President Muhammadu Buhari on Wednesday said the newly redesigned N1, 000, N500, and N200 denominations unveiled by the Central Bank of Nigeria (CBN) had been fortified with security features that will make them difficult to counterfeit.
Buhari also stressed that the redesigned naira denominations would help the CBN implement better monetary policy objectives and enrich the collective memory of the country’s heritage.
Speaking in Abuja at the launch of the redesigned naira notes, shortly before the commencement of the weekly Federal Executive Council (FEC) meeting, inside the Council Chamber of the State House, Abuja, the president expressed delight that the new currencies were locally produced by the Nigerian Security Printing and Minting (NSPM) Plc.
Buhari commended the CBN governor, Godwin Emefiele, and his deputies for the initiative, while also thanking Managing Director, Executive Directors, and Staff of NSPM for working with the apex bank, within a pretty short time, to make the currency redesign a reality.
Acknowledging that international best practice required central banks and national authorities to issue new or redesigned currency notes every five to eight years, the president observed that it was now almost 20 years since the last major redesign of the country’s currency was done.
According to him, “This implies that the naira is long overdue to wear a new look. A cycle of banknote redesign is generally aimed at achieving specific objectives, including, but not limited to, improving security of banknotes, mitigating counterfeiting, preserving the collective national heritage, controlling currency in circulation, and reducing the overall cost of currency management.
“As is known, our local laws – specifically the Central Bank of Nigeria Act of 2007 – grant the Central Bank of Nigeria the power to issue and redesign the naira.
“In line with this power, the Central Bank Governor approached me earlier this year to seek my permission to embark on a currency redesign project. I considered all the facts and reasons presented before me by the central bank.
“There was an urgent need to take control of currency in circulation and to address the hoarding of naira banknotes outside the banking system, the shortage of clean and fit banknotes in circulation, and the increase in counterfeiting of high-denomination naira banknotes.
“It is on this basis that I gave my approval for the redesign of the N200, N500, and N1000 banknotes.
“While this may not be apparent to many Nigerians, only four out of the 54 African countries print their currencies in their countries, and Nigeria is one. Hence, a majority of African countries print their currencies abroad and import them the way we import other goods.
“That is why it is with immense pride that I announce to you that these redesigned currencies are locally produced right here in Nigeria by our Security Printing and Minting Plc.
“The new naira banknotes have been fortified with security features that make them difficult to counterfeit.”
Earlier in his remarks, the CBN governor thanked the president for his unwavering support for the redesign and distribution of the new notes, which he said would help to control inflation, make policies more effective, ensure financial inclusion, and fight corruption.
Emefiele also stated that by international best practice, the redesign of notes should be every five to eight years, and the currency in circulation had been in usage for 19 years, with spiralling challenges on the economy, especially on security and counterfeiting.
He appreciated Buhari for his insistence that the initial notes must be designed and produced within the country, further placing confidence in Nigerian Security Printing and Minting Plc.
“Mr. President, only a president of your esteemed and incorruptible stature could have done what we are witnessing today.”
The CBN governor listed the benefits of the redesigned naira notes to include enhanced security, greater durability, attractiveness, and promotion of the country’s rich cultural heritage.
Answering reporters’ questions after the event, Emefiele said the apex bank was determined to make Nigeria a cashless economy. He said the amount of money that could be withdrawn from the counter would be drastically restricted, noting that security agents would track anyone who wants to withdraw substantial cash to determine its use
Emefiele said, “In other countries, you will find, say in the United States, you want to withdraw $10,000 from the counter, you will be interrogated, you will fill numerous forms, they will even track the use of that $10,000 cash that you are withdrawing.
“Or you want to withdraw £10,000 from the counter. They will refuse and if you insist, then you will fill forms. The problem we have had in the past is that we say this is a cash economy.
“There is no economy that is inbuilt, thinking that it has to be cash economy. The world has moved away from predominantly cash to cashless economy. And I think Nigeria and the Central Bank of Nigeria is prepared at this time to move towards a cashless economy.
