" ITREALMS: Between new currency, e-Naira & 2023 - ITREALMS

Monday, November 14, 2022

Between new currency, e-Naira & 2023 - ITREALMS

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REMMY NWEKE in this piece, examined the plans to introduce new redesigned notes, its impact on eNaira and funding of 2023 general elections.

Barely 24 hours after the commemoration of the first anniversary of the electronic Naira (eNaira), the Federal Government through the Central Bank of Nigeria (CBN) proclaimed the decision to introduce new currency notes, effective from Thursday, December 15, 2022.

The CBN Governor, Mr. Godwin Emefiele, disclosed Wednesday, October 26, in Abuja at a special press briefing, said apex bank has sought and obtained the approval of Mr. President, General Muhammadu Buhari, retired, to redesign, produce and circulate new currency notes of N100, N200, N500, and N1000; Noting that both new and existing currencies shall remain legal tender and circulate together until January 31, 2023, “when the existing currencies shall cease to be legal tender.”

Hoarding of notes:

Currency management, he said, has faced several daunting challenges that have continued to grow in scale and sophistication with attendant and unintended consequences for the integrity of both the CBN and the country. Emefiele underlined some of the challenges to include hoarding of banknotes by members of the public. Statistics, he said, showed that over 85 per cent of currency in circulation was outside the vaults of commercial banks.

And specifically, Emefiele said, as at the end of September 2022, available data at the CBN indicate that N2.73 Trillion out of the N3.23 trillion currency in circulation, was outside the vaults of Commercial Banks across the country; and supposedly held by the public. Evidently, currency in circulation has more than doubled since 2015; rising fromN1.46 trillion in December 2015 to N3.23 trillion in September 2022. This is a worrisome trend that cannot be allowed to continue, coupled with some challenges including worsening shortage of clean and fit banknotes with attendant negative perception of the CBN and increased risk to financial stability; Increasing ease and risk of counterfeiting evidenced by several security reports.

Effect of technologies:

Emefiele lamented that indeed, recent development in photographic technology and advancements in printing devices have made counterfeiting relatively easier, just as this has instigated CBN to significantly higher rates of counterfeiting, especially at the higher denominations of N500 and N1000 banknotes.

Global best practice, he said, is for central banks to redesign, produce and circulate new local legal tender between five and eight (5–8) years, decrying that Naira has not been redesigned in the last 20 years, hence, he charged customers of banks to begin paying into their bank accounts the existing currency to enable them to withdraw the new banknotes once circulation begins.

No charges for cash deposits:

Consequently, CBN directed all Deposit Money Banks (DMBs) in the country to suspend with immediate effect all bank charges for cash deposits, insisting that DMBs are to note that no bank customer shall bear any charges for cash returned/paid into their accounts and advised banks forthwith to commence return of banknotes back to CBN.

While urging banks to keep their currencies processing centers open from Monday to Saturdays in order to accommodate all cash that will be returned by customers.

Hurray! eNaira is one:

This latest introduction came barely 24 hours after CBN rolled out drums to commemorate the first anniversary of the unveiling of what it tagged Africa’s first ‘Central Bank Digital Currency (CBDC)’ - eNaira; formally launched by President Buhari at the State House, Aso Villa on Monday 25 October 2021.

According to the Director, Corporate Communications at CBN, Osita Nwanisobi, the implementation of eNaira, has put Nigeria in global spotlight as one of the pioneers to deploy a CBDC into live production, which has continued to attract the interest of global stakeholders such as the International Monetary Fund (IMF), World Bank, other Central Banks, and the CBDC community.

eNaira advantage?

As part of activities lined up to mark the first anniversary of the eNaira, he said, CBN held a day workshop themed “Leveraging Innovation for Inclusive Growth and Development: The eNaira Advantage,” on Tuesday October 25, 2022 at the Eko Hotel and Suites, Victoria Island, Lagos, with the objectives include to review the eNaira implementation journey, one year after; drive further adoption of the eNaira through public engagement; and facilitate global policy dialogue on CBDC to promote peer learning and benchmarking.

