In view of the impression that trillions of naira is outside the banking system, ONYEKACHI EZE writes that the redesigned naira notes by the Central Bank of Nigeria (CBN will help track campaign funding of political parties in the forthcoming general elections
Since the Central Bank of Nigeria (CBN) governor, Godwin Emefiele, announced the plan by the apex bank to redesign three of the nation’s currency notes – N200, N500 and N1000, different interpretations have been given on why the project is embarked upon at this time. This is more so as key stakeholders in the financial sector, especially Minister of Finance, Budget and National Planning, Zainab Ahmed, said they were not carried along.
The Minister had told Senate Committee on Finance that her Ministry was not involved in the redesign, and warned that the new notes could have dire consequences on the value of the naira. Although the Minister said the policy may be a well-conceived one, “but the timing going by realities on ground, is very wrong as the naira may fall to as low as N1,000 to a US dollar before January 31, 2023 fixed for full implementation of the policy.” Her criticism came to naught as President Muhammadu Buhari quickly said the policy has his blessing.
This is not the first time Nigeria is changing or redesigning her currency. This had been done a record times, but the most remembered was that of 1984.
Incidentally, that was during the time Buhari was Nigeria’s military Head of State.
People remember the 1984 currency change due to the hardship it inflicted on Nigerians. The period given for the exchange of the old currency with new ones were too short resulting in many people losing huge sums of money. This was explained to the fact that the country had few banks in existence, and majority of Nigerians then is not exposed to the banking system. This was further compounded by poor communication system. There was no social media and mobile telephone service presently in existence. The only means of communication was postal service, which was detested because of its snail-speed nature in delivering services to the people.
Emefiele, the CBN governor said the new currency notes will become legal tender from December 15 this year while the old ones would ceased to be used for transactions from January 31, 2023. He however, said the date has been adjusted to begin from November 23, the day President Buhari unveiled the new notes to the Nigerian public. This is some 23 days earlier than the scheduled date. This, he further stated, “is almost 100 days,” which he added, “is enough for any person in any part of Nigeria to deposit his money in the bank and get ready to withdraw cash when the new notes are released.
“For information, indeed, we are no longer waiting till December 15 to begin to unveil and begin to release the new notes.”
His reasons for embarking on the policy were to take full control of the currency in circulation and eliminate counterfeiting of banknotes in circulation. Beyond that is the plan to control money supply and aid security agencies in tackling illicit financial flows and crimes. He told Nigerians that N2.73 trillion out of N3.2 trillion in circulation as at September 2022 (which is about 80 per cent) was outside banks’ vault. What this means is that the notes were being hoarded by members of the public.
“So first of all, what we want to do is to mop up the N3.2 trillion back into the CBN so we can take control of the money supply. Again, this would help to rein inflation and it would have a positive impact on inflation,” the CBN governor added.
Nigerians still believe there is more to the redesign than they were made to know, given the fact that President Buhari’s tenure would end on May 29, 2023.
When the similar project was embarked in 1984, it was an attempt to control money laundering as part of Buhari’s government’s anti-corruption crusade. The
president is embarking the policy this time when he has just less than seven months to the end of his two-term tenure, and four months to the general election.
It is believed that the policy is targeted at certain categories of people: Nigerian politicians who are believed to have already hoarded huge sums of money to buy votes in the 2023 general election; kidnappers who demand huge sums of money, in cash as ransom; and terror financiers.
Kidnapping have become a lucrative business in the country, where relations of kidnap victims, including government, are made to pay ransom cash before the victims could be released. Such money does not go through the banking system for fear of being traced and the perpetrators arrested. But with the new policy, the perpetrators of the heinous crime would have no other alternative than return these monies to the banks, otherwise they would become worthless after January 31 next year.
Though Nigerian electoral system has been monetised before now, a new dimension was introduced since Edo 2016 governorship election. The Independent National Electoral Commission (INEC) had introduced Permanent Voter’s Cards (PVCs) and smart card reader (SCR) machine to accredit voters in the 2015 general election. The election was described as one of the most transparent elections in the country. Since then, the commission has been deepening the use of technology including electronic transmission of election results from polling unit level to its portal.