“And that is the reason why with the re-issue of these notes, we will insist that cashless would be nationwide.
“We will restrict the volume of cash that people can withdraw over the counter. If you need to withdraw large volume of cash, you will fill uncountable forms. We will take your data, whether it is your BVN, your NIN so that enforcement agencies, like EFCC or ICPC, can follow you and be sure that you are taking that money for good purpose.”
Emefiele stated further, “We have to work as a country, Nigeria is the biggest country, both in population and economy, in Africa and we have to ensure that we do things the right way that also position us as leader in Africa and one of the leading countries in the world.
“We must do things right and I think it would start from today.”
The CBN boss said nobody was being targeted with the currency redesign, as widely rumoured.
He stated, “The practice worldwide is that currencies should be redesigned or replaced or reissued every five to eight years. But for Nigeria, we have not had the opportunity of redesigning and reissuing currency in the last almost 19 years.
“The CBN by law has a mandate to reissue and redesign currency for the country and for Nigerian people every five to eight years. And I want to hope that after the event of today, the CBN can just take it as part of its programmes to see to it that within five to eight years, the currencies are designed or reissued.
“It is because mainly the central bank should be able to have full control of the size of currency in circulation. That is the sole mandate of the CBN, because it has implications for monetary policy management in the country.
“There is no need for anybody to think that this programme is targeted at anyone. Like you heard the president speak in the chambers, he said that this discussion to redesign and reissue this currency started earlier in the year.
“We took painstaking efforts in looking at the pros and cons and the reasons when and why it should be done. And the president, in his wisdom, decided that, yes, it must be done.
“In the past, I have to confess that attempts by the CBN to redesign our currencies had been resisted. And that is the reason I also read in my speech that is only a president of the esteem and statute of President Muhammadu Buhari that could have done this.
“I want to seize the opportunity to appeal to members of the public that there is no need for any insinuations, giving the impression that this is targeted at any individual. There is no attempt at that. We’re doing our work and we would continue to do our work.”
Emefiele insisted that the January 31, 2023 deadline for the exchange of old notes would not be extended, noting that there are over one million points in the country where people can deposit the old notes.
In a related development, Director, Monetary Policy Department, CBN, Dr. Hassan Mahmud, yesterday, said the newly launched banknotes would address price stability and mop up cash hitherto outside of the banking system. Mahmud said this while speaking as a guest on the “The Morning Show” on Arise News Channels, the broadcast arm of THISDAY Newspapers. He said too much money in circulation had been identified as one of the causes of inflation, and the redesign and launch of the new naira notes would help to address the situation.
Giving reasons why the CBN decided to unveil the new naira notes earlier than the initial December 15 date, Mahmud said Emefiele had explained that everything relating to design, printing and production of the new naira notes would be done locally, with full local content. He said the initiative was achieved on record time, hence the need to unveil the new naira notes earlier than announced.
Mahmud also explained why the CBN was planning to reduce the volume of N1,000 and N500 notes in circulation. He said the idea was to get the country’s monetary policy right.
According to Mahmud, “The instrument that government uses to address money supply in the system to affect domestic prices, which is inflation, will be more effective. Getting that volume into the system will enable the monetary policy tools to become more impactful in terms of achieving price stability.
“The CBN created alternative channels for payments and financial transactions, which include: Point of Sales (PoS) terminals, online transfer, mobile money transfer, Automated Teller Machine (ATM), which are fintech driven, in order for Nigerians to have alternative to cash. “The truth is that it is very expensive to print and manage cash. If the federal government has invested so much in re-designing the new currency that was unveiled yesterday, bringing that same volume of naira back into the system will amount to achieving nothing.”
Addressing the features of the new naira notes, Mahmud said the re-design and production had been concluded and the Arabic inscription was part of the features of the new naira notes.
