CBN’s Currency Redesigning Policy Portends Grave Danger For Naira, Finance Minister Warns

The Minister of Finance, Budget and National Planning, Mrs Zainab Ahmed on Friday faulted the naira redesigning programme of the Central Bank of Nigeria warning the timing for the implementation of the policy is wrong.

Ahmed who said that she had no knowledge of the policy until it was announced two days ago by the CBN Governor, Mr Godwin Emefiele said that it would have a negative impact on the foreign exchange market.

The Minister, who commented on the policy in response to question raised by Senator Opeyemi Bamidele ( APC Ekiti Central) during 2023 budget defence session she had with the Senate Committee on Finance, warned CBN of consequences that may arise from it.

Senator Bamidele had in his question, told the Finance Minister that barely two days after announcement of the policy by CBN, repercussion of it on the value of Naira to US dollar was being felt.

“Just two days after announcement of the policy, value of Naira to a US dollar has risen from N740 to N788 to a US dollar due to rush in exchange of stashed Naira Notes for foreign currencies, particularly dollar.

“To me, the policy may be a well conceived one, but the timing going by realities on ground, is very wrong as the Naira may fall to as low as N1,000 to a US dollar before January 31, 2023 fixed for full implementation of the policy,” she said.

Surprisingly, the Minister in her response said she and her Minister of State were not aware of the policy but only heard of it from the media.

“Distinguished Senators, we were not consulted at the Ministry of Finance by CBN on the planned Naira redesigning and cannot comment on it as regards merits or otherwise.

“However as a Nigerian privileged to be at the top of Nigeria’s fiscal management , the policy as rolled out at this time, portends serious consequences on value of Naira to other foreign currencies.

“I will, however, appeal to this committee to invite the CBN governor for required explanations as regards merits of the planned policy and rightness or otherwise of its implementation now,” she said.

Effective January 31, 2023, the existing N100, N200, N500, and N1,000 banknotes will cease to be accepted as a medium of exchange for any transaction conducted in Nigeria, the Central Bank of Nigeria had said.

The CBN Governor, Godwin Emefiele had said the apex bank, in line with global best practices had received the approval of President Muhammadu Buhari to redesign the bank notes new with new features.

He said when effective from December 15 this year, Nigerians who are in possession of the old notes should approach their banks for the new notes.

Explaining the rationale for the move, he said recent development in photographic technology and advancements in printing devices have made counterfeiting of currencies relatively easier.

According to him, the CBN had in recent times recorded significantly higher rates of counterfeiting especially at the higher denominations of N500 and N1,000 banknotes.

He also stated that there had been significant hoarding of banknotes by members of the public, with statistics showing that over 80 per cent of currency in circulation are outside the vaults of commercial banks.

Emefiele also identified 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, as other reasons for the new policy.