OSTENSIBLY to ease the problem being experienced by Nigerians in the currency redesign policy, President Muhammadu Buhari has approved the use of the old N200 note for the next 60 days.
The old N200 note, Buhari said in his nationwide address this morning, would be allowed to circulate as legal tender with the new N200, N500, and N1000 bank notes until it ceases to be legal tender on April 10.
The President, who acknowledged the harrowing experiences of Nigerians on the implementation of the policy, noted, however, that “these activities are being carried out within the ambit of the Constitution, the relevant law under the Central Bank of Nigeria (CBN) Act 2007 and in line with global best practices.”
He cited the need to restore the statutory ability of the CBN to keep a firm control over money in circulation as a key factor underpinning his decision to support the apex bank’s currency redesign policy.
According to the President, “In 2015 when this administration commenced its first term, currency in circulation was only N1.4 trillion.”
The proportion of currency outside banks grew from 78 per cent in 2015 to 85 per cent in 2022, he noted.
The President observed that by October 2022, currency in circulation had risen to N3.23 trillion, out of which only N500 billion was within the banking system, while N2.7 trillion remained permanently outside the system, thereby distorting financial policy and efficient management of inflation.
He expressed concern that the huge volume of bank notes outside the banking system had proven to be practically unavailable for economic activities and, by implication, retard the attainment of potential economic growth.
He pointed out that apart from the initial setbacks experienced, the evaluation and feedback mechanism set up revealed that gains had emerged from the policy initiative.
“I have been reliably informed that since the commencement of this programme, about N2.1 trillion out of the bank notes previously held outside the banking system had been successfully retrieved. This represents about 80 per cent of such funds,” he said.
Reacting to the President’s speech, the Executive Director, Centre for the Promotion of Private Enterprises (CPPE), Muda Yusuf, said the CBN governor, Godwin Emefiele, did not advise the President wisely, pointing out that Nigerians should not be sleeping at automated teller machine points to access cash.
Yusuf said, “This policy has crippled the rural and the informal sector of the economy and has made them vulnerable. People are struggling with inflation and the cash crunch is worsening it. This might trigger recession, especially the largely informal Nigerian economy.”
Another development economist, Kelvin Emmanuel, attributed the gaps being being witnessed in the policy to poor strategic planning.
“See the way we are going back and forth on this, and also the disregard for the Supreme Court. This is also a threat to our democracy. We can do better subsequently. The fragrant disregard of court order on this is my worry, and it is sending wrong signals about our economy,” Emmanuel added.