President Muhammadu Buhari’s address in a televised broadcast on Thursday has bee generating reactions from several Nigerians. The address contains a lot of policy statements on the naira crisis plaguing the country.
Below are a brief analysis and key points to note
New naira has come to stay
The president has defended the naira redesign policy of the Central Bank of Nigeria. In his address, he said the policy became necessary noting that the proportion of currency outside banks grew from 78% in 2015 to 85% in 2022. He said as of October 2022, the currency in circulation had risen to N3.23 trillion; out of which only N500 billion was within the Banking System while N2.7 trillion remained permanently outside the system; thereby distorting the financial policy and efficient management of inflation.
Old N200 note will remain legal tender till April 10
The president, in an effort to cushion the effect of the new naira policy on the citizenry, approved the continued use of the old N200 as legal tender for the next 60 days. This means that till April 10, Nigerians will be able to trade with the old N200 banknote. However, it will also cease to be legal tender after its 60 days of grace elapses.
Old N500, N1000 notes no longer legal tender
On the contrary, the president had nothing much to say about the old N500 and N1000 bank notes, which indicates that they are no longer legal tender in the country, as he said the old N200 will circulate alongside the new N200, N500 and N1,000 notes.
He however added, “In line with Section 20(3) of the CBN Act 2007, all existing old N1000 and N500 notes remain redeemable at the CBN and designated points.”
Buhari apologises for difficulties
Speaking on the difficulties Nigerians have experienced since the naira redesign, the president said he was deeply sorry for the hardship caused.
In his words, “I am deeply pained and sincerely sympathise with you all over these unintended outcomes. To stem this tide, I have directed the CBN to deploy all legitimate resources and legal needs to ensure that our citizens are adequately educated on the policy , enjoy easy access to cash withdrawal through availability of appropriate amounts of currency and availability of currency.”
Why naira was redesigned
In a bid to enlighten Nigerians on why the naira was redesigned, Buhari said, “I feel obliged to avail you a few critical points underpinning the policy decision. These include:
a. The need to restore the statutory ability of the CBN to keep firm control over the money in circulation.
b. The proportion of currency outside banks grew from 78%in 2015 to 85% in 2022, thereby distorting the financial policy and efficient management of inflation;
c. The huge volume of banknotes outside the banking system has proven to be practically unavailable for economic activities and by implication, retard the attainment of potential economic growth;
d. Economic growth projections make it imperative for government to aim at expanding financial inclusion in the country by reducing the number of the unbanked population; and
e. Given the prevailing security situation across the country, which keeps improving, it also becomes compelling for government to deepen its continuing support for security agencies to successfully combat banditry and ransom-taking in Nigeria
What new naira policy will achieve
The president highlighted the expected short, medium and long terms goals the policy is supposed to achieve as; a strengthening of our macroeconomic parameters; reduction of broad money supply leading to a deceleration of the velocity of money in the economy which should result in less pressures on domestic prices; lowering of Inflation as a result of the accompanying decline in money supply that will slow the pace of inflation; Collapse of illegal economic activities which would help to stem corruption and acquisition of money through illegal ways; Exchange Rate stability; availability of Easy Loans and lowering of interest rates; and greater visibility and transparency of our financial actions translating to efficient enforcement of our anti-money laundering legislations.
Saboteurs of naira policy will face the law
Buhari said he has directed the CBN to intensify collaboration with anti-corruption agencies, “so as to ensure that any institution or person(s) found to have impeded or sabotaged the implementation should be made to bear the full weight of the law.”
He added, “I have directed the CBN to deploy all legitimate resources and legal means to ensure that our citizens are adequately educated on the policy; enjoy easy access to cash withdrawal through availability of appropriate amounts of currency; and ability to make deposits.”
Buhari appeals for understanding
Insisting that the naira redesign policy is for the economic best of the nation, the president pleaded with Nigerians for understanding. he said, “I seek your understanding and patience during this transient phase of implementation,” adding that “I wish to once more appeal for your understanding till we overcome this difficult transient phase within the shortest possible time.
Next administration will benefit from naira redesign
On the fast-approaching general elections, the president said, “On the 25th of February, 2023 the nation would be electing a new president and National Assembly members. I am aware that this new monetary policy has also contributed immensely to the minimization of the influence of money in politics. This is a positive departure from the past and represents a bold legacy step by this administration, towards laying a strong foundation for free and fair elections.
Shun electoral violence
Buhari further urged every citizen to “go out to vote for their candidates of choice without fear, because security shall be provided and your vote shall count. I however admonish you to eschew violence and avoid actions capable of of disrupting the electoral processes. I wish us all a successful general election.”