Recently, the apex bank, under the new monetary policy to stop vote buying in the 2023 general elections, fixed weekly cash withdrawals for individuals at N100,000 and corporate bodies at N500,000. Maximum cash withdrawal at POS terminals has also been reduced to N20,000 daily. The policy is expected to take effect nationwide from January 9, 2023.
To forestall the future harbouring of naira notes by individuals, the central bank came up with another policy pegging N100,000 and N500,000 as the maximum cash individuals and corporate organisations respectively can withdraw weekly.
This policy will also help to checkmate the incidence of vote buying, which is the greatest threat to fair and credible elections in 2023. Those with looted funds in their houses should find a way of depositing such monies in any commercial bank rather than trying to use a back door approach to knock off the CBN governor and get the policies reversed through their lackeys.
Perhaps, the main reason the Nigeria government is redesigning some denominations of the country’s naira notes is to mop up the money outside the control of the CBN. In a press conference addressed by the Central Bank of Nigeria, CBN, governor, Godwin Emefiele, said N2.7 trillion out of N3.23 trillion of the total money in circulation is outside the banks’ vaults.
He reiterated that one of the core reasons behind the redesigning is to ensure all the currencies outside the bank vaults return, and the CBN regains control of money in circulation. This is a strategic blow against politicians who have saved trillions of naira in their houses to influence 2023 elections. The strategic step will put pressure on politicians who are not popular in their constituencies. One of the most sought-after commodities right now in Nigeria, is voter’s card; not just any, but the permanent one which goes by the acronym PVC.
The redesign of naira will eliminate and address vote-buying and purchase of permanent voter cards in 2023 elections. The case, brought by Socio-Economic Rights and Accountability Project (SERAP), is an indication of growing concerns around the illicit practice ahead of the crucial 2023 elections. Vote-buying has always played a role in Nigeria’s polls, but many have been outraged at the apparent brazenness with which party officials have sought to sway voters in recent contests. Politicians that have created personal bank’s vault at home have been disappointed by the CBN to redesign the naira.
With Nigeria in the election season, the sudden CBN monetary policy of redesigning of certain currencies is expected to create some shock in the system, and affect politicians who have amassed huge financial war chests to prosecute the 2023 election, as all old currencies are expected back to the vault by 31 January, 2023.
The EFCC boss has said “the objectives which the CBN seeks to achieve with the redesign and reissue of the higher denomination Naira notes, are in tandem with the objectives of the Money Laundering Prevention Prohibition Act 2022, which criminalizes the conduct of cash transactions above a certain threshold.”
According to Section 2 (1) of the Money Laundering Act 2022 “No person or body corporate shall, except in a transaction through a financial institution, make or accept cash payment of a sum exceeding— (a) N5,000,000 or its equivalent, in the case of an individual or (b) N10,000,000 or its equivalent, in the case of a body corporate.”
Optimistic that the new currency measure would further boost Nigerians’ embrace of banking culture and encourage the acceptance of cashless transactions, the EFCC chairman recalled that the commission had recently taken operational action against currency hoarders in major commercial cities in Nigeria.
“It is therefore pertinent to issue this stern warning to Bureau de Change operators to be wary of currency hoarders who would attempt to seize this opportunity to offload the currencies they had illegally stashed away.”
In April 1984, the colours of all the banknotes in circulation were changed with the exception of the 50 Kobo banknote to arrest the currency trafficking prevalent at the time. In 1991, the 50K and ₦1 were both coined.
In response to the expansion in economic activities and to facilitate an efficient payments system, the ₦100, ₦200, ₦500 and ₦1000 banknotes were introduced in December 1999, November 2000, April 2001 and October 2005 respectively.
On 28th February, 2007, as part of the economic reforms, ₦20 was issued for the first time in polymer substrate, while the ₦50, ₦10 and ₦5 banknotes; as well as ₦1 and 50K coins were reissued in new designs, and the ₦2 coin was introduced.
On 30th September, 2009 the redesigned ₦50, ₦10 and ₦5 banknotes were converted to polymer substrate following the successful performance of the ₦20 (polymer) banknote. Thus, all the lower denomination banknotes were printed in the polymer substrate.
CBN, as part of its contribution towards the celebration of the nation’s 50th anniversary of Nigeria’s independence and 100 years of its existence as a nation, issued the ₦50 commemorative polymer banknote on 29th September, 2010; and the N100 commemorative banknote on 19th December, 2014 respectively.
The governor of the Central Bank of Nigeria, Godwin Emefiele, announced that the bank would release re-designed naira notes by December 15, 2022.According to the CBN governor, this was targeted at controlling currency in circulation as well as curb counterfeit currency and ransom payment to kidnappers and terrorists.
He noted, “Indeed, the integrity of a local legal tender, the efficiency of its supply and its efficacy in the conduct of monetary policy are some of the hallmarks of a great central bank. “In recent times, however, currency management has faced several daunting challenges that have continued to grow in scale and tsophistication with attendant and unintended consequences for the integrity of both the CBN and the country.
“More specifically, as at the end of September 2022, available data at the CBN indicate that N2.73tn out of the N3.23tn currency in circulation was outside the vaults of commercial banks across the country, and supposedly held by members of the public. Evidently, currency in circulation has more than doubled since 2015, rising from N1.46tn in December 2015 to N3.23tn as at September 2022. I must say that this is a very worrisome trend that cannot continue to be allowed.”
On how it would help curb ransom payment, he said, “Also, in view of the prevailing level of security situation in the country, the CBN is convinced that the incident of terrorism and kidnapping will be minimised as access to large volume of money outside the banking used as source of funds for ransom payment will begin to dry up.”
He further identified more reasons that necessitated the re-designing of naira notes.
According to the apex bank governor, other the challenges included: significant hoarding of banknotes by members of the public; worsening shortage of clean and fit banknotes with attendant negative perception of the CBN and increased risk to financial stability; and increasing ease and risk of counterfeiting evidenced by several security reports.
The nation has much to gain from the redesign of naira as she would save huge fractions of her scarce resources hitherto deployed to repeated conduct of elections which often produced the same defects as the previous ones. Some people are now allegedly buying off the PVCs by offering between N1000 and N5000 in exchange for them.