The reasons the Central Bank of Nigeria (CBN) Governor, Godwin Emefiele adduced for introducing the new Naira notes are unassailable. They may not all carry the same weight, but standing alone, each qualifies for a great central bank to want to do something so as to achieve set goals. Some of the reasons also go to show how stifling to the economy and upsetting to the banking system some of our practices can be. To imagine that people, be they traders, or whatever their vocation will prefer to keep raw cash, in the scale that Emefiele revealed, rather than put same in their bank accounts, sixty two years after Nigeria’s independence, is to say the least unfathomable.
After all the drumbeat by the CBN to deepen financial inclusion through its multifarious programmes, including internet and mobile money banking channels, POS (Point of Sale), Agent Banking, just to name a few, and for people to prefer cash transactions, calls for a surgical treatment. Warehousing physical cash in homes and stores is injurious to the economy because it drastically reduces the quantum of money, that if available to the banks, would have been lent to borrowers, and eventually used to create jobs as the productive base is expanded.
The security implication should equally be of concern as the knowledge of money starched in unsecured places can stoke armed robberies that could result in deaths. In addition, such large volumes of cash can be diverted to funding criminal and untoward enterprises, including drug peddling.
The concern, as it has been variously expressed, that money is having too much influence in Nigeria’s political recruitment process, could be another reason the CBN may have taken this preemptive action. It is difficult, if not near impossible to control money outside the banking system. This step just announced by Emefiele, will inadvertently force all cash outside the banks to be re-rooted into the financial web so there can be some element of control and monitoring, especially when huge cash is being moved from bank vaults to undefined and unexplained locations.
The CBN, like every Nigerian, should be worried that the nation’s currency is susceptible to counterfeiting. This is made so much easy where hordes of cash abound, as the fake currency notes can be easily stuffed and mingled with the good ones. The damage this can cause in stoking inflation is better imagined than experienced.
Speaking on CBN’s plans to redesign some banknotes, former Executive Director, Keystone Bank, Richard Obire, said the need to reduce counterfeiting as disclosed by the CBN is germane, but there are other reasons the apex bank may not want to disclose. He said the move will also enable the CBN to take proper account of the volume of money in circulation in an election year. He said the CBN wants to sterilize cash with people who have earned money illegally and may find it difficult to approach the banks to deposit their funds. The apex bank wants to fully control money supply and check rising inflation. It is also an opportunity to entrench cash-less economy,” he said. Other analysts said it remains the CBN’s job to ensure banknotes are secure, gain the acceptance and confidence of people as a legal tender.