By Jackson Olali
The Governor of Central Bank of Nigeria (CBN), Mr Godwin Emefiele, is being buffeted by a platoon of vested interests in Nigeria. His ‘sin’ is that he redesigned the naira, thus rendering the old notes invalid from a particular date.
No sane person will find himself in Emefiele’s position and not commit this ‘sin’. It’s an ‘offence’ worthy of its associated risks. It is a ‘sin’ committed in the interest of the good people of Nigeria who are in the majority. The only persons kicking against the naira redesign are a few politicians whose weapon and popularity value is the amount of ill-gotten cash they have stashed away from public treasury and hidden in their homes, offices and make-shift vaults in make-shift warehouses.
This is why Nigerians of good conscience must stand by Emefiele just so the few crooks who have warehoused the old naira notes would be put to shame.
The genesis: The CBN on October 26, 2022, announced its plan to redesign three banknotes. An excited President Muhammadu Buhari subsequently unveiled the redesigned N200, N500, and N1,000 notes on November 23, 2022. The apex bank fixed a January 31 deadline for the validity of the old notes. Within this period, all old notes were expected to have been turned in to the CBN through deposit banks and by then enough of the new notes would have saturated the cash space. This did not happen. Enough new notes were not in circulation. Not so much the fault of CBN but so much for the greed of deposit bank workers. Some bankers turned a simple exercise of dispensing new naira notes through ATM machines into a gamble and a profiteering game. Some simply refused to load new naira notes into their ATM machines but elected to sell the new notes to touts, money traders and sundry cash merchants for profit.
Nigerians complained. The pain lingered. CBN listened and extended the deadline from January 31 to February 10. Yet, the cash squeeze persisted. Crooked bankers could not be bothered. Some still engage in profiteering from the cash stasis.
But whether painful or not, it was inevitable that a responsible central bank would act in the manner CBN did. No where in the world do individuals turn their homes into warehouses to hoard cash. Nowhere! Nowhere in the world do citizens run their own parallel banks, building cash vaults as part of the building plan or creating make-shift vaults in their homes.
First let’s look at the statistics. As at the end of September 2022, available data at the CBN showed that N2.73 trillion out of the N3.23 trillion cash in circulation, was outside the vaults of commercial banks across the country. Let’s do the math. It means that only about N500 billion (N0.5 trillion) are within the banking system of a country that pushed out N3.23 trillion. This works out to 84.5 percent of the cash in circulation being held outside the banking system by individuals or corporates. This is not only primitive, it is cruel, barbaric and crude. Not even in medieval times did such ever happen; that a people would leave the norm and embrace the absurd. Emefiele wanted to correct the absurd. For that, he has come against the pelts of the crooked clan; the roguish mob.
First, they said he was unfit for the job; that Buhari should sack him. Then they claimed he was financing terrorism. The same Emefiele that rose stoutly against the propagation of cryptocurrency because it became a conduit for terror financing globally is now a financier of terrorism? Such illogic! They even approached the court of law to stop him after their plot to arrest and badger him out of office failed. And their efforts ought to fail because in the redesign of the naira, Emefiele was, is and will always be right.
Many reasons justify the action of CBN which also enjoys the astute backing of President Buhari, the Economic and Financial Crimes Commission (EFCC), the World Bank, among other agencies and groups.
There is the matter of insecurity hallmarked by kidnapping and payment of hefty ransom by families and government agents to kidnappers. Ransoms are paid in cash. Kidnappers stack them in their fortresses, not in banks. The more cash paid out as ransom, the more damage we do to the economy by keeping huge sums out of the banking system.
A report by SBM Intelligence, an Africa-focused geopolitical research and strategic communications consulting firm, said in one year alone (July 2021 to June 2022), kidnappers placed a demand of N6.531 billion as ransom in exchange for the release of captives. Out of this, the sum of N653.7 million was paid as ransom. This is money paid in cash and stored outside the banking system by the kidnappers. This is far more than the N500 billion captured within the banking ecosystem. Even in voodoo economics, this is injurious to any monetary system. The new policy would render such cash in the hands of criminal kidnappers and killers invalid. For this alone, Emefiele is right and deserves every grain of support.
The new naira policy will constrict the space for currency fraudsters. Crooks, usually public office holders who have hidden their stolen money in home vaults. Emefiele is simply a ‘bad boy’ for this class of crooks.
With inflation galloping at dizzying speed, the new naira policy will help to temper the rate of inflation and put a lever of control on the quantum of money in circulation. These are noble ideals and germane steps to take to steer the economy out of turbulence.
Most Nigerians are in support of naira redesign. Even critics of the policy say they are not against it but against the timing. This argument about time is that it is close to a general election. But they are wrong. Our peculiar experience has shown that during elections, ill-gotten money is spent by politicians with reckless abandon. Cases of vote-buying and financial inducements have been fueled by a preponderance of cash at the whims of politicians. Emefiele wants to discourage vote-buying and financial inducements for votes and allied electoral operations and decisions.
Those who quarrel with the timing of the policy, not Emefiele, have questions to answer. What do they want to do with too much cash during elections?
No doubt, the naira redesign policy is good but its implementation should be improved operationally just so that everyone who needs cash should get it because even with our much-touted cashless economy, cash is still king.
Mr Olali writes from Port Harcourt