Are Nigeria's Currency Redesign and Withdrawal Limits Ill-Timed?

In November 2022, the Central Bank of Nigeria launched new banknotes, after 20 years. The new notes came into circulation effect on December 15, 2022. The apex bank directed all banks and other financial institutions to ensure that over-the-counter cash withdrawals do not exceed U.S.$222 per week for individuals, and U.S.$1,111 per week for businesses. The decision came after the central bank began the distribution of its redesigned bank notes, which it says will curb inflation, counterfeiting, and corruption, writes Stephen Onyeiwu for The Conversation Africa.

However, the news was met with mixed reactions. The National Assembly called for the suspension of the policy, at least until after the 2023 general elections. Experts were sceptical about such results in a country that has battled chronic corruption for decades, with government officials regularly arrested for looting public funds that have caused more hardship for many struggling with poverty.

People have been given up till 31 January 2023 to return old naira notes to banks, central bank cash offices, and other designated financial intermediaries. But the 38 million Nigerians (or 36% of the adult population) who don't have a bank account have no choice but to hold on to the old notes. Banks don't have enough of the new ones to exchange for the old ones.

The timing of the policy announcement and rollout is bad. Domestic and foreign investors are already jittery about the upcoming elections and the state of the Nigerian economy. This new policy will add another layer of uncertainty, argued Onyeiwu.