On Thursday, February 2, 2023, during a zoom interview on Channels TV, the National President, Association of Mobile Money and Bank Agents in Nigeria, Mr Victor Olojo, was put on the spot over the current naira crisis. The Central Bank of Nigeria mandates banks to pay customers with the new naira. The banks complain of inadequate supply of the new notes and innocent Nigerians are groaning under the yoke of the buck passing between the CBN and the commercial banks.
Responding to a question that the Point of Sale operators were taking advantage of the naira scarcity to charge those desperate to withdraw money huge interest, Olojo explained that his members also had to source for naira notes in many places, including filling stations at a cost.
One of the major headlines in Nigeria on Wednesday, October 26, 2022, was arguably the announcement by the governor of CBN, Mr Godwin Emefiele, that the apex bank would redesign some of the naira notes and make them legal tender before the end of the year.
This is a Federal Government project which the apex bank has the statutory obligation to execute every five to eight years by global standard. But it is believed that in the last 20 years, such a comprehensive re-design has not been done. The rationale for redesigning N200, N500 and N1000 is to help curtail counterfeiting, enhance CBN’s visibility of money supply, promote financial inclusion, boost cashless transactions, reduce the expenditure on cash management, tame inflation and perhaps track some money launderers. In addition to the new design, the apex bank has announced the limit of cash that an individual or corporate entity can withdraw at the counter and the maximum daily withdrawal at ATMs.
The intent of the Federal Government looks good. But market watchers were quick to finger electricity and network challenges in many parts of Nigeria, especially the rural areas. They therefore cautioned the government to ensure a more conducive environment before the new policy becomes operational. This position was reinforced by the initial reaction of the Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed. that the ministry was not consulted, adding that it was the announcement it heard.
The die is cast. The Oracle has spoken. Nigerians are already contending with the consequences of a good policy erected on hasty implementation procedure. Ironically, by esprit-de-corps, Ahmed is now assisting our embattled Emefiele in the damage control style to hawk a product that is fast becoming a hard sell. Many voices, including those of some governors, have called for an extension of the deadline for old notes. After grandstanding, Emefiele announced that the deadline had been extended by one week to February 10, 2023, and the President, Major General Muhammadu Buhari, assured that within seven days, every Nigerian would have access to the new naira notes.
There are issues. The CBN is asking commercial banks to start paying the new naira notes. But the banks are saying the new notes are not available. It is curious how the new naira notes got into the hands of partygoers and money changers. In every adversity, there are opportunities. PoS operators took over the jobs of banks. They charge an average of N2000 on N10,000 of the old notes as people are desperately in need of cash . The apex bank’s decision that people can still deposit old currency after the new deadline is covered by law but has defeated the objective of tracking money launderers.
Positive impacts of the President’s promise of resolving the scarcity of new naira notes within seven days has yet to be felt nationwide and time is running out. Economic activities have been bruised. In the process, Emefiele who appears to enjoy controversy in his characteristic military approach has said the new deadline would not be extended. Nigerians are tired of assurances but need action. Top analysts believe that the operational methodology of making the new naira notes available is flawed. They argued that the apex bank should have released the new notes in tranches to ensure widespread circulation and pump more N100 notes into the system to boost the new currencies in the process.
Emefiele was appointed the CBN governor by President Goodluck Jonathan in 2014. Upon assumption of duty, he rattled the financial market by blocking importers of 41 items, including toothpicks from the official forex window since the items could be produced in Nigeria. The President, Major General Muhammadu Buhari (retd) extended his tenure in May 2019 for another five-year term. If he does not have the backing of the presidency, he could not have announced the decision to print new naira notes without input from the finance minister.
There was also his rumoured presidential ambition on the platform of the ruling All Progressives Congress. Emefiele did not only dare the public condemnation of his partisanship and massive call for his immediate resignation, he also went to the High Court, Abuja to file a suit against the Independent National Electoral Commission and the Attorney-General of the Federation and Minister of Justice, Mr Abubakar Malami, SAN, alleging attempt to disqualify him from the 2023 presidential poll. But the court refused his prayers. The landmark judgement is a strong basis for a review of the relevant section in the CBN Act which is silent on eligibility of a serving governor to stand for an election in Nigeria.
We write our history every second. On one hand, Emefiele shall go down in history as the first governor of the CBN to serve for two-terms since the country returned to democracy in 1999. On the other hand, Emefiele is the first serving governor of the CBN to seek court approval to enable him to run for presidential election. The apex bank should not lose focus. There are lots of gaps in the management of the Nigerian fiscal and monetary policies. The economy has been working on its head before Russia invaded Ukraine. We cannot continue to blame our economic woes on COVID-19 pandemic. Inflation rate was already double digit before the COVID. Nigerians had been contending with unemployment, low purchasing power and rising poverty before the pandemic. The Nigerian economic outlook for 2023 is gloomy.
A global rating agency, Moody’s Investors Service dropped the country’s credit rating from B3 to junk bonds. The agency also stigmatised nine banks, including some tier-ones on creditworthiness. Although Ahmed is contesting that the external rating agency did not understand the domestic economy. Nigerians are languishing in pains over exchange rate conundrum, forex scarcity, high cost of living, insecurity and many other issues. The rating is a call to the economic managers to change their strategy. Where is the economic management team? They should not wait until the country’s economy goes bankrupt.
The country’s problem is not about the dearth of ideas but implementation. I have not seen any difference in the manifestoes of the three leading presidential candidates. They are practically selling the same products—- all are pro-market, private-sector -dominant and apostles of political fuel subsidy removal among others. What can distinguish whoever emerges the president after the election from the status quo and free Nigerians from the current crises is strategy implementation.
- Oni is a chartered stockbroker and commodities broker
