Victor EzejaLagos Chamber of Commerce and Industry (LCCI) has joined voices with those opposing the proposal of redesigning the Naira notes by the Central Bank of Nigeria effective from December 15, 2022.
Prime Business Africa reports that the Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, had in Abuja on Wednesday, October 26, 2022, announced that the bank would release redesigned Naira notes by December 15, 2022 and and completely phase out the old ones by January 31, 2023.
The affected Naira notes according to the CBN governor are N100, N200, N500, and N1,000.
However, according to the LCCI, redesigning of the said Naira notes should not be a priority for now as it will not add any value to the economy but instead, would be a waste of time and resources of the nation.
In a statement released on Friday, October 28, 2022, signed by the LCCI Director-general, Dr. Chinyere Almona, the chamber noted that replacing old currency notes with new ones is a routine exercise which the CBN need not make noise about.
It however, faulted the manner in which the apex bank is going about it by ordering sudden withdrawal of the old notes not minding the impact on the masses and the economy.
Part of the statement reads: “Replacing old currency notes with new ones is a routine exercise that central banks do not necessarily make noise about. Old notes are gradually replaced with new ones once they return to the banking system.
“Proposing a sudden withdrawal of notes for replacement with redesigned notes is of no economic benefit to the country, but it will come at huge costs.
“Redesigning the N100 to N1000 notes, which should not be a priority now, is a waste of the nation’s time and resources. The N100 (equivalent to US 20 cents) to N500 (equivalent to USD1) are due for replacement with Naira coins of the same denominations to make room for the introduction of higher denominations of Naira notes that will be more in line with the value of denominations of currency notes circulating in other climes.”
The chamber pointed out that such drastic decision of the apex bank by fixing the deadline few weeks to the Christmas/Yuletide season and two months to the general elections next year, would cause more disruptions in the economic system, stressing that the organised private sector is already enduring disruptions caused by the local forex supply, exchange rate, and interest rate shocks.
“Fixing the deadline two to three weeks ahead of Christmas/New Year festivities, two months ahead of the general election, is disruptive and insensitive. The organized private sector is already enduring a lot of disruptions ranging from local forex supply, exchange rate, and interest rate shocks.
“These aggravate food and energy shocks, and they deserve to be spared the needless disruption from the wild goose chase proposed by CBN so close to the yuletide and the polls.
“The fact that ‘over 80 percent of currency in circulation (i.e., N2.73 trillion out of N3.23 trillion) exists outside the commercial banks’ is not sufficient evidence of ‘persistent hoarding of banknotes by members of the public.”
LCCI also stressed that the fact that “currency in circulation has more than doubled since 2015; rising from N1.46 trillion in December 2015 to N3.23 trillion in September 2022′ does not necessarily present a problem because the GDP also increased from N95 trillion to N210 trillion over the reference period,” adding that “the value of currencies in circulation has been a stable fraction of GDP, roughly 1.34 percent, over the period.”
It said that information published in the annual report of the Currency Operations Department of CBN revealed that the number of pieces of Naira notes in circulation has more than doubled between 2006 and 2020 from 3.2 billion to about 10 billion pieces, adding that five billion of the notes were N100 to N1000 notes.
It therefore, advised that going ahead to print such huge amount of notes will not be an appropriate decision at this time.
“Therefore, the CBN is proposing to redesign and replace five billion pieces of the highest four denomination notes, when the appropriate action to take is to coin N100 to N500 notes and replace them with about a billion pieces of larger denomination Naira notes to cut the monumental waste implicit in continuing to print pieces of low-value notes with a short lifespan.”
The chamber added that the Naira may likely experience more exchange pressures that may further weaken it against major currencies if more people decide to buy foreign currencies as alternative store of value.
It urged the CBN to evolve innovative policies and strategies that will reduce inflation in the economy.
“The CBN needs to be more innovative to establish appropriate policies and take actions that will drive down the inflation rate and strengthen the value of our Naira,” LCCI added.
Victor Ezeja is a passionate journalist with six years of experience writing on economy, politics and energy. He holds a Masters degree in Mass Communication.
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