Hosted by CBN Governor, Mr. Godwin Emefiele, with the Ministers of Communication and Digital Economy, as well as Humanitarian Affairs, Dr. Isa Ibrahim Pantami and Mrs. Sadiya Umar Farouq, respectively were speakers, while other key participants comprised of Chief Executives of the Securities and Exchange Commission (SEC), the Nigeria Inter-Bank Settlement System Plc (NIBSS), the Nigerian Deposit Insurance Corporation (NDIC), and the National Information Technology Development Agency (NITDA), members of the Bankers' Committee, the academia, financial services, and telecommunications regulators, merchants, agents, cooperative groups and technical experts, the entertainment industry amongst others.

Effective collaboration, but …:

The event, ITREALMS gathered also featured a policy round-table discussion on “Effective Collaboration for National Development (Infrastructure, Interoperability, regulation)” and a panel discussion on “eNaira Adoption for economic growth.” CBN encouraged Nigerians to be part of the celebration streamed live on the bank's social media channels as well as those dedicated to the eNaira, urging them to visit the website to register and participate in the workshop via www.enaira365days.com.

Ahead 2023 election:

Since the announcement about the new currency introduction, allegations abound ahead of 2023 general election, that the All Progressive Congress (APC)-led Federal Government is doing everything possible to stifle opposition.

Some industry watchers alleged that Buhari’s government introduced two fiscal measures which may appear innocuous on the face value, but considering the timing, these appeared to cripple opposition parties ahead of 2023 election.

Political observers said that the first, was the introduction of newly designed Naira notes by CBN, due to commence on December 15 2022, whereas old notes remain valid until January 31, 2023 and all holders of the old notes to begin returning old notes immediately.
CBN Logo

Old notes and campaign financing:

They also expressed worries that the 2023 Presidential election is coming in February 2023, political parties need fund to finance campaign and other logistics ahead of 2023 and yet FG wanted the deadline for phasing out old currencies to be in January 2023.

The implication this school of thought noted, is that politicians and political parties would be forced to submit old currencies to the banks in order not to be caught off and may not have enough access to equivalent new currency because there may not be enough new currency in circulation at the time to meet up excess demands of physical cash by politicians, political and their supporters during the actual elections.

Opposition parties may be starved of fund:

According to this proponents, APC-backed Federal Government has every access to enough of the new currency to finance its presidential election while other parties or opposition politicians will be subjected to rationing in accessing the new currency at a time they would need money most.

Once all the parties and opposition politicians return their money to the banks to beat the deadline, a simple purported investigation on their account by EFCC can affect cash movement in or out of the account.

EFCC waging war on politicians:

EFCC Chairman has already started gearing for war against lawyers, accountants, real estate agents whom he accused of aiding politicians in laundering money. He was over joyed that the 2022 Amended Money Laundering Act has given the commission an alleged open-cheque to go after lawyers whom he accused of being used by politicians to launder money.

In addition, they posited that it is not surprising that ahead 2023 election, FG redesigned N200, N500 and N1000 Naira notes, and Amended the Money Laundering Act, whereas the old Naira notes are mandated to cease from circulation by January 2023. But they are very suspicious that the timing of these two fiscal policies are geared towards curtailing opposition parties ahead 2023 election while giving FG backed APC unlimited access to the new naira notes to freely do its work in 2023.

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Based on the foregoing, observers canvassed that if FG has no political intention in these two fiscal policies; then, the deadline for returning old currencies should extend beyond 2023 elections.

The need to up the ante in manner of domesticating technology deployment cannot be overemphasized, especially on digital photographic tools in 21st century, beginning with the patronage of the nation’s Top Level Domain (TLD) .NG.

Taking eNaira commemorative website for instance, www.enaira365days.com; it has no known logic for this miss-step on the part of CBN, likewise other FG’s agencies in Nigeria.

Economically, this is a sabotage to Naira, eNaira and amounts to capital flight as well as sustaining foreign domain name industry since the payment must be in USD, while depriving Nigeria this economic value and opportunity to showcase .NG with the assumed global spotlight eNaira brought to the country as one of the pioneers deploying CBDC.

Lack of access to new notes will push politicians more into adapting cryptocurrency as alternative; which is a digital currency designed to work as a medium of exchange through a computer network that is not reliant on any central authority, such as a government or bank, to uphold or maintain it.

Thus, every FG’s agencies and mostly regulatory arms need to wake up in preaching the sermon followed up by living it out through implementation.

Charity is said, must start at home.

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