Naira redesign: CBN must follow rule of law, says NGF

Oluwanifemi Ojo
Oluwanifemi Ojo
The Governor of Central Bank of Nigeria

The Nigeria Governors’ Forum has urged the Central Bank of Nigeria to follow the rule of law in driving its naira redesign policy.

According to a report by Premium Times, the NGF made these statements in a communiqué that was released at the conclusion of its meeting on Saturday in Abuja.

The statement was signed by its chairman and governor of Sokoto State, Aminu Tambuwal.

The forum stated that it is “determined to employ all legitimate channels to ease the situation.”

According to NGF, the country might be susceptible to recession owing to the new naira policy of the Central Bank of Nigeria.

The NGF urged the Federal government “to respect the Rule of Law and listen to the voice of reason expressed by Nigerians and several other stakeholders including the Council of State, before the damage to our economy becomes too great to fix by the next administration.”

“We express our sympathies and support with Nigerians who are experiencing great difficulties under the current CBN naira re-design and cash withdrawal restrictions policy,” the forum added.

NGF said, “It has become necessary to make a distinction between the Central Bank of Nigeria (CBN) Naira redesign policy backed by Section 20 (3) of the CBN Act, 2007 and the aspirational policy of going cashless, both of which are mutually exclusive at this time.

“It is our considered view that what the CBN is at present pursuing is a currency confiscation programme, not the currency exchange policy envisaged under S20(3) of the CBN Act, 2007.

“Currency confiscation in the sense that the liquidity provided to the general public is grossly insufficient due to the restrictions placed on the amount that can be withdrawn regardless of the amount deposited.”
NGF expressed worry over the CBN’s approach as it does not seem to put civil rights into consideration.

According to them, “The current approach of the CBN raises concerns about the respect for the civil liberties and rights of Nigerians as it relates to their freedom to use legitimately earned income as they wish.”

The Forum thinks that rather than taking a harsh stance, as we have seen over the past three months, to implement a cashless policy and expand digital transactions, it is best practice globally to develop a range of incentives to encourage customers.

Disputing the CBN’s reason for the new note policy, NGF said, “The argument by the CBN for what it describes as the astronomical increase in the currency in circulation as the basis for this policy is not supported by its own data.

“According to the CBN, the currency in circulation increased from N1.4 trillion in 2015 to N3.23 trillion in October 2022.

“The Bank appears not to have taken into consideration the increase in the size of the country’s nominal GDP over this period, the doubling of consumer prices, rising population, and the impact of the humongous Ways & Means advances to the federal government by the Central Bank of Nigeria over this period.”

The Forum added that, “In the circumstances, it is safe to draw either of two conclusions – the CBN data may be incomplete or in fact, Nigerians may have done exceptionally well in the transition to a cashless economy.

“In addition, considering the sizeable informal sector in the nation, the amount of banknotes created in exchange so far by the CBN implies it vastly underestimated the economy’s actual cash needs.”

According to the governors, “The inability to use the new notes has had far-reaching economic effects, leading to the emergence of the naira black market, severe food inflation.

“Also, variable commodities prices based on the method of exchange, and long queues as well as crowds around Automated Teller Machines and banking halls across the country with individuals hoping to get a fraction of their money in new notes to meet their daily livelihood.

“The country runs the risk of a CBN-induced recession,” they said.

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