year at the same time that the new notes which the CBN said it will issue from December 15 would not have sufficiently permeated the financial system. The economy is already bad and crushing with cost of living unbearable for the majority of Nigerians. And now the CBN has contrived to make living hellish for millions more this Christmas and New Year. This policy will be a kill joy with minimal or no reward at the end of the day for a majority of our citizens. It could just be that 1984 is loading. Again.

AUTHOR:UGO ONUOHA


Articles published in our Graffiti section are strictly the opinion of the writers and do not represent the views of Ripples Nigeria or its editorial stand.

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