The redesign of the N200, N500, and N1000 paper notes, which will take effect on December 15, 2022, was announced by the Central Bank of Nigeria (CBN) on October 26, 2022.
Thus, as of the specified date, the new notes are in force. There are a few limitations to the program, including: no exchange window (old notes must be transferred into an account); a cap on cash withdrawals with a harsh penalty.
There are various justifications for the policy. The CBN seeks to advance several goals, including enhancing financial inclusion by bringing more people into the financial system, enhancing currency security by reducing counterfeiting, mobilizing cash outside of circulation to the banking system to reduce cash hoarding, and moving toward a cashless economy.
As more people enter the financial industry, the cost of managing currencies will drop. Additionally, there will be less cash available to fulfill ransom demands, which will help address the current national security threat of kidnapping and terrorism.
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 sited. 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, famers 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 government must work on protecting people and also minimize this approach.
The policy can be said to have commenced on the 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.