The Central Bank of Nigeria (CBN), in its economic wisdom has unveiled the new redesigned Naira notes of 200, 500 and 1,000 denominations. The unveiling of the new notes by President Mohammadu Buhari on November 23rd at the Federal Executive Chambers of the State House, Abuja took Nigerians by surprise as the CBN had earlier planned to unveil and release the new notes on December 15th. It was a move that left many wondering the reasons behind the urgency of the unveiling.
The CBN Governor, Mr Godwin Emefiele had earlier notified Nigerian in a press conference on Tuesday November 22nd, during the Monetary Policy Committee (MPC) in Abuja, that not only will the new notes be unveiled on November 23rd but there would be no going back on the January 31st 2023 deadline for the return of the old Naira notes. He argued that the 100 days window which was from October 26th 2022 till January 31st 2023 given to return the old notes was enough and there won’t be enough extension. Emefiele explained that the non-extension of the deadline is hinged on the reasons that a lot of money that would have been in the bank are hidden underground, in septic tanks and other unbelievable places. Thus, this is a deliberate effort to catch those who have locked the nation’s treasury outside the banking system.
Going back to 1996, when the United States of America redesigned their Dollar bills, their main focus was to wade off counterfeits and make their currency easily identifiable with people with low vision. In essence, security features were the drive for the US governments unlike the Nigerian governments where the desire to recover money outside the banking system is the quest.
Among the alterations of the new dollar was a universal Federal Reserve seal rather than individual seals for each Reserve, Optically variable ink (OVI) changes from green to black in the number in the lower right-hand corner of the bill when viewed from different angles, a watermark of the figure in the portrait and others while retaining some basic elements in the old notes.
In 2017 when Ghana marked the 60th year of the establishment of the Bank of Ghana, a new 5 cedi note was introduced into the country with features even different from the rest of the Cedi denominations like 2 Cedi, 10 cedi and even 50 cedi. The then Bank of Ghana, Governor, Mr Kwesi Ammisah-Arthur (now late) mentioned that the government’s plan to have a varied look of its country’s was in order to improve identification. On November 29th 2019, the country introduced the 100, 200 cedi notes and 2 cedi coins to suit current inflationary trends. Regardless, the move was a betrayal of their redenomination currency policy from July 1, 2007. Till now, Ghana still uses the 1 cedi and 2 cedi notes fashioned during the redenomination era though with a promise that they would be gradually replaced by coins.
In June 2022, Bank of Sierra Leone redesigned their currency targeted to boost the leone currency already bamboozled by Dollar at 13,000 to $I. At the unveiling, no aesthetical alterations were incorporated but only highlighted a knock off three zeros which are jokingly called ‘zeroes of shame’ in the country. Instead of the initial 1,000, 2,000, 5,000, 10,000, notes the new currency was replaced by 1-,2-,3-,10 leone notes. The new notes were said to be smaller and still retained all designs that had lasted for 20 years in the country
What is currency redesign?
According to experts; 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.
Recall that on February 28th 2007, as part of the economic reforms, N50, N20, N10 and N5 banknotes and N1 and 50K coins, were reissued in new designs. While a new denomination N2 coin was introduced.
The redesigning of the currency has elicited concerns as to how much did it cost Nigeria to redesign the Naira
Speaking during an interview on Channels Television’s Politics recently, Omoyele Sowore alleged that the amount the Central Bank of Nigeria (CBN) spent to redesign the naira is N218 billion. There are also speculations that the CBN spent N50bn for the exercise.
Following the death of the Queen of England ,the Bank of England will reveal updated banknote designs featuring King Charles III by the end of 2022 on all current polymer versions. They are expected to enter circulation by mid-2024, according to reports.
Speaking to MMS Plus, Professor of Financial Economics, University of Uyo Leo Ukpong, stated that he believed the aim of the note –retrace lost fund is attainable with the redesigning.
