OPINION – CBN’s Naira Confiscation, A Poverty Inducing Monetary Policy

Not only are new notes generally unavailable, the old ones have been summarily declared unlawful in spite of a subsisting Supreme Court order

By Uche Nnadozie

The Central Bank of Nigeria (CBN) openly admitted of having mopped up over ₦2.1 trillion of the old ₦200, ₦500 and ₦1,000 notes. According to the apex bank, about ₦900bn was still hiding away under pillows, sacks, in pits, pockets and streets, forests and homes around Nigeria.

There’s a huge disparity between the quantum of money in circulation and within the banking system prior to this confiscation drive. About ₦700bn was hitherto in official circulation (through the banking sector).

With the above scenario, CBN went to work and released about ₦500bn or less into the system. This is less than 25% of what was thought to be in circulation albeit unofficially. Going by CBN’s records, it’s also less than the ₦700bn it admitted was circulated through the banks.

Out of the less than ₦500bn pushed into the market as new naira notes, no one is sure of what got into the hands of Nigerians according to what they deposited in their various bank accounts.

One other curious thing is that even up till middle to end of January, bank ATMs were still dispensing the old notes which were supposed to cease to be legal tender by January 31 going by CBN’s tight schedule.

Recall that it was only on December 15, 2022 that the new notes publicly went into circulation in trickles. For some people, including this writer, it was not until January 2023 that the new notes got into their hands. It should worry that people will go to ATMs to withdraw money only to be handed old notes within few days to the extended deadline of February 10.

Even the Supreme Court induced extension has not improved circulation of new or old notes. The second question will be: where is our money? Suddenly there is a huge shortfall up and down the country as if the policy was formulated to punish Nigerians for working for their money.

Some have tried to justify this seemingly contrived austerity measure as some kind of silver bullet to domesticate a cashless society, but nothing can be more cavalier.

The laws of the land expressly states that Nigerians must be paid the face value of the money they deposit in their accounts whenever they present themselves.

Today, the case is different. Not only are new notes generally unavailable, the old ones have been summarily declared unlawful in spite of a subsisting Supreme Court order.

President Muhammadu Buhari dropped the ball when he overruled the highest court in the land while pursuing a draconian policy of currency confiscation.

This is so because today, Nigerians are reeling from the effect of this disorderly and sadist programme. Most people had expressed their support for the policy (initially) but frown at a deliberate plot (implementation) to rile the people against constituted authority in a way that is despicable.

Today, most Nigerians can’t afford many of life’s necessities not because they don’t have the funds but because President Buhari and Governor Godwin Emefiele of CBN combined to emasculate them at a very disconcerting period.

People can’t pay for medicines at pharmacies or pay their hospital bills. In normal times, it’s tough to complete administrative procedures which includes fees in hospitals – it can only be imagined what tension exists in those supposedly life-saving centres at the moment.

In the markets, goods are running out. Vendors are unable to replace exhausted wares. What’s more, everyday Nigerians don’t have cash to pay, where there are Point of Sale devices, the network has gone crazy. Completion rate has dropped considerably and all we see are silly and ludicrous excuses. And this is putting it mildly.

Most PoS agents are not working. Where they do, some charge as high as 40% as commission. Queues abound. As if he lives in another planet, CBN governor threatened sanctions when he has simply refused to supply money to banks and to the agents. They bought the naira, they have to sell it to cover their investment, dammit Mr Emefiele!

Seeing folks leave their work to queue at both ATM and PoS points to get non-existent cash is too humiliating to contemplate. But that’s the Nigeria Buhari and Emefiele claim this scarcity has come to improve their economic well-being. Loss of man hours is huge. Aside from this, at the end of this debacle, most everyday Nigerians will stay away from banks since the government can wake up on the wrong side to confiscate their funds.

Less than a week to election, most people can’t afford basic needs. Transfers through bank apps are slow and failing. Vendors that this writer had dealings this past week are still calling for payment because transfers have not been completed. On my side, I’m forced to pay twice, on their side they have no funds for the value of goods exchanged. Even services like taxis have been disrupted.

At intra-state bus stations, you have to produce cash otherwise you can’t board. Car hailing services on the other hand hold you hostage in their vehicles until they get alerts. What kind of voodoo monetary policy is this?

On the politics of things, it’s depressing to see people find words to support the reduction of our people to paupers because they can’t access their funds after asking them to deposit same in the banks.

People support or withhold their support based on the political party or leader they support. Save for most All Progressives Congress (APC) supporters who surprisingly oppose the naira confiscation drive, the other main parties support it.

Reason is not farfetched. APC supporters fear that the backlash as a result of the witchcraft policy will affect their candidate going into the election week; the other parties support it because since 2015, nothing has de-marketed the ruling party so much like this confiscation of the naira.

Buhari claims he’s fighting corruption, insecurity and inflation with this, but I wait to see how inability to conduct basic microeconomic activity will create an Eldorado afterwards.

It is left to be seen how the government or CBN will restore the lost economic opportunities owing to lacklustre economic activities. For today, this poverty inducing policy should be suspended. Cashless society does not mean no cash at all. And by data, Nigeria does not even have enough cash in circulation going by our GDP size compared to other nations including USA, South Africa, etc. Everything put in perspective, this backdoor money policy is arcane at best, suffocating at worst. Nothing good will come out of it at least in the short term beyond make-believe statistics.

The country is sliding. Banks are shutting at will, riots are spreading. Soldiers are out on the streets to prevent mayhem. Is someone bent on igniting an inferno? Is that the real motive behind the veil?

▪︎Nnadozie is a newspaper columnist and public affairs analyst. 

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