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  Following the launch of the newly redesigned Naira notes (1000, 500, and 200), many Nigerians have expressed scepticism about such a move, questioning the logic and wisdom behind such an ambiguous project. However, several monetary and security experts have pointed out the merits behind the government’s move.
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  • To Curb Inflation

According to reports by the country’s apex bank, the Central Bank of Nigeria, more than 80% of the 3.2 trillion Naira ($7.2 billion) in circulation in Nigeria are outside the vaults of commercial banks and in private hands. In a country where private hoarding of currency is rife, several experts have lauded the CBN for the redesign, stating that such a move will force hoarders to deposit money in banks, curbing inflation in the process. In October, regulators disclosed a Jan. 31 deadline for old notes to either be used or deposited at banks. According to the CBN governor, Godwin Emefiele, currency redesign  “will bring the hoarded currencies back into the banking system”. With inflation at a 17-year high of 21.09% propelled by rising food prices, the central bank will regain control of the money being used in the country. He further noted that:
“The currency redesign will also assist in the fight against corruption as the exercise will reign in the higher denomination used for corruption and the movement of such funds from the banking system could be tracked easily.”
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  •  To Combat Terrorism And Ransom Industry

Many security experts have also acknowledged that the currency redesign will deal a fatal blow to the growing kidnapping and ransom industry. With the rising spate of kidnapping and handsome payments in northeastern Nigeria, the CBN Governor is confident that the incidences of terrorism and kidnapping would be largely contained as access to large volumes of money outside the banking system used as a source of funds for ransom payment will begin to dry up. For Dr Yasin Abubakar, a financial historian, the CBN policy will come with unconsenting negative impacts for the larger population, such as the depreciation of the value of the naira and inflation. But it would certainly help in reducing insecurity in the region. He noted that:
“one of the war strategies deployed by Nigeria in the effort to crush the Biafran rebellion during the Nigerian Civil War was the changing of the colour and design of the country’s currency in 1968.”
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  • To Check Counterfeited Banknotes

It is no news that one of the major challenges facing the Nigerian monetary system is the increasing rate of currency forgery in the country. Experts note that the redesigned banknotes will check this malaise by rendering existing counterfeit high-denomination notes useless.

  • To Address the Shortage of Clean and Fit Notes

Finally, the redesigning of the naira notes will lead to the printing and minting of new banknotes, which will address the problem of the volumes of dirty and unfit notes in circulation. Featured Image Source: Development Diaries
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This article was first published on 26th November 2022

nnaemeka-emmanuel

Nnaemeka is an academic scholar with a degree in History and International Studies from the University of Nigeria, Nsukka. He is also a creative writer, content creator, storyteller, and social analyst.

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