Godwin Emefiele, the Central Bank Governor of Nigeria, announced that the Federal Government have decided to redesign some naira notes. People were surprised, and wondered the main reason why the government through the apex bank chose to redesign some naira notes. In this post, we’ll be present an opinion post of the reason why the Central Bank of Nigeria chose to redesign some of its currencies.
The currencies that were redesigned are 200, 500, and 1000 naira. At the point of the announcement of the redesigning, several theories were brought up as to why the policy was enacted. Top of the circulating reason was that Federal Government wanted to recover the money out of the reach of the bank, and also to reduce the level of crime in the country.
How correct is this? Is it true that this was what CBN and FG wanted to achieve?
Why the Central Bank of Nigeria Redesigned the Naira Notes? The Main Reason
The main reason the CBN enacted this policy is to curb the rate of inflation. As the government is looking towards removing fuel subsidy, it is expected that the country’s inflation will worsen in 2023 and beyond. Therefore, to limit the disastrous effects, the best is to curb inflation through naira redesigning.
You should note that aside from the redesigning, the CBN also stated that they would reduce the number of higher amounts of 1000 and 500 naira in circulation. Thus, there will be more of 200 naira in circulation. This, the apex bank argued, is to curb inflation.
The policy was also enacted to force people to deposit money in the bank. To help the apex bank recover excess money in circulation. The lesser the money in circulation, the lesser the inflation rate.
The policy also came with withdrawal limits for people and businesses. This withdrawal limit has been readjusted to be 500,000 naira for personal accounts, and 5 million naira for company accounts. This, they argued, will also help curb inflation, and reduce the money outside the reach of the banks.
How successful will the policy be in curbing inflation?
It will achieve little or no success in curbing inflation.
In 2023 and beyond, you’re to expect harsher inflation as Nigerian Government intends to cut off fuel subsidy. Fuel will sell for around 400 naira or more. Cost of transportation, food, and other things, will increase.
The only relief Nigeria might feel a bit regarding the economy is if the Russia-Ukraine hostilities ceases, and the world economy recovers from the double blow of COVID-19 and the war.
Furthermore, you should know that you might have been deceived that the policy will reduce the spending power of politicians, and it’ll eliminate vote buying. These politicians would find ways around it. At the moment, there are reports that they are already buying peoples’ voter’s cards. The policy will have no effects on the corruption and vote buying associated with Nigerian election.
Here is the main reason why Central Bank of Nigeria redesigned Naira notes.