Let me go straight to the point. The redesign of the Naira is a very good idea. Kidnappers, bandits and many corrupt elements have stockpiles of Naira that they can’t bank. This change will render their billions useless. The pound and dollar have been redesigned multiple times. On this, Emefiele did well! His job is very tough. Many people erroneously blame the collapse of the Naira on him. But the devaluation of the Naira is due to Nigeria’s high propensity to import, unfavorable balance of trade position, and high dependence on foreign borrowing, none of which are his responsibility. If he is sacked, chances are that his replacement won’t be any better. The finance ministry makes the borrowing decisions.
This policy will work, because the Money Laundering Act limits the amount of cash you can deposit in a bank. It also prohibits banks from changing cash from customers who do not have an account.
Additionally, when a country relies on foreign countries to educate and medicate its own citizens, its currency can never be strong. The UK issued less than 9,000 student visas to Nigerians in 2019/20. But this year, with ASUU on indefinite strike, they issued almost 66,000 student visas to Nigerians. If you assume that each student needs about £50,000 annually (tuition, boarding, tickets, health, upkeep, etc), that means as a country, we will need to send extra £2.85 billion per year! Now that’s just the UK only! None of that is Emefiele’s fault!
The Naira redesign will also help improve the value of the Naira by getting currency out of circulation and into banks, which will reduce, but not eliminate, the ability of currency speculators to frustrate the Central Bank of Nigeria’s ability to control the direction of the Naira.
I see some people saying that those with unexplainable stockpiles of cash will start buying properties to try to escape the Naira redesign. Yes, that is a possibility, but it will hardly solve a problem, because paying for property above ₦5 million in cash is a crime according to the Money Laundering (Prevention and Prohibition) Act, 2022.
Only unwise people will sell their properties for cash that they may find difficult to deposit. And yes, they can break it down into smaller amounts and deposit at different dates, but the Central Bank of Nigeria has software that alerts it when individuals make cash deposits of more than a certain amount over a short period, even if it is paid into different accounts in multiple banks. Your Bank Verification Number tracks all your accounts. Besides, commercial banks have laid down rules for reporting illicit or suspicious transactions, rules that would be vigilantly followed this period.
And yes, they could give those monies to surrogates to pay into their accounts. But let us face it. We are talking about Nigeria and Nigerians here. What did Boris Johnson say about our ‘obsession’ with money? Well, good luck to those who will try that. I hope they will be able to retrieve their money from their surrogates.
But on a serious note, Nigeria is facing desperate times, and desperate times call for desperate remedies.
What are we doing with ₦3.3 trillion cash in circulation and outside the banking sector? No wonder inflation is now at double digits. And the number one culprit are bandits, who kidnap for ransom, and Nigerians who agree to pay the ransom demanded. I know this sounds cruel, but the more we pay ransoms, the more kidnaps will occur.
And Governor Emefiele cannot go about arresting kidnappers. He neither has the mandate to do so, nor the wherewithal to do it. And so the next best thing is to make their Naira stockpile useless to them.
Most of these guys are stuck in different forests around the country. Leaving their lairs to go to the city to exchange their old Naira for new Naira is risky. And by virtue of the Money Laundering Act, banks will not change amounts above ₦5 million for non-customers. Even if they use proxies, it will be hard for them to change their old Naira before the deadline.
We are so used to reflexively condemning any government policy that we do not even pause to reflect on whether a policy is good or not before we criticise it. By this one act, Emefiele has dealt almost a mortal blow to bandits and kidnappers.
And some people, including those in this present administration, seem not to understand the nuances in the relationship that the Central Bank of Nigeria has with any incumbent President and his administration.
By virtue of the Central Bank of Nigeria Act 2007, the Central Bank of Nigeria is an independent financial institution.
Section 1 (3) of the Central Bank of Nigeria Act, 2007 provides that “The Bank shall be an INDEPENDENT body in the discharge of its functions.”
Flowing from the above, the argument by the Minister of Finance that she was not informed of the Central Bank of Nigeria’s intention to redesign the Naira, is not a negative on the CBN. It is actually a great positive. It shows that they are independent.
The Bank of England is independent from 10 Downing Street. The US Federal Reserve Bank is independent of the White House. I am not saying everything that the West does is good and that we should copy them hook, line, and sinker. No. However, even communist Russia and China have copied this model and granted partial independence to their own central banks (Putin and his central bank Governor do not see eye to eye on crypto). And such independence has worked well for them. And it will also work well for us.
In monetary matters, attack is the best form of defence. Advance notice will give saboteurs within the system (and believe me, there are many), enough time to develop strategies to counter this patriotic action by the Emefiele led CBN board.
And the argument about costs is moot. Why? Because whether or not we redesign the Naira, we will still have to print new Naira notes. For those who do not know, the process of recalling old currency notes and replacing them with new currency notes is a recurring process in Nigeria, and almost every country, if not every country.
Let us take the United States for example. According to the website of the US Federal Reserve Bank (federalreserve. gov), the average lifespan of a $1 bill is 6.6 years. For the $5 bill, it is 4.7 years. For the $10 bill, it is 5.3 years.
Money is not static. It is dynamic. And for good reason too. viruses and bacteria love money. Paper currency is what is known in microbiology as a fomite. By definition, a fomite is any object or material which is likely to carry infection.
And the thing about paper currency is that it is very hard to sanitise it without destroying it. And that is one of the reasons why they have to be periodically destroyed, as failure to do so would (not could) lead to a health crisis within society.
Which is why it is virtually impossible to find a Naira note that was signed by a former Central Bank of Nigeria Governor from eight years ago.
As a nation, we ought to respect the independence of the Central Bank of Nigeria, and not second guess that critical institution, so that its board is not distracted from the task ahead of it.
And believe me, the CBN has its job cut out for it. I mentioned the inflation rate earlier, and that must be tackled with very tight policies, like Chile has had to do, (lifting rates from 0.5% to 11.25%), or we face the prospect of a Venezuelan or Sri Lankan style inflation, which does not come alone (it is accompanied by intense civil unrest that makes EndSARS look like child’s play).
Nobody benefits from such a scenario. So, our best bet is to prevent it from happening by allowing the Central Bank of Nigeria focus on its core duties, instead of this analysis paralysis neurosis that has since gripped our nation.
Reno’s Nuggets
You only think you are behind your mates, because you are thinking carnally. Think spiritually. The stone that will go far must first be drawn backwards by the catapult. You are not behind. You are only being prepared for your launch into orbit! And by the way, who is really your mate? You were born alone and you will die alone, and in between your birth and your death, the only person that will have exactly the same experiences as you is you. You are your ONLY mate!
*Omokri is a former presidential aide