Nigeria: Mixed Reactions As CBN Unveils New Naira Notes

24 November 2022

Nigerians as well as finance experts are divided over their assessments of the newly redesigned naira notes that was unveiled by President Muhammadu Buhari yesterday in Abuja.

Buhari and the Central Bank of Nigeria governor, Mr. Godwin Emefiele, among other officials, launched the new naira notes, yesterday at the State House, Abuja.

However, many people said the notes only changed colours but retain their old features.

Speaking at the launch of the new banknotes, which preceded the Federal Executive Council (FEC) meeting, President Buhari expressed delight that the redesigned currencies are locally produced by the Nigerian Security Printing and Minting (NSPM) Plc.

The president, in a statement by presidential spokesman, Femi Adesina, explained in detail the basis for his approval to the CBN to redesign the 200, 500 and 1000 banknotes.

According to the president, "the new Naira banknotes have been fortified with security features that make them difficult to counterfeit."

He also added that the new banknotes would help the Central Bank design and implement better monetary policy objectives as well as enrich the collective memory of Nigeria's heritage.

President Buhari commended the CBN Governor, Godwin Emefiele and his deputies for the initiative, while also thanking the managing director, executive directors and staff of the Nigerian Security Printing and Minting Plc "for working tirelessly with the apex bank to make the currency redesign a reality, and for printing the new Naira notes within a comparatively short time."

Acknowledging that international best practice requires central banks and national authorities to issue new or redesigned currency notes every 5 to 8 years, the president noted that it is now almost 20 years since the last major redesign of the country's local currency was done.

"This implies that the Naira is long overdue to wear a new look.

"A cycle of banknote redesign is generally aimed at achieving specific objectives, including but not limited to: improving security of banknotes, mitigating counterfeiting, preserving the collective national heritage, controlling currency in circulation, and reducing the overall cost of currency management

"As is known, our local law - specifically the Central Bank of Nigeria Act of 2007 - grants the Central Bank of Nigeria the power to issue and redesign the Naira.

"In line with this power, the Central Bank Governor approached me earlier this year to seek my permission to embark on a currency redesign project. I considered all the facts and reasons presented before me by the Central Bank.

"There was an urgent need to take control of currency in circulation and to address the hoarding of Naira banknotes outside the banking system, the shortage of clean and fit banknotes in circulation, and the increase in counterfeiting of high-denomination Naira banknotes. It is on this basis that I gave my approval for the redesign of the 200, 500 and 1000 banknotes.

"While this may not be apparent to many Nigerians, only 4 out of the 54 African countries print their currencies in their countries, and Nigeria is one. Hence, a majority of African countries print their currencies abroad and import them the way we import other goods.

"That is why it is with immense pride that I announce to you that these redesigned currencies are locally produced right here in Nigeria by our Security Printing and Minting Plc," he said.

In his remarks, the governor of CBN, Godwin Emefiele, thanked the President for his unwavering support for the redesign and distribution of the new notes, which he said will control inflation, make policies more effective, ensure financial inclusion and fight corruption.

Emefiele also appreciated President Buhari for his insistence that the initial notes must be designed and produced within the country.

"Mr. President, only a President of your esteemed and incorruptible stature could have done what we are witnessing today," he added.

Mixed Reactions from Nigerians

Meanwhile, while some expected wholesome changes to the N200, N500 and N1000 notes launched yesterday, others appreciated the motive of the change rather than aesthetics, as long as they are legal tender.

A chartered accountant, Adeola Oyebamiji, who works in Lagos, said: "At first glance, the new notes looks like a lazy work but upon further reflection, I realise the aim of the currency redesign is more bigger than its aesthetics and we will get used to it with time"

On his part, a business man in Port Harcourt who preferred to be identified as just Chinedum, said he was "expecting a total change in the face of the new notes.

"Well, I was expecting a total makeover of some sort - new designs or something similar. This looks more like just a colour change; primary colour change, such as red, blue and green, but it is still a change nonetheless."

The chief executive officer, Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, said the whole exercise has no economic value for the country.

An entrepreneur, Mr. Olufemi Omotayo, said: "They (CBN) merely changed the colour, not the design. It would be interesting to know how much has been spent on this. I believe they will tell us in the days ahead to measure whether the spending is worth it or not."

Head of financial institutions ratings at Agusto&Co, Ayokunle Olubunmi, on his part, said he was more concerned about the security features included in the new notes.

According to him, one of the reasons given for the change of currency was due to the ability of criminals using new technology to forge the naira notes.

"I did not have any major expectation for the new notes other than improved security features. My concern is that they have not said much about the security features. Before now, if the CBN was issuing a new note, there would have been sensitisation and jingles on radio, television and newspapers on the security features that people should watch out for.

"However, we have not heard anything about the security features that the new notes have and what difference people should watch out for in the new notes.

"To be fair to the CBN, when the dollar was changed, there was not much difference between the new notes and the old notes, but the security features were more to make it harder to forge and that was what I was expecting from the CBN." Olubunmi noted.

A source within the CBN who confided in LEADERSHIP explained that the removal or addition of a new feature would have had a serious cost implication which the apex bank was trying to avoid.

"If a feature was introduced or removed, it would mean a lot of research and developing a new plate. That, in itself, isn't cheap and isn't something that can be done in a few weeks.

