Scepticism Trails the Introduction of New Naira Notes

–O Oyale

Nigeria has issued newly designed naira notes, which the Central Bank hopes will help to reduce inflation and money laundering.

Some economic and political experts, however, are sceptical of such a move due to the level of corruption and looting of public funds by government officials, which has resulted in many people living in poverty.

The new naira notes were unveiled on Wednesday, with denominations of 200 naira, 500 naira, and 1000 naira. This is the first time Nigeria has changed the face of its currency in 19 years. The bank notes will be available to the public in the middle of December.

President Muhammadu Buhari, who unveiled the notes on Wednesday at the State House, stated that the naira has been in need of a facelift for some time. He also stated that the new naira notes will assist the Central Bank in developing and implementing more effective monetary policies.

Godwin Emefiele, Governor of the Central Bank of Nigeria, also stated that more than 80% of the 3.2 trillion naira in circulation is not in the vaults of Nigerian banks. As a result, inflation has reached a 17-year high, and food prices have skyrocketed. He hopes that the new naira notes will help bring hoarded currency back into the hands of the banking system and help the Central Bank regain control of the country’s money circulation.

Emefiele is also convinced that the redesign, which focuses on the higher currencies most commonly used in corrupt practices, will aid in the reduction of corruption and the tracking of corrupt activities through the banking system.

Analysts, however, believe that the best way to combat corruption in the system is through institutional reforms rather than the redesign of naira notes. According to Adedayo Bakare, an analyst with Lagos-based Money Africa, if you want to reduce money laundering, your financial system must improve; if you want to reduce ransom payments, security must improve; and if you want to reduce inflation, the rate at which the economy’s money supply grows must slow down. 

Nobody knows exactly how the naira redesign will affect Nigerians but the new naira notes are here to stay. The Central Bank of Nigeria has set a January 31 deadline for old notes to be used or deposited in banks.