Supreme Court ruling and my observations on CBN “Currency Redesign” policy
By Raymond Okafor
We have the Governments of Zamfara, Kogi, Kaduna States and the Supreme Court to thank for arresting the drift to anarchy in our country as a result of the poorly implemented and ill-timed new Naira and cashless policies of the Central Bank that have grounded socio-economic activities in the country.
While the interim injunction of the Supreme Court which has stopped the Federal Government and CBN from making the old N200, N500 and N1000 legal tender from February 10, 2023 will help to restore public order and stability to the country ahead of the crucial general elections, below are my observations on the naira ‘redesigned policy.”
1. CBN claims it has taken deposits of over N2.7 trillion out of circulation into the banking system by Jan 31, 2023. This is far below the N3.3 trillion hitherto in circulation.
2. However, working flat out since end September 2022, the Mint has been able to print about 400 million new notes valued at N300 billion. The Mint’s total capacity is about N1 trillion per annum, so it will take about 3 years to replace all the currency in circulation with new notes.
3. Why would CBN print only 1/9th of the currency taken out of circulation unless it intentionally wanted to create a cash crunch, destroy economic activities and impose needless hardship on citizenry?
4. Only 34% of our population have bank accounts and only 9% use digital platforms for economic and financial transactions. (See World Bank Group Internal Paper, Feb 2023).
5. How is it possible to make 66% of the country’s population to open bank accounts in a matter of weeks? How many local governments in Nigeria don’t have a single bank branch?
6. How can the telecoms infrastructure, without prior planning and investment in bandwidth nationwide, handle an eleven-fold increase in transactions within a matter of months? How many towns and villages have no broadband telecoms infrastructure enabling digital financial transactions?
7. The protests and anger we are witnessing, including closure of some banks, is not just the result of incompetence of the CBN Governor, but intentional political/economic sabotage meant to ignite hunger and anger, incite the populace against the ruling party, ensure widespread social upheaval to enable the collapse of the Fourth Republic.
8. Out of the N300 billion the CBN has got the Mint to produce, less than N100 billion has so far been distributed to the commercial banks. The largest banks like GT Bank, Zenith, UBA, Access and First Bank typically get daily allocations that translate into about N1 million per branch.
9. The smaller banks that are connected to the CBN Governor – Polaris (Emefiele/Atiku Abubakar/IBB), Titan Trust Bank (Emefiele), Heritage Bank (Bukola Saraki/Sekibo/Emefiele), Fidelity Bank (Peter Obi) and even recently-licensed Premium Trust Bank (Emefiele/Okowa) get much more generous allocations of the new notes translating into tens of millions of Naira per day to ensure that these PDP-related entities have preferential availability of the new notes to the detriment of the banking system.
10. Noteworthy is the widely-reported conviction last week, of a director and secretary of Fidelity Bank (Peter Obi) for diverting allocated notes to politically-exposed persons, while the bank’s customers were waiting endlessly for their new notes. It is therefore not surprising that in spite of the hardship being expressed daily by Nigerians due to the so-called currency swap, the PDP and Labour Presidential Candidates voiced opposition to any extension of the February 10 deadline of the CBN.
11. The timing and timeline of the so-called currency redesign (it is merely change of colours, not any redesign) aim at bringing all trading activities to a halt so that the February-March 2023 elections will be surely impossible to hold. The artificial scarcity of petroleum and maintenance of a dysfunctional subsidy regime is meant to add fuel to the fire of discontent leading to EndSARS 2.0.
12. The impossibility of holding the elections due to cessation of trade and exchange, the collapse of the Fourth Republic, the disintegration of Nigeria and the defeat of the APC are some of the expected outcomes that the CBN Governor and his disgruntled partners in the Villa are hoping for – they have lost out in their scheme to impose a president of their choice in the APC, so everything and everyone in Nigeria should go down the drain.
While the ex parte order of the Supreme Court has provided immediate relief to hapless Nigerians who have been subjected to needless pain, a permanent solution for the suffering traders, fishermen, civil servants, students and market women of Nigeria will be substantive ruling of the apex court exercising its original jurisdiction in the case of Attorneys-General of Kaduna, Kogi and Zamfara States vs. Attorney General of the Federation.
-Okafor, a public affairs analyst writes from Abuja