Nigerian Crumbling Currency
The Central Bank of Nigeria is the only financial institution authorized to issue legal cash in the Federal Republic of Nigeria (CBN). The amount of money given to the economy is controlled to preserve monetary and price stability. The manufacture, purchase, supply, processing, reissue, disposal, or disintegration of banknotes and coins are all tasks that fall under the purview of the CBN’s Currency Operations Department.
The Nigerian currency, the naira, was formally unveiled in its digital form in October 2021.On the direction of President Muhammadu Buhari, the Central Bank of Nigeria (CBN) decided to redesign the naira in 2022 as a measure to fulfil a regulatory requirement and halt the country’s rising usage of fake currency in circulation. According to Godwin Emefiele, CBN Governor the overhaul was approved by the president of the nation to tackle corruption, terrorism, kidnapping, and other illicit activities that diminish the country’s economical image.
The larger naira denominations, over 100, 200, 500, and 1,000 notes, he stated, were those that the criminals used most frequently, as a result of which the country`s economical condition is in a downward trend.
The newly redesigned naira notes were to be produced by the Nigerian Security Printing and Minting Corporation Ltd, making Nigeria one of only four African countries to manufacture its currency rather than importing it from overseas.
According to the information released by the CBN, in November 2022, the old naira notes must be returned to the banking system by January 31, 2023, after which they will no longer be acknowledged as legal tender.
Now, the CBN press release states that the deadline for currency exchange has been advanced to February 2023. Significant public demonstrations broke out when the Nigerian government attempted to force its people to use a freshly minted government-sponsored central bank digital currency in
February 2023 due to a severe cash shortage brought on by not enough new currency notes being put into circulation. This sparked a significant public protest that continued up until now. Primafacie, the currency revamp appears to be divisive. Some Nigerians have had to wait in long queues or spend the night on the sidewalk while they wait for ATMs to be reloaded due to a paucity of fresh banknotes. Stampede like situation develops, as the ATM is loaded with cash. A country where 40% of people do not have a bank account adds salt to the injury of the severe cash crunch leading to civil disturbances that need to be addressed appropriately. The change has, in some respects, contributed to the development of a cashless society, but not in the way that the CBN had envisioned.
The Nigerian government’s aim is perhaps to limit the people’s access to money and understands its nature of circulation. At the same time, the government in coordination with CBN has shown interest to move into the digital payment arena to control the monetary froth in the system.
Various banking, non-banking and industrial institutions in Nigeria, however, lack the capacity and infrastructure needed for an efficient digital payments system as of date. The administration has been working for a long to move the country towards a cashless society for achieving transparency in economic activities. Even though most Nigerians still heavily rely on cash and cash transactions, very few of them started using digital platforms for transactions.
