The problem with Nigerians is politicising everything. The central bank decision to redesign Naira notes is apt, long overdue, and truly economically motivated.
Aside from the security motives which you and I don’t expect the apex bank or government to disclose, the move will surely sanitise the system, enhance cashless policy and improve financial inclusion.
From January to date, the monetary authorities raised interest rates from 11% to 15.5% all aimed at reversing the soaring high cost of goods and services but the stubbornly inflationary trend keeps rising. Sadly, there’s no end in sight. This shows that even if the MPC decides to raise rates by another 100 basis points, it is not likely to change anything as the money in circulation is not within the banking system.
What does that mean?
The central bank of Nigeria says there’re currently 3.4 trillion Naira in circulation out of which only about 20% is currently within the banking system leaving a whopping 2.7 trillion Naira stashed around the unbanked informal sector thereby pushing cost of goods and services, creating liquidity challenges to nigerian banks, and unnecessary pressure on our Naira.
It is no longer news that huge amount of funds are currently plying around bandit camps buying sophisticated guns and ammunitions to perfect their heinous crimes, while political parties had since moved funds from banks to buy their way back to the government, corporate bodies on the other hand hoard large volume of funds to evade tax. This has negative implications on our nations financial sector.
Imagine Mr A who lives in a village has no bank account but keeps his 2 million Naira under his carpet while mr B who lives in Abuja with his account number but keeps his 1 billion naira in his safe. Remember they both don’t own the paper notes as it belongs to the CBN. What mr A and B owned is the value of the notes and if that is so, then why not give out the paper notes(Naira) to your trustee (Bank accounts) so that the funds will be channelled to productive sectors thereby stimulating the economy.
However, while it is true that some argued the move is ill timed considering the fact that the exercise is coming at a time when millions of Nigerians are celebrating Christmas, wedding ceremonies and elections shortly after, it will also create financial distress, put more pressure on the naira but i strongly believe its temporary and necessary sacrifice that we all have to endure for we’ll laugh last 🤓.
The CBN that i know under Godwin Emefiele having studied the problem encountered in 1984 will not be overwhelmed by this exercise, they will work round the clock including weekends to surmount those challenges and deliver the much needed mandate without necessary inflicting much hardship on the citizenry. They must also warned commercial banks against sabotaging the process, embark on aggressive campaign to rural areas, social and religious gatherings to ensure smooth and effective transition.
While banks were mandated to ensure all customers with deposits above 500k most be fully profiled (KYC), EFCC and NFIU are tracking such humongous deposits and will surely clampdown on hoarders. This i say is maradonic 💪
My brother, asked your political godfather who hide funds in soak away for votes buying to share 1 million naira each to you guys (Yan kare muradu) 🤣 as it will be worthless by January 31st.
My sister, tell your uncle who lives in the village with his 2 million naira cash to come and open a bank account and deposit such money.
Trust me guys, the CBN is smart on this.