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Amid controversies over the position of the Finance Minister, Mrs Zainab Ahmed, on the decision of the Central Bank of Nigeria, CBN, to embark on the redesigning of Naira notes, President Muhammadu Buhari said on Sunday that the CBN has his support on the project.
Minister of Finance, Zainab Ahmed, had earlier declared that the CBN did not carry her Ministry along in the new Naira note plan, warning that the new notes could have dire consequences on the value of the Naira.
But Buhari in a statement by his Senior Special Assistant on Media and Publicity, Mallam Garba Shehu, said he is convinced the nation will gain a lot by doing so.
Speaking in a Hausa radio interview with Halilu Ahmed Getso and Kamaluddeen Sani Shawai, Buhari said reasons given by the CBN convinced him that the economy stands to benefit from a reduction in inflation, currency counterfeiting and the excess cash in circulation.
He said he did not consider the period of three months for the change to the new notes as being short.
According to him, “people with illicit money buried under the soil will have a challenge with this, but, workers, businesses with legitimate incomes will face no difficulties at all.”
Why Naira redesign is necessary — Moghalu
Commenting on the issue, a former Deputy Governor of the CBN, Kingsley Moghalu, said that the decision of the CBN to redesign the naira notes is a ‘necessary step’ for the good of the economy.
Moghalu averred his support for the decision in a series of tweets on his Twitter account on Friday.
He explained that the CBN is trying to gain control over the money supply in the economy.
“I fully support the Central Bank’s redesign of the Naira,” he said. “If 80% of banknotes in circulation are outside the banks, that’s troubling. The CBN obviously wants to force all those notes back into the banking system. Those with the notes must surrender to get new ones or else it becomes illegal tender after January 31 2023.
“This is also a way to withdraw currency from circulation, an unorthodox way of tightening the money supply since the country is battling high inflation.
“The flip side is that people who are holding huge amounts of cash outside the banking system for nefarious reasons will go the parallel forex market to buy hard currency, putting further downward pressure on the value of the Naira as too much Naira will be chasing too few dollars.
“I doubt it will solve inflation because there also are other major reasons for inflation such as the forex crisis, which this new move could exacerbate, as well as impact of the security crisis on food price inflation. But overall it is a necessary step.
“I just think the time window for its implementation is rather short. This will put a lot of operational pressure on commercial banks and the financial system in general. A 90-day window would have been better, but one can understand the need to avoid interfering with the elections.”
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