He said Emefiele and former CBN governor, Sanusi Lamido Sanusi, had explained that the Arabic inscription had no political undertone, but represented Hausa as a language.
Meanwhile, speaking during a virtual post-Monetary Policy Committee (MPC) media briefing alongside other directors, CBN Director, Currency Operations Department, Ahmed Bello Umar, said as at November 18, 2022, about N165 billion had so far been returned to the central bank in line with the call by the apex bank to customers to return their old N200, N500 and N1000 banknotes.
He, however, pointed out, “This is still far from where we want to be.”
He feared a situation where there could be a stampede towards the expiration of the January 31, 2023, deadline for the existing banknotes to be returned.
CBN also clarified that it was not in any way exposed to losses relating to the unprecedented flooding witnessed across the country.
There had been concerns that farmers under the CBN-Anchor Borrower Programme (ABP) could have incurred huge losses following the floods that destroyed many farmlands, therefore, making it difficult for the apex bank to recover its investments in rice production in particular.
CBN Director, Development Finance Department, Mr. Yila Yusuf, explained that the bank heeded the weather advisory by Nigerian Meteorological Agency (NiMET), which had predicted heavy rains during the year, and did not fund the wet season rice programme under the Anchor Borrower Programme (ABP).
Yusuf said, “We were not exposed in any way during the wet season. What we did was to fund others, like maize and soya beans, among others.
“To counter some of the losses the farmers had, we are going to be doing a robust dry-season farming. We are going to have three crops, rice, mainly, maize, and then wheat.
“Nigerian Meteorological Agency (NiMet) issued an advisory that the rains were going to be heavy this year. So, what the central bank did was not to fund the rice programme because, with heavy rains, you are going to encounter massive losses.”
He warned farmers not to indulge in the hoarding of grains for arbitrage.
Yila said, “We started a wheat programme, which targets to cut down our import of wheat over a period of five years. This year, we are going to be doing 250,000 hectares. Consumption of wheat is almost five million metric tons and we spend in excess $2.5 billion to $2.6 billion, especially in the northern part of the country that can cultivate this wheat.”
He added, “As we approach yuletide, we are concerned about prices of items, especially rice; and as we move into the election period, we had a meeting with them this week and we informed them that if they take advantage of arbitrage and try to raise prices they would suffer at the end.
“This is because the government has made an enabling environment because if the borders are opened and rice comes in, these mills would close. There is no reason why rice should go as much as N40,000 – rice should sell at N30,000 and they are making enough margins which they all agreed.”
The CBN, however, noted that though it intended to continue with the ABP, the interventions had implications for monetary policy.
On his part, Mahmud, said, “And we think that we have done enough, we expect the private sector to pick up and the fiscal authorities also pick up from that space. Largely what we were doing was targeted, which were those that would really affect food and core inflation numbers.”
Mahmud, while also commenting on the apex bank’s decision to further raise the benchmark interest rate to 16.5 per cent at its recent meeting, said the central bank was aware that tightening was impacting growth, and resulting in higher cost of lending, among others. He added, however, that higher costs would make supply more attractive as well as provide incentives for more production.
He admitted that the bank, perhaps, started late in responding to the threats posed by inflation.
He said, “We started a bit late. Secondly, the quantum we are doing may not be huge enough because we were being mindful of the fact that it has implications. It is something that we need to do strategically; yes, we want to close the gap but we cannot close the gap in a day.
“So, we’re looking at that and seeing the impact on the economy. Let’s see the numbers of our GDP for the third quarter, and then we’ll see whether we’re not losing too much in terms of sacrifice ratio or opportunity costs.
“As we are taming inflation, how are we impacting growth, employment, the balance of payment, the external sector, exchange rates, and external reserves? And so, the gap is still wide, but we need to close it over time.”
Deji Elumoye, James Emejo in Abuja; Emma Okonji, Nume Ekeghe and Nosa Alekhuogie in Lagos
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