By Sheriffdeen Tella
The major thought of every powerless Nigerian is how to survive without cash in the next minutes or next second because of government ad hoc monetary policy on currency redesign. According to the Act that sets up the Central Bank of Nigeria, the only institution that can print the domestic currency is the CBN. Those who designed the Act were conscious of the danger of allowing multiple issuers but never envisaged that such an important task can be carried out without proper caution and consideration for its grave consequences on the economy and the citizens. Here we are today with unanticipated consequences of misuse of discretion of monetary management.
In October 2022, the CBN announced the introduction of redesigned banknotes of N200, N500 and N1000. According to the CBN Governor, Godwin Emefiele, the objectives of the redesign notes are to make monetary policy more efficient than hitherto. Later, the CBN added that the currency redesign and withdrawal would encourage cashless economy; prevent vote buying and thus sanitise polity.
On November 23, 2022, the President Major General Muhammadu Buhari officially unveiled the redesigned currencies. Within the context of the agenda, January 31, 2023 was fixed as the deadline for the validity of the old notes. The time from October, 2022 to January, 2023 was sufficient for the citizens to prepare and comply just as it was adequate for the CBN, the initiator of the project and agenda to prepare and produce enough currency proportion for transactions across the country.
Under normal circumstances, central bank monetary policy is backed up with outcomes of research, particularly for this kind of major adjustment in activity. There would have been calculation on what proportion of the withdrawn currencies would be in circulation without serious shortage that can create distortion, panic and public anger. Such calculation would involve simulation on currency adequacy, public reaction including business response and feedback. The outcome of such research would have prevented many of the unintended economic, social and legal distortions and destruction we have witnessed in the last eight weeks. The fact that there was no research implies that the governor acted on impulse or afterthought. Probably that was why he needed presidential cover at all times.
Some of the takeaways of the current currency situation include underserved pains, deaths, and greed on the part of the citizens while it has portrayed the government officials as careless, arrogant, heartless and lawless. Additional takeaways are in terms of the parlous state of the technology development and advancement.
In the last two months and beyond, we have heard, read and witnessed pains in the marketplace, banking halls and banks’ gates, of people trying to collect the money they returned to or kept with their banks. People were lured to return to banks, cash with which they run their businesses with the hope that they would get the redesigned currencies only to return empty handed with implications that their businesses have collapsed.
The non-business citizens like salaried workers can only see their money in their accounts’ balances without being able to collect them because the banks themselves have neither new nor old currency to pay through ATMs or directly to customers. So, people have money that was not available for spending, even on food and medicare. That is why we found people who collapsed in queues trying to collect money or on the road trekking long distances to their workplaces or dying on sick bed because their families could not get money to buy recommended drugs in time.
Those who have money no longer take them to banks, except for traders who are afraid of holding large sums of money. So, most banks in Nigeria have been turned into pay points, unable to carry out their primary functions of accepting deposits and making payments. Many people who were able to collect stipends from banks hold on to such while reverting to the use of Point of Sale and electronic transfer of money with its limitations.
The takeaways from these are that the CBN policy has, by omission or commission, caused deaths, loss of businesses and confidence in the banking system. It has exposed governments as liars, callous and cannot be trusted with their words and also not concerned about the welfare of the citizens. It will affect foreign businesses or foreign investors’ interest in the economy since a single government functionary can make or change policies with personal discretion and grave consequences for successes of their businesses.
Despite the visible and reported pains and the glaring policy failure, nobody is being called to order or punished for bringing the government to this despicable level. That seems to have emboldened those involved in the mismanagement, particularly the CBN to continue to ignore calls for redress or obeying court judgment. Now, the CBN has been unable to put new currencies in the banks just as it could not even return a large proportion of the old ones collected. The banks are now rationing money to customers. In an economy that is properly run on the basis of rule of law and respect for citizenry, the CBN governor should be answering queries from the President or be kept behind bars for disrespecting the Supreme Court judgment and directive.
The arrogance in governance was demonstrated first by the President and later, borrowing from the President’s attitude, by the CBN governor. The Supreme Court pronounced the use of the old currencies until judgment was given but the President came up with the directive that only N200 should be accepted for transaction until April 10, 2023. The CBN governor echoed the President’s directive and the banks stuck on that.
When the Supreme Court finally gave judgment that the old and new currencies should be in circulation together till the end of the year, neither the President nor the governor told the banks and the public what to do. The bankers said they were waiting for a directive from the CBN governor while businessmen and women are still waiting for the President’s public speech as he did after the first pronouncement by the court. It seems clear that they could not come out to disagree publicly with the Supreme Court. The takeaway is that citizens are left confused and confounded.
On a final note, it has become clear that this country is not ready for a cashless economy and it cannot be so forced without sound, adequate and affordable infrastructure. It is imperative to know that velocity of money in an economy dominated by the informal sector is important for its economic growth. That is, the movement of money from hand to hand which also shows exchange of goods for money. In countries which are largely cashless, the informal sector is almost absent. The transport system is based on the use of tickets; purchase of pepper, tomatoes and other food stuff are done in supermarkets where PoS or machines are used or in weekend markets where cash is used but the product can be preserved properly with efficient electricity.
More appropriately, using PoS or transfer is aided by efficient infrastructure in terms of electricity, internet facilities and allied gadgets. The use of PoS has been cumbersome and inefficient. The takeaway from here is that the minister in charge of communication and information technology has lots of work to do. All the noise so far is just noise.
In the last two months, businesses that have suffered most are those dealing in perishable goods. The owners of such businesses are small or even micro with no knowledge of PoS or fund transfer. When one proposes to transfer, they prefer to give the product at ridiculously low price to avoid total loss. This brings us to the issue of greed and inconsiderateness, even by the public. When you want to take public transport, the driver asks whether you want to transfer money or pay cash. He would prefer those who want to pay cash, so that he can sell the money to someone who needs cash for some gains.
In Nigeria, we now use money to buy money. More so when the cash is not available in banks where you have your money. But, that is Nigeria. We complain about government atrocities in terms of exploitation, yet we exploit our fellow poor citizens. A people deserve the kind of leaders they get.