“The expectations of Nigeria from general news was that the redesign of Naira was to control political rigging. However, the Central Bank Governor gave the official reason. I don’t think there has been an overwhelming reaction in terms of bad or good. Some analyst believe it’s good, that it will cut down on illegal money in the system
“However, for me , there are some traders with money that is stocked either at home and not in the bank’s vault for genuine reasons. That is in the minority. But other people would also hold money outside the banking system because it’s illegal money, if they take it to the bank they can be traced . If the new Naira notes come into place, what we expect is that money would go back into the formal banking system . The government hasn’t said they would arrest anyone who deposits large sum, but it would give the government an idea of how much money we have in the vault.
“Last week, the Central Bank Governor said that what is coming in is still very low from what they are expecting.
I believe that money hoarded would go back into the banking system because it’s good for the bank. They are accepting money without disclosing the records of the depositors. It’s all good for the economy,
“Whenever the money goes into the bank , it would be good for business because banks can now exchange loans. This is because more loans means increased business. Also, more money in the banking system and this might also lead to lower interest rates. In terms of the economy, because we are in a political season, I am not sure there is going to be a serious impact because normally during election, politicians spend a lot of money.
They would use the economic activities through business borrowing and the politicians would still use the money,
On his end, Mr Segun Musa, who highlighted on the unveiled notes as just possessing a change of color while other features which could have connoted redesign were missing. He stated : “The government has the right to change the currency at intervals for different reasons.. First and foremost, if there is a need for us to put restrictive measures or add more securities or designs, these are part of the reasons why governments often change the look of the currency. This is conventional. However, what we have seen so far in our new currency is only change in colour and change in colour does not involve the feature of security. I am really surprised; the only thing we are seeing is color, which is not part of our expectations. One would have expected that the government would have been able to add more value to the currency and innovations in terms of technology that we have now. At least, to help us curb money laundry, kidnapping, Insecurity and others, that’s what one would have expected to see. The redesign would have added value to the security efforts as well as money laundry. Unfortunately, the only thing we are seeing is just the color change. I see it as a failed effort that does not add any value “
Musa, also highlighted that the impulsive change of plan to unveil the notes earlier as earlier stated ,indicates an unknown reason on the part of the government. “Probably the government is targeting a particular group for doing that and when the government is taking action there are often areas of suspicion and so many things that one may not easily identify, “ he added.
Meanwhile, insurance expert and Chief Executive Officer, Finterate Projects, Ekerete Ola Gam-Ikom , welcomed the new look of the naira and believes in the aim of CBN in redesigning the currency. He opined: “ For me, the design is brilliant, I was initially concerned that they may change some things on the note but I am happy that they have retained them the way they are. I am really looking forward to holding one to appreciate the colours that we see as different to what we have with the old ones. I am encouraged to see that the advantages envisaged would be captured as we go ahead. It’s a good development, we have the advantages of having this, to curb the issue of not having a lot of money that goes out of the economy within the banking system and we have also discussed the advantage of curbing the activities of kidnappers and all of that”.
Also Gam-Ikom saw the swift plan in unveiling the Naira notes earlier as a boost of confidence on the government as being eager to arrest the Naira depreciating woes. He reeled off: ” It’s not something that’s within our control. This is one policy or direction that I would say have made me have confidence in the things that have been happening with the CBN and the government. We have already given them the go ahead to do this and we have to maintain that confidence that it would turn out to be something that is good for everyone”.
An anonymous manufacturer of African food condiments is already being nostalgic about the new look of the Naira notes . She said, “ I prefer the old one to the new one, the color of the old one is more solid. It’s the same design as the old one. It was just the color that was changed. For the unexpected unveiling date, my suspicion is that the politicians are agitating for the government to bring it out before December 15th due to the upcoming 2023 General Elections. With the old timing, the politician may have not changed enough money to use for their campaigns. They are just trying to generate money for their campaign in good time”.