Ten Unforgettable Events That Characterised FG, CBN Naira Redesign Policy

The Central Bank of Nigeria on Monday, March 13, 2023, ordered commercial banks to accept and start dispensing the old naira notes.

The old notes were seized to be legal tender as of February 10th, 2023 based on the FG-CBN deadline for swapping old notes for newly redesigned notes.

But a supreme court order compelled Nigeria’s apex bank to rescind its decision on February tenth.

CBN on Monday in compliance with the March 3 ruling of the Supreme Court declared that the old ₦200, ₦500, and ₦1000 notes should be used concurrently with the new notes till December 31, 2023.

Whilst the CBN deadline stands, and prior to Monday’s declaration by the apex bank, many Nigerians went through difficulties and so much hardship leading to an outbreak of protests across the country, loss of lives and properties, paralyzes of commercial activities among other unforgettable issues that bedeviled or plagued the Naira redesign policy.

In this article, CityNews highlights ten unforgettable issues that characterized the CBN laudable policy which was targeted at kidnappers, vote buyers, and the actualization of a cashless policy.

Issues That Plague CBN Naira Redesign Policy

1. Scarcity of Naira – One of CBN’s intentions for the naira redesign is to mop up excessive cash in circulation, which according to the CBN Governor, Emefiele, is the cause of the increasing inflation rate in Nigeria.

To achieve its aim, the CBN releases a limited amount of the new naira notes to commercial banks, but the Nigerian economy has been predominantly a cash-driven economy, hence, the contraction in cash supply caused serious panic and adverse effects on individuals and businesses.

2. Hoarding Of New Naira Notes, Naira Racketeering –  Naira scarcity was not only caused by the contraction in supply but also, some bank managers were hoarding the new notes and were selling to POS operators who charged the public exorbitant fees for swapping and withdrawal.

Nigerians were paying as high as ₦1,500 for the withdrawal of ₦5,000, that’s 25% of any amount to be withdrawn. In other words, to withdraw five thousand naira (₦5,000) such a customer must pay six thousand, five hundred naira only (₦6,500) or the customer gets three thousand five hundred naira (₦3,500) instead of five thousand naira (₦5,000).

Certainly, for over a month, Nigerians were exploited through naira racketeering.

3. #NairaToNaira Trends – Naira racketeers ensure that the new naira notes didn’t get to the masses, forcing them to buy their own currency at a premium. The situation resulted in varying amounts at which Nigerians paid to get cash for domestic needs.

Since Nigerians were buying naira at varying amounts, people coined the phrasal hashtag ‘NairaToNaira’, which simply indicates how much naira is being paid to acquire new naira notes at different places in Nigeria.

The hashtag trended for most of the periods that the CBN old naira notes’ February 10th, 2023 swapping deadline stands.

4. Prices Of Commodities Skyrocket – The direct effect or chain reaction of Naira scarcity was a hike in the prices of domestic goods, especially those needed for immediate consumption. 

Prices of goods skyrocketed because many small business owners and individuals needed physical cash to pay their suppliers, most of whom demanded payment in cash. So, lots of petty traders, especially those that have no bank accounts had to buy naira at a premium to pay suppliers, the premium is a factor taken into consideration when pricing their goods, and the premium is passed to final consumers.

CBN Governor, Godwin Emefiele

5. CBN Governor Became More Popular – prior to the Naira Redesign Policy and its untoward hardship, the governor of the Central Bank of Nigeria, Godwin Emefiele, was not known by many Nigerians, in fact, not many knew he wanted to contest the All Progressive Congress (APC) presidential primary election.

However, shortly before the February 10th naira swapping deadline, the CBN governor’s name, Emefiele, became a household name because of the difficulties the naira redesign policy has brought on Nigerians.

As with every leader, Emefiele is being castigated and blamed for the hardship which characterized the CBN policy, and today, tons of people in the queue at different commercial banks would quickly and verbally hold Emefiele responsible for their predicaments.

6. People Lost Their Lives – This is one of the tragic events that plagued the naira redesign policy.

7. Commercial Banks across the country lost valuable assets worth millions of naira – Following protests that erupted in many parts of the country, some commercial banks in Ogun, Oyo, and Delta were set ablaze by irate youths who couldn’t bear the suffering brought on them by the naira scarcity.

But instead of seeking a peaceful and amicable means of way out, these youths wreaked havoc.

The banks’ assets that were gutted by fire were worth millions of naira.

8. Commercial activities paralyzed – The scarcity of naira impacted negatively on so many commercial activities. Lots of POS operators shut down their businesses, and traders dealing in perishable goods were counting their losses as people can’t patronize them because of a lack of cash, so their goods became bad and unsellable. 

It was an event many Nigerians would love to forget quickly. When our correspondent speak to a section of Ogun state residents, they expressed joy at CBN’s decision to obey the supreme court order while recounting their ordeals.

A fruit seller, simply said, “can you see how tensions were doused across the metropolis after the CBN confirmed that the old naira notes should remain legal tender till December 31st, 2023.”

“The past few weeks’ experiences were horrible”, she added.

That expression summed up how difficult it’s been for small businesses, roadside traders, and many Nigerians who would need cash for daily and domestic needs.

9. More Nigerians embrace online/mobile banking – Prior to the February 10th Naira swapping deadline, the associated naira scarcity, and commercial activity paralyzes; a number of businesses reject payment via bank transfer, or POS terminal, largely because they are either scared of losing their money to fake alert, failed transaction and/or to avoid bank charges on transactions less than a thousand naira (₦1,000).

However, the situation has changed as a good number of petty traders, and businesses who reject transfers have now embraced such forms of payments. One of the CBN’s objectives is gradually being achieved, one would say.

10. Unusual Demand For Bank Statements Over Failed Transactions – Many commercial banks in Nigeria are today overcrowded and most of these bank customers visit their banks to request bank statements because of failed, delayed, and/or proof to show a beneficiary of successful transactions.

It is the confirmation of the fear Nigerians nursed by not fully accepting online/mobile banking. 

Many have argued that the CBN’s cashless policy, even though it is not new, is like placing the cart before the horse because of the incessant downtime usually experienced by commercial banks which has resulted in failed or delayed transactions.

They opined that commercial banks need to upgrade their system to be able to accommodate the surge in financial transactions triggered by the CBN Naira redesign policy and its untoward scarcity.

The CBN policy even though grossly castigated, is laudable and would have positive impacts on the Nigerian economy in the long run.

According to a former Central Bank of Nigeria’s Deputy Governor, and a former presidential aspirant,  professor Kingsley Moghalu, whatever benefits ascribed to the Naira Redesign Policy, has been nullified by the untoward hardship it created.

He said, “Today, whatever may have been the benefits of the naira redesign policy have been canceled out by the economic and social gridlock it has created and we are still suffering from it.”