By Bassey Udo
In what might seem a widening gaps between fiscal and monetary authorities of the present administration, the Minister of Finance, Budget and National Planning, Zainab Ahmed, and the Central Bank of Nigeria (CBN) Governor, Godwin Emefiele, have disagreed over the planned redesign, printing and circulation of the Naira banknotes announced on Wednesday.
But the CBN has insisted it followed the law and due process in carrying out the exercise, which became overdue by about 12 years.
On Wednesday, the CBN governor announced that the apex bank received President Muhammadu Buhari nod to carry out the plan by the monetary authority to reissue the N100, N200, N500, and N1,000 denominations of the Naira.
Emefiele gave reasons for the plan, saying current statistics on money in circulation in the economy showed that more than 80 percent (about N2.7trillion) of the over N3.0 trillion) were outside the banking system.
The CBN said the new currencies would begin to go into circulation throughout the country from December 15, 2022, while the current currencies in circulation would cease to be legal tenders by January 31, 2023.
Regardless, he said the new and existing currencies shall remain legal tenders and circulate together until January 31, 2023 when the existing currencies shall cease to be legal tender.
But the Minister of Finance, Budget and National Planning, Zainab Ahmed, who reacted to the policy on Thursday denied knowledge about the plan to redesign and reissue of Naira banknotes.
The Minister who was responding to a question by Opeyemi Bamidele (representing APC Ekiti Central Senatorial District) during 2023 budget defence session she had with the Senate Committee on Finance, said the Ministry was not carried along on the plan.
The lawmaker had drawn the attention of the Finance Minister to the impact of the monetary policy barely 48 hours after the announcement by the CBN on Wednesday, particularly on the value of Naira to US dollar.
Bamidele had noted that the announcement of the policy by the CBN governor had forced the exchange rate of the Naira to plummet further against the US dollar, from N740 to N788 to a US dollar.
He blamed the development on the rush by bank customers to exchange their Naira banknotes kept away from the bank system for foreign currencies, particularly dollars.
Although the lawmaker acknowledged the policy may be a welcome development, he criticised the timing by the monetary authorities, considering what he called “realities on ground”, which he feared might push the Naira exchange rate to crash to as low as N1,000 to the dollar before the January 31, 2023 deadline for full implementation of the policy.
Finance Minister claims Ministry not aware of plan
However in her response, the Minister distanced herself and the Minister of State from the plan, saying they were not aware of the plan other than what they read from the media.
“Distinguished Senators, we were not consulted at the Ministry of Finance by the CBN on the planned Naira redesigning and cannot comment on it as regards merits or otherwise.
“However as a Nigerian privileged to be at the top of Nigeria’s fiscal management, the policy as rolled out at this time, portends serious consequences on the value of the Naira to other foreign currencies.
“I will however appeal to this committee to invite the CBN governor for the required explanations as regards the merits of the planned policy and rightness or otherwise of its implementation now,” she said.
In a robust response the CBN governor denied claims by the Minister that her ministry was not carried along in the ongoing process to redesign three series of the Naira.
In a chat with reporters in Abuja on Friday, the CBN spokesman, Osita Nwanisobi, expressed surprise at the minister’s claim, pointing out that the CBN remained a very thorough institution that follows due process in its policy actions.
The Management of the CBN, Nwanisobi explained, in line with provisions of Section 2(b), Section 18(a), and Section 19(a)(b) of the CBN Act 2007, had duly sought and obtained the approval of President Muhammadu Buhari in writing to redesign, produce, release and circulate new series of N200, N500, and N1,000 banknotes.
He urged Nigerians to support the currency redesign project, and as it was in the overall interest of Nigerians.
The CBN spokesperson declared that the decision to redesign and reissue the Naira banknotes was informed by the observation that some persons he did not name were hoarding significant sums of banknotes outside the vaults of commercial banks.
This ugly trend, he said, should not be encouraged by anyone who means well for the country.
Besides, he said the country’s currency management had faced several escalating challenges which threatened the integrity of the Naira, the CBN mandate and the country’s economy, adding that every top-rate Central Bank the world over is always committed to safeguarding the integrity of the local legal tender, the efficiency of its supply, as well as its efficacy in the conduct of monetary policy.
On the timing of the Naira banknotes redesign project, Nwanisobi explained that the CBN had even tarried for too long, considering that it had to wait for almost 20 years to carry out a redesign, whereas the standard practice globally was for Central Banks to redesign, produce and circulate new local legal tenders every five to eight years.
While assuring Nigerians that the currency redesign exercise was purely a central banking exercise and not targeted at any group, the CBN spokesperson expressed optimism that the effort would, among other goals, deepen Nigeria’s push to entrench a cashless economy in the face of increased minting of the eNaira.
This, he said, was in addition to helping to curb the incidents of terrorism and kidnapping due to access of persons to the large volume of money outside the banking system used as a source of funds for ransom payments.
Nwanisobi therefore urged Nigerians, irrespective of their status and position in society, to support the Naira redesign project, as it is for the greater good of the economy.