With the introduction of the use of technology by INEC in the conduct of elections, politicians have adopted vote buying as method of election manipulation, since double or multiple voting and ballot box snatching are no longer possible.
Billions of naira is believed to have been spent by politicians to buy votes since 2016. This has permeated every facet of Nigeria’s electoral process as evidenced in the May and June presidential primaries of the Peoples Democratic Party (PDP) and the All Progressives Congress (APC).
It is feared that this undemocratic process, if unchecked, may threaten the gains the 2022 Electoral Act might have made on the electoral system. “If voting is as important as INEC always claims it is, now is the time to end the buying of democracy by wealthy politicians and their sponsors.”
It is believed that the redesign of higher denominations of naira notes, would curb this. Already, funds earmarked for vote buying have left the banking vaults and warehoused for that purpose. With the new policy, the funds will be returned to the banks. On January 31 when the exchange of the old and new notes ends, it will be less than a month to the general election.
The apex bank said it would make withdrawal of huge sums of money by individual or corporate organisations difficult. According to him, no individual or organisation will be allowed to withdraw huge cash without being interrogated from relevant anti-corruption agencies.
“We will restrict the volume of cash that people can withdraw over the counter. If you need to withdraw large volume of cash, you will fill uncountable forms. We will take your data, whether it is your BVN, your NIN so that enforcement agencies like EFCC or ICPC can follow you and be sure that you are taking that money for good purpose.
“We have to work as a country, Nigeria is the biggest country both in population and economy in Africa and we have to ensure that we do things the right way that also positions us as leader in Africa and one of the leading countries in the world.
“In other countries you will find, say in the US, if you want to withdraw US$10,000 across the counter, you will be interrogated, you will fill numerous forms, they will even track the use of that US$10,000 cash that you are withdrawing. Or you want to withdraw £10,000 across the counter, they will refuse and if you insist then you will fill forms,” he added.
The Economic and Financial Crimes Commissioned (EFCC) said it would monitor the process to ensure that unscrupulous players and currency speculators do not undermine the exercise.
EFCC Chairman Abdulrasheed Bawa stated that the objective of the redesign and reissue of the higher denomination naira notes, were in tandem with the objectives of the Money Laundering Prevention Prohibition Act 2022, which criminalises the conduct of cash transactions above a certain threshold. Bawa noted that Section 2
(1) of the Money Laundering Act 2022, states that “No person or body corporate shall, except in a transaction through a financial institution, make or accept cash payment of a sum exceeding, (a) N5, 000,000 or its equivalent, in the case of an individual; or (b) N10, 000,000 or its equivalent, in the case of a body corporate.”
He called on operators in the Nigerian financial services sector, especially deposit money banks and bureau de change operators, to work within the guidelines provided by the CBN to ensure seamless withdrawal of the old currency.
Also worrisome is violation of the law guiding campaign expenditure by political parties. INEC said no political party has complied with a section of the Electoral Act directing parties to disclose contributions received from individuals and corporate bodies for the elections. Clause 91(2-7) of the Electoral Act, 2022, pegs the maximum election expenses to be incurred by a candidate at a presidential election to exceed N5 billion; governorship N1 billion, the same with senatorial candidates while that of House of Representatives N70 million. State Assembly and chairmanship candidates have a spending limit of N30 million.
Councillorship candidates has maximum spending limit of not exceeding N5 million. INEC also said N50 million still remains the maximum amount an individual could donate to a political party or candidate for an election. The commission and the EFCC could not track the parties’ spending because the funds are outside the bank vault.
The reverse will be the case if the redesign policy succeeds and the warehoused money returned to the banks. Observers believe that the effectiveness of this policy remains to be seen between now and January ending, the terminal day for return of old currencies in the first instance and during the elections