Naira note redesign and currency management in Nigeria
Nigeria became a Republic state in 1963 and in 1999 Nigeria officially became a democratic state.
As of 2022, Nigeria has enjoyed 23 years of democracy as a system of government which implies that laws, policies, leadership, and major undertakings of Nigeria are directly or indirectly decided by the people.
As a country practicing democracy the Nigerian government is supposed to prevent rules by autocrats, guarantee fundamental human rights, Allow for a relatively high level of political equality, and better foster human development which should be evident by certain Indicators such as health and education, provide more prosperity for citizens and ensure a broader range of personal freedom.
Among the mentioned roles and benefits for a Democratic state, the Nigerian government has demonstrated underperformance in education, Health, economy, and security.
Recently, the underperformance of the Nigerian government has been evident as seen in the public universities’ closure for 8 months which has stopped the public universities from functioning, the increase in the currency exchange rate to about 100% Increase in the naira to the dollar exchange rate which indicates economic recession, high levels of Insecurity which has stopped businesses and affecting citizens individual performance, among others.
Amid the high levels of intervention needed in the above-mentioned areas in Nigeria, the governor of the Central Bank of Nigeria has announced the finalized arrangement for the naira note redesign in which the new naira note will begin circulation on December 15th, 2022.
According to the CBN governor, Mr. Godwin this exercise will affect the highest denominations including 200, 500, and 1000 naira notes.
Reasons and benefits of the Naira note redesign according to the CBN governor
Why the Naira Note Redesign
- Significant holding of the banknotes by the members of the public. With over 85% of currency in circulation being outside the vault of commercial banks. On December,7th 2015, the total money in circulation was 1.7 trillion which has increased to 3.23 trillion nairas as of September 2022 with 2.7 trillion outside the vault of the banks.
- A high shortage of clean and feed bank notes is leading to a negative perception of the CBN and increasing financial stability.
- Increased rate of counterfeiting the naira notes as evidenced by several securireportsort
Benefit Of The Naira Redesign
- Ensure strong and effective legal tender according to CBN Act 2007
- Encourage a cashless economy as it will complement the maintenance of the E-naira
- Drizzle in currency outside the bank system into the bank system
- Reducing the prevailing levels of insecurity in the country including terrorism and kidnapping.
By the hierarchy of needs in Nigeria is currency redesigning a top priority?
The bases for the naira note redesign are not in alignment with the needs of the citizens of Nigeria as the naira redesign is going to expose Nigeria to a high risk of inflation and recession. Again, with the budget deficits hitting extreme figures as high as 11 trillion naira, there is no way the Naira notes redesign a means of proffering solutions to Nigeria’s challenges.
Other stakeholders have claimed that the naira note redesign is a tool for regulating campaign financing given the 2023 election which will contribute to increasing the chances of free and fair elections by reducing the rate of vote buying and improving security. This claim is not valid as the EFCC is responsible for regulating campaign financing in Nigeria.
The CBN governor has not given any real benefit that coincides with the economic growth and development of Nigeria and all the mentioned reasons have no positive impact on the citizens which calls for two questions
- Is Nigeria as a democratic state practicing democracy?
- Is the naira note redesign another resource mismanagement strategy?
Disadvantages of the Naira redesign
- Securing more budget deficit
- Increasing Risk of inflation due to foreign exchange rate
- Unnecessary panic for small and large business owners
Important economic indicators that concern the Nigerian Economy.
- Inflation rate
- Unemployment rate
- Dept profile
- GDP growth
- Foreign reserves
- Exchange rate
- Promoting a free market economy
Dedicating real attention to policies that positively impact this indicator is the way forward for the Nigerian economy. The naira note redesign has more probability of generating a negative impact on some of the indicators than generating any positive effect.
Cheetahs Policy Institute
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