It is obvious even to the ignoramus that Nigeria is undergoing torment from forces combating national development. Apart from the ceaseless attacks from bandits and other criminal groups, the nation’s economy is heading for the doldrums. The more the managers of our economy assure us of a buoyant future, the more our economy cascades down the slippery slope of irreversible doom.
Seven years of budgets by the present administration has not brought any form of relief. After the exit of Nigeria from the World’s Debtor’s Club, made possible by former President Olusegun Obasanjo, Nigeria now occupies a prime position in the club, with no hope of exiting anytime soon. For now, we are Africa’s most indebted and global headquarters of poverty.
Democracy has reduced us into a nation depending more on foreign aids and handouts from a sympathetic comity of nations. Terror has kept us in the backwaters of development and made us into citizens subjugated by brigands and criminals. While our armed forces are helpless in rescuing fearful populace from terror gangs armed with superior firepower, we have been turned into a laughing stock as terrorists staged daring attacks on our prisons located in our nation’s capital, Abuja, to rescue their commanders and fellow comrades.
With yet another national election approaching in 2023, the skies are not getting clearer. Desperation seems to be the game as two, out of the three frontline presidential candidates, are locked in a fiery battle over who emerges victorious in next year’s presidential election. The albatross remains the candidate of the Labour Party (LP) Mr. Peter Obi, who is threatening the song of victory in both camps: All Progressives Congress (APC) and Peoples Democratic Party (PDP).
Even before now, the opposition has always cried foul that plans are afoot to ensure the APC retains power. Though the plot for continuing in power for the APC has always remained vague, last week’s speech by President Buhari at the inauguration of the APC Presidential Campaign Council that he would lead the charge for APC’s victory in 2023 did not go unnoticed.
Few days after Buhari’s declaration, the Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, announced the approval granted by the President for redesigning of the naira. The CBN’s governor announcement has kicked up a storm of discourse, with members of the public ferociously divided over the appropriateness of redesigning the naira. While the public square is still enmeshed in various dissonant tunes on the exigencies of the redesigning, those opposed to the new naira are accusing Emefiele of not telling Nigerians the entire truth behind the new naira that is expected to cost the country a great fortunes in tens of billions of naira.
The CBN boss also said the decision to redesign the local currency is hinged on what he described as a deliberate attempt to stop further hoarding of banknotes. Statistics have shown that over 80 percent of currency in circulation, amounting to nearly N3 trillion, is not in bank vaults. Emefiele had, during a press briefing in Abuja, lamented that the worsening shortage of clean and fit banknotes, with attendant negative perception of the CBN and increased risk to financial stability, remain the major reason for redesigning the local currency, especially at the higher denominations of N200, N500 and N1, 000.
In line with global best practices that stipulate national central banks should redesign, produce and circulate new local legal tender every 5–8 years, the fact that the naira has not been redesigned in the past 20 years seems to justify the CBN’s decision. The last time the local currency was redesigned was in 1985 when the General Buhari/Idiagbon-led regime attempted to stop the hoarding of the local currency by sacked politicians of the Second Republic.
As it was in 1985 when General Buhari as Head of State ordered for new naira notes, so it is now. Having granted approval for the redesigning of the naira in a bid to tackle challenges associated with those engaged in hoarding the local currency, the Daura-born General is repeating history. The new naira, when in circulation, the CBN governor explained, is aimed at controlling inflation and combating activities of criminal elements behind the financing of terror activities.
With the final approval given by the President, the new currency is expected to start circulation from December 15, 2022. Both new and existing currencies, according to the CBN, “are to remain legal tender and circulate together until January 31, 2023 when the existing currencies shall cease to be a legal tender”.
Already those opposed to the new currencies are already alleging that redesigning the local currency is anchored on the battle for 2023, especially on the need by the incumbent government to keep taps on spending by the opposition. The question on many lips is: In what way(s) can the redesigned local currency controls rising inflation and keep terror financiers at bay?
Allowing politicians, who are known to have hoarded the local currency for the 2023 battle, to resort to buying off foreign currencies in the open market could put a stress on the dollar and shoot the rate of foreign currencies to the roof as the hoarded naira floods the foreign exchange black market. With nearly N3 trillion outside the banking system, the move to flood the foreign exchange black markets with these hoarded local currency could crash the naira.
The CBN governor knows that the existence of a dual foreign exchange rate system, with a whopping difference of over N340 per dollar, contrary to laid down policy that differences between the official and black market should not exceed three naira, Diaspora remittances and Direct Foreign Investments (DFI) have been on the low side, as it is no longer profitable to patronise the official foreign exchange market. As long as a black market foreign exchange rate system exists, investors and companies won’t patronise the official market rate that is now being exploited by top CBN shots taking advantage of the dual foreign exchange rate system for their pecuniary interests.
The present dual exchange rate of the naira with other international currencies only serves the interest of highly placed CBN shots who, on a weekly basis, allocate huge foreign currencies to their cronies fronting as bureau de change for obscene profits. As long as Nigerians are allowed to source for foreign exchange outside financial institutions, so long will the naira continue to be in a free fall. It’s only in Nigeria that everyone, including foreigners, is allowed to buy foreign currencies in the open market. Such is never allowed in most countries. A nation that does not protect its currency against other currencies is bound to face hard times. For a consumer nation like Nigeria that depends on dollars for its imports, the continuous dollarisation of its financial economy is a clear signal that the naira is fixed to hit rock bottom soonest. When that happens, as it is bound to happen sooner or later, the expected Armageddon is bound to follow.
Critics of the new naira insist that Emefiele’s plan may not be unconnected with the need to monitor spending by political parties ahead of next year’s polls. Apart from outlawing the old currency, less than six weeks to the commencement of the 2023 elections, many smell a rat. Already, the Executive Chairman of the EFCC, Mr. Abdulrasheed Bawa, has described the move by the CBN as “a well-considered and timely response” in tackling the challenges of currency management that has continued to imperil Nigeria’s monetary policy and security.
Spending billions of naira to redesign the local currency, while looking for nearly $15 billion to borrow in order to finance the 2023 budget, runs against financial reasonableness. Except where the rationale of redesigning the naira is outside economic rationality, the Emefiele-led CBN should rescind its decision over the redesigning, as there are no guarantees that the new naira will end counterfeiting and hoarding.
What Nigeria needs now is security in order to allow investments to flourish. The dual foreign exchange rate system should be replaced with the floating foreign exchange rate. Playing games with the Nigerian financial system on the eve of a general election is tantamount to courting dangers for the country. The least of our problems is not redesigning the naira but restructuring the country to ensure equity and fairness for all citizens across ethnic and religious divides.
