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By Haruna Yunusa Saeed
On October 26, 2022, the Central Bank of Nigeria, CBN, announced its decision to redesign the paper notes of N200, N500 and the N1000 effective December 15, 2022.
The new notes have thus, come into effect since the said date. The policy has come with some restrictions, amongst which are: no exchange window (old notes must be deposited into account); limit on cash withdrawals with punitive penalty.
The rational for the policy are many.
Among them, the CBN hopes to improve the currency’s security and reduce counterfeiting; mobilization of cash outside circulation to the banking system thus, minimizing cash hoarding; progressing towards cashless economy; enhancing financial inclusiveness by bringing more people into the financial sector; reducing the overall cost of currency management; and, to combat the current national security challenge of kidnapping and terrorism because there will be shortage of cash in circulation to meet demands for ransom payments. These objectives are hardly contestable.
By now, the CBN must have evaluated the impact of the policy at the commencement stage.
The major criticisms from the general public and the members of the National Assembly include timing; duration to conclude the transition being short; high cost of printing the new notes in addition to opaqueness of the inherent cost; absence of banks and financial institutions in some parts of the country; insecurity, thus heightening fear of people in bringing out cash. Others see the policy as a misplaced priority.
The major issue to do with the policy, as outlined above, for me, is the absence of banks and financial institutions in many parts of the country and the low penetration of banking culture in our society. Many households and individuals don’t have bank accounts and are lacking in education to imbibe the culture so suddenly.
Nonetheless, the policy has already taken off. Therefore, ways of mitigating adverse consequences of the policy must be worked out.
However, our governments, especially at the state and local government levels, hardly care about the citizen welfare, even though it is key in their mandate. In this moment, what matters most in their minds is election, senseless kleptomaniac dominance and brutal use of authority.
Nonetheless, we need to bring it in the fore and demand actions from them. It will be horrible and indeed callous to look the other way when individuals are likely to lose their money by the time the policy matures.
It may not have any effect on many even without maintaining and depositing money in the any account as their meager collection and spending will not let them have stock of the old notes at the maturity point of policy.
As a way forward, and in the discharge of human civic responsibility, we should advise on ways on achieving the goal of financial inclusiveness in a way that individuals that should be in the net are somehow brought in, directly or indirectly, within the policy timeline.
The CBN, banks, state and local governments, NGOs and religious institutions and organizations should quickly key into the process to support the weak before they get weaker by losing some money and means of survival.
It will be noted that when the cashless economy takes firm root, people without ability to receive and make payments through the financial wire system will be left out.
The CBN and the banks should devise methods of supporting individuals in remote areas without bank branches to open accounts by reaching out to them, not only though POS operators as they are also lacking in capacity and trust base.
The rural banking program of Gen Babangida failed because other supporting policies were not put in place to force compliance by the banks as profitability was lacking. Many local governments in the north do not have any bank branch sites. These uncovered spaces must be covered and protected or else this policy can also suffer somersault.
The CBN should work in assigning areas to be covered by each bank which will seek support of institutions in the locality, traditional, religious, etc.
Further support should come from the local government authorities. Organizing individuals according to election clusters, like wards that the local government leadership is most familiar with, can quickly bring results.
Money can be collected under trust and care by the local government and deposited in special accounts and the individuals assisted in the process of account opening into which their money will eventually be transferred.
Cooperative societies, farmer’s groups, trade unions, market women associations and the like can be encouraged to key into the process and assist in getting individuals to open accounts.
The danger here, however, is the fraudulent practices of our fraudsters who are everywhere with ways of scamming people. Therefore, as much as possible the government must work on protecting people and also minimize this approach.
The policy can be said to have commenced on October 26, 2022 when the CBN pronounced it along with the timeline for introducing the new notes and completing the withdrawal of the old notes.
Nonetheless, the critical time is from now to January 31, 2023 when the old notes will cease to be accepted as legal tender. Therefore, the CBN and government must scale up publicity and support to the weak and vulnerable in order to succeed in achieving the policy goals. It should be noted that the citizen welfare should be the ultimate goal of any policy.
Haruna Yunusa saeed writes from Kaduna