"With the new redesign, CBN intends to print few notes which will be circulated. Consequently, CBN would be in a better position to control the money by driving its cashless policy. This would also reduce the activities of terrorism financing as well as proceeds of kidnappers. It is also intended to reduce the counterfeiting of the notes. So, Nigerians should be more concerned with the actualisation of these aims. If this is followed to the letter, we may see our naira appreciating," the source pointed out.

A broker with Calyxt Securities Limited, Mr Tunde Oyediran said, any policy or initiatives that can strengthen the nation's currency should be backed by the country's financial institutions and government, adding that the change in colour is enough to curtail the excess currency in circulation.

For the managing director of Countryside Communication Limited, Mr Johnson Okanlawo, the new naira is okay as long as it is means for exchange.

The above view is shared by a renowned economist, Professor Tayo Bello.

He said, "As long as it's a legal tender, its fine. The motive of naira redesign should be the ultimate and as long as the CBN achieved that, the complaints of not having much difference between the new and the old notes do not hold water."

However, he expects the CBN to improve on the security features to guard against saboteurs of the nation's currency.

Similarly, the editor-in chief of Primetime Business Africa, Dr. Marcel Mbamalu, said he didn't expect too many changes in the new naira notes, especially as CBN never promised any improved security features or entirely new features to the currency during its earlier announcement of Naira redesigning.

He said as long as the apex bank does not allow the process to be influenced by the powerful ruling elite who might want to take advantage of the new development for their own selfish political gain, he is okay with it.

"CBN and the federal government should just allow a level playing ground for all political actors, especially in the current political dispensation and campaigns, such that the politicians close to government don't have undue advantage over others in the use of the nation's new legal tender for political campaigns and gains," he said.

Earlier, at the unveiling, the CBN governor, Mr. Godwin Emefiele had said the official launching of the new Naira banknotes marks a major milestone in CBN's efforts to solve the numerous challenges facing the management of the nation's currency with the unveiling of the three redesigned denominations of N1,000 , N500 and N200.

He said: "A significant hoarding of banknotes by members of the public, with statistics showing that N2.72 trillion out of the N3.26 trillion currency in circulation as of June 2022 was outside the vaults of commercial banks across the country, and supposedly held by members of the public.

"Second is the worsening shortage of clean and fit banknotes with the attendant negative perception of the CBN and increased risk to financial stability while there is increasing ease by criminals and risk of counterfeiting evidenced by several security reports received at the Central Bank of Nigeria," he pointed out.

Highlighting the benefits of the currency redesign to the Nigerian economy, he noted that "this policy will help to control inflation as the exercise will bring the hoarded currency into the banking system, thereby making monetary policy more effective; helps with better design and implementation of Monetary Policy as we would have much more accurate data on money supply and monetary aggregates.

"It will also increase financial inclusion, moving towards a more cashless economy, and ensuring greater formalisation of the Nigerian economy while assisting in the fight against corruption as the exercise would rein in the higher denomination used for corruption, and the movement of such funds from the banking system could be tracked easily."

The new notes, he said, have enhanced security, greater durability, attractiveness and the country's rich heritage

Slow Return Rate Of Old Notes Worries CBN

Meanwhile, barely two months and a few days to the January 31, 2023 end date for the high-denomination old bank notes, the Central Bank of Nigeria (CBN) has expressed worry over the low response by Nigerians and commercial banks towards the return of the old notes.

"Up to now there is no serious uptick in the deposits that customers are doing," CBN's director in charge of currency, Ahmed Bello Umar, said yesterday at a post-Monetary Policy Committee media briefing in Abuja.

Umar said between October 26 when CBN announced the redesigning of the high-denomination notes and November 17, only N165 billion out of the N3.23 trillion in circulation had been returned to the apex bank.

It was revealed that some banks have not even started returning the old currency to the central bank.

He expressed worry that late hour rush by those still hoarding the currencies could cause stampede at the banks.

CBN Governor Godwin Emefiele on Tuesday maintained that the bank would not shift the January 2023 deadline for the existing notes to be acceptable as legal tender.

He was responding to critics who said that the six-week window provided was too small. Others also argued that the timeline would hurt the rural poor who do not have easy access to bank branches.

Director, banking supervision at the CBN, Haruna Mustapaha said the central bank was planning to reduce the volume of the high-denominations in circulation when the redesigned bank notes are circulated to discourage hoarding and counterfeiting.

"We may not have so much in those denominations," he said. Currently, about 80 percent of the money in circulation is high-denominations, with approximately N2.9 trillion both in banks and outside being constituted by two denominations as N500 and N1000, he stated.

CBN has enough grains - Director

Meanwhile, the director in charge of development finance, Philip Yila Yusuf, has said the bank has enough reserve of rice and other grain products to crash the rising prices of the farm products, which is largely caused by middlemen.

Dr Yila said the bank is aggressively going into wet season farming to close the expected gap in food supply as a result of the recent floodings that affected 33 states of the federation.

He said the bank is importing some seedlings of various types from Mexico with high yielding seeds year on year for the farmers to plant.

He said CBN is commencing a dry season wheat farming programme in four states: Jigawa, Sokoto Gombe and Kebbi States where the climate is right and enough land to be able to do the cultivation.

"All things being equal, we're looking at 400,000 hectares. So, a lot more land is going to be unlocked. At the same time, we do not want farmers running away from rice, because we have high yield seeds for wheat," he said.

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