The governors made their positions known in a statement signed by the Sokoto State Governor and Chairperson of the NGF, Aminu Tambuwal.
The 36 state governors of the Federal Republic of Nigeria under the platform of the Nigeria Governors' Forum on Tuesday urged President Muhammadu Buhari to extend the timeframe for the implementation of the Naira Redesign policy.
The governors made their positions known in a statement signed by Sokoto State Governor and Chairperson of the Nigeria Governors' Forum, Aminu Tambuwal.
In December 2022, the Central Bank of Nigeria (CBN) announced new limits for cash withdrawal, specifically limiting daily withdrawals to N20,000 for individuals and N100,000 for corporate organisations.
Similarly, the CBN announced the re-designing of the N200, N500 and N1000 and specified an implementation period of 45 days before shifting the deadline to 10 February.
But since it introduced the policy, Nigerians have had difficulties accessing the new notes. The development has also worsened the hardship being faced by Nigerians, as there was an existing fuel scarcity crisis. These challenges have now led to protests and demonstrations in some parts of the country.
The NGF, in its statement Tuesday, said that it does not doubt the good intention of the CBN to curb the excesses emanating from cash transactions and the imperative to migrate the country to digital financial services and cashless economy.
"We note that this policy is intended to address the contradictions in our fiscal environment including the dysfunction that has resulted from large volumes of cash circulating outside the banking system, estimated at over 80%," it said.
"Understandably, the policy is designed to have been aimed at addressing the shortage of clean banknotes, the attendant negative perception of the CBN, the increased risk to financial stability and the threat of counterfeiting."
However, the forum acknowledged the concern shown by experts and renowned institutions over the implementation of the policy as poor execution of the policy would hurt the economy and have a disproportionate impact on the most vulnerable.
"Mr. President, a State by State analysis has shown that this policy will affect several intra State security arrangements which basically depend on cash transactions to ensure effective implementation," the forum said.
"Your Excellency, we also find the timing of these policies untenable. The new currency was unveiled between mid-December 2022 and January 2023, which essentially allows a 45-day window for implementation.
"This period also coincides with the Christmas and new year festive season, which is traditionally a time of heightened commercial activity. The speed of implementation of the policy is a recipe for anarchy in the country and we urge a re-think of the policy."
Cash withdrawal
Regarding the reviewed cash withdrawal limit, the NGF said the informal sector in the states, particularly in the Northern and Niger Delta States, almost wholly depend on cash transactions because of the nature of their trade. It added that an immediate limitation in the use of cash without robust engagement with stakeholders as well as the provision of accessible alternatives will deny such people legitimate sources of livelihood.
The Governors' Forum argued that the cumulative effect of "these unintended but very profound and probable consequences of these policies" would be a rise in the number of unemployed and unengaged persons who will inevitably resort to crime to make ends meet.
"This has a dangerous implication to the security of the country and a potential to derail Mr. President's security agenda," it said.
The forum said that it noticed the remarkable unavailability of the new notes, adding that some banks are rejecting the old notes even though they are still legal tender. These have resulted in riots and protests from Nigerians who are clearly frustrated by this policy, it said.
"Your Excellency, to further compound the unfortunate situation occasioned by these new policies, the Nigeria Financial Intelligence Unit (NFIU) recently released an Advisory and new Guidelines on cash transactions. We are already in talks with the NFIU for a review of these policies," it said.
Recommendations
The governors appealed to the president to "approve an expanded time frame for the implementation of the policy and direct the CBN to make the new notes available within the enlarged time frame."
The forum also urged Mr Buhari to direct a thorough assessment of the prevailing economic conditions related to the implementation of the currency change and cash withdrawal limit policies and approve the putting in place of necessary infrastructure and facilities within a reasonable time frame to facilitate the implementation of the policy.
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It urged the governor to introduce incentives to encourage the use of digital payment solutions and invest in infrastructure to expand access to financial services.
In addition, it urged the president to "direct that a robust enlightenment campaign be mounted to create sufficient awareness in the citizens of the thrust of the policy."
This decision, it said, will help people better understand the implications of the naira redesign and cash withdrawal limits and how to use digital payments platforms.
The Governors' Forum also urged Mr Buhari to direct the review of the NFIU Advisory and Guidelines to accommodate the peculiar circumstances of States; direct the CBN to increase foreign exchange availability to alleviate the pressure on the naira; and encourage increased collaboration between the government and the private sector to encourage digital payments.
