The announcement of the Naira notes redesign by The Central Bank Of Nigeria(CBN) has stirred up different reactions and opinions as to the positive and negative impacts the policy might bring.

Dr. Musa Sabiu, an economist at the University of Abuja, offers the first viewpoint to be debated. He responded to the CBN Governor’s two primary points. We aim to control inflation and stop criminals like bandits and kidnappers from stockpiling money.

In his argument, Dr. Musa made it abundantly evident that Nigeria’s inflation is structural in origin and has surpassed the scope of monetary policy.

his own words. He stated:

“Money supply is a simple economic term. If there is too much money chasing a few goods, there will be inflation. But the problem of Nigeria’s inflation is not a monetary problem, it is structural. Changing the money or reducing the money supply will not change anything because we have a large population and a very weak production capacity. Industries have been closing down and no electricity. The price of diesel that you use as an alternative for your industry has skyrocketed to almost N1000 per litre. How can you produce?”

He questioned the first factor cited by the CBN Governors in support of the redesign of the naira note policy as he concluded his remarks.

In contradiction to the second point made by the governor of the CBN, who hinted that the policy will prevent kidnappers and robbers from storing significant sums of money.

He rebutted,

“Who told you the criminals are keeping their money in Naira? This criminality you see—this banditry, armed robbery, kidnapping, Boko Haram is an organised international crime. Do you think ordinary Fulani illiterates can kidnap, organise ransom and get away with it? There is a better brain behind them. That is why the value of the naira continues to fall. People buy dollars not necessarily to import, but as a store of value and as a means to keep the proceeds of criminality. Who is keeping naira? Government is beating a dead horse,”

Second, Dr. Masu Gombe, a fellow economist from the University of Abuja’s department of economics, supported Dr. Musa’s viewpoint.

Added he,

“If there is inflation in those countries, automatically, it will cause cost-push inflation in Nigeria,” Dr Gombe said, adding that controlling inflation will only work when there is effective demand.”

“Introducing this new policy, of course, you will control the supply of money, as you control the supply of money, it means that consumption will reduce— if consumption declines, this means production will reduce and employment will reduce as a result of laying off. This means you are mortgaging effective demand for autonomous consumption, that is catastrophe. This will lead to criminality,”

The country is more of an importer than an exporter, making it vulnerable to the economic activities of other nations, he continued, so the problem with inflation in Nigeria is not local.

Furthermore, he implied that the advisors of the president who influenced his decision to permit the redesign of naira notes, intentionally did this for their selfish gains, to halt the transition the country has been recently undergoing.

He explained,

“Those who advised him in that context, left to me, they are mischievous. Because if you left it to him, he is not an economist, all those promoting this kind of thing, if you X-ray this policy, you will realise they are doing it for their own benefit, not in the interest of Nigerians,”

The regulation, according to Dr. Masu Gombe, will have an impact on politicians who may have accumulated money to give to their supporters.

Additionally, he stressed that the legislation will soon have a detrimental impact on business owners and entrepreneurs.

Nevertheless, Professor Moghalu, a former CBN Deputy Governor applauded the Central Bank of Nigeria for the development of the Naira notes redesign.

“I fully support the Central Bank of Nigeria in redesigning the Naira. If 80 percent of banknotes in circulation are outside the banks, that is troubling.

“The CBN obviously wants to force all those notes back into the banking system. Those with the notes must surrender them to get new ones or else it becomes illegal tender after January 31, 2023.

“This is also a way to withdraw currency from circulation, an unorthodox way of tightening the money supply since the country is battling high inflation.”

“The flip side is that people who are holding huge amounts of cash outside the banking system for nefarious reasons will go to the parallel forex market to buy hard currency, putting further downward pressure on the value of the Naira as too much Naira will be chasing too few dollars.”

Although, he conveyed his doubts of the policy bringing a solution to the Country’s Inflation, since there are other causes of inflation except the circulation of money.

However, he opined for a 90-days window for the implementation of the policy.

Similarly, The Conference of Nigerian Political Parties (CNNP) also supports the policy of naira notes redesign.

The group contends that the amount of cash in circulation that the bank is unable to account for threatens both the nation’s economic and internal security.

“It is, therefore, obvious that many politicians, especially since 2015, amassed illicit wealth and depleted the national commonwealth to the extent that the currency in circulation has more than doubled since 2015, rising from N1.46 trillion in December 2015, to N3.2 trillion as of September 2022, according to the CBN data.”

“The CNPP is totally in support of the CBN and the CBN Governor, Mr. Godwin Emefiele, on this policy initiative and hereby call on all security agencies, including the Department of State Services (DSS), the Economic and Financial Crimes Commission (EFCC), and the ICPC to redouble efforts to reduce insecurity and electoral corruption by placing all politicians contesting in the 2023 general election on perpetual surveillance,”

“Only politicians who intended to buy votes and financially induce electoral officials, the ignorant of the import of the policy or beneficiaries of proceeds of crimes, including drug barons and kidnappers, will kick against the move by the CBN,” it added.

Last but not least, the Economic and Financial Crime Commission (EFCC) has explicitly said that it will monitor illegal funds in the run-up to the phasing out, in addition to supporting the strategy.

The CBN, EFCC, and other financial authorities have previously collaborated closely to discuss and decide on the best way to stabilise the nation’s monetary policy environment, according to Abdulrasheed Bawa, executive chairman of the EFCC.

Hence, This approach has developed into a chance for the country’s monetary policy to be stabilised.

In order to ensure a smooth withdrawal of the old currency, Bawa has informed the financial sector services in Nigeria, particularly Bureau De Change Operators and commercial banks, to act in accordance with those recommendations.

Additionally, he issued a warning that the EFCC will keep an eye on the exchange of naira notes to ensure transparency.

Regardless, the involvement of the EFCC may become a roadblock to people looking to exchange their naira notes.

Professors, government officials, and concerned citizens all seem to have diverse opinions about the policy.

Do you agree with any of this various opinions?

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