New Telegraph

September 26, 2023

Naira: ‘Alteration should be with cautious optimism’

The current policy of the Central Bank of Nigeria to redesign, produce and circulate new series of banknotes, N200, N500 and N1,000, should be viewed with cautious optimism, according to founder, Lagosforum.com, Joe Femi-Dagunro.

In an interview with New Telegraph on Thursday, he noted the concern of the people about the propriety of the decision given that Nigeria is heavily indebted to other countries and creditors, the rate compared to the dollar, flood ravaging many parts of the country, destroying livelihood, election around the corner, among others.

He, therefore, suggested that the money for the project be spent on issues that are of priority, but also said the decision was not only that of the CBN Governor, Godwin Emefiele. Femi-Dagunro said: “The CBN is an independent arm of the government. The Governor of CBN takes decisions on monetary policies in conjunction with the Minister responsible in the Executive to address fiscal and monetary policies.

“They must have discussed it. they can not just wake up to say this is what I want to do. The CBN said ideally within some years the currency should be redesigned. He has reasons for doing it. “I will be cautiously optimistic about any information coming from the CBN. Let us watch and see.

My concern is when someone has political interest and he has shown it publicly, I do not want to say that most of the decisions are politically inclined. “I want to be cautiously optimistic to see the outcome of this policy.

The most important thing is that once such a policy works for the government, it is good for the people. Any decision or policy that will make this country great is good for all of us. “That is why I will not just rush into condemning this policy or idea from the CBN Governor. Let us watch how this thing will go. He has given a deadline. But most deadlines given in this country are always extended. Let us watch carefully. I am cautiously optimistic but I am wishing him the best.

“A lot of people say is this what we need right now considering that Nigeria is heavily indebted to other countries and creditors, the naira has fallen, there is the flood that has ravaged many parts of the country and destroyed the livelihood. The money should be spent on issues that are of priority.

“In this decision, you have the President, the Executive, and the minister responsible, they meet regularly to decide on MPR. The CBN Governor is  not acting in isolation. If he is carrying all these people along with him and they see nothing wrong with that, unless the masses will ask questions, unless we continue to speak, we can not change that decision. “We can only make analyses and express ourselves carefully and responsibly, but at the same time, we can not change the decision.

Anything we can not change, it is better we let it go.” Besides Dagunro and some other experts, a leading forensic accountant, Professor Richard Mayungbe, in a chat with New Telegraph, expressed support for the CBN’s plan, which he described as “belated,” and a step the apex bank should have taken a year or two ago. He said: “The announcement is belated.

It is an action that should have been taken a year or two ago. But then, better late than never.” According to him, the CBN’s action is bad news for people hoarding the naira as well as terrorists and other anti-social individuals, who avoid the banking system.

Mayungbe stated: “When you change a currency like that (a 90-day period), criminals and other such people who are hoarding cash, will be caught napping. Thank God for the Bank Verification Number (BVN). Once you deposit a large amount of cash into your account , your account will be flagged. Terrorists are in trouble. The action will curb, if not totally eliminate suspicious banking transactions.”

Another advantage of the CBN’s plan, according to Mayungbe, is that it will result in a lot of liquidity in the system which will boost lending and positively impact economic growth. He proposed that in order to prevent the hoarders of cash from returning to business after January 31, the authorities should float a 10-15-year bond that will trap the excess liquidity and ensure that the funds will be used for growing the economy.

On whether the action will not lead to a further weakening of the naira, given that some people holding excess cash would want to use it to buy dollars instead of depositing it in their bank accounts, Mayungbe said that while the risk of this happening is real, the naira will only be under serious pressure in the short term. He predicted that even if the local currency falls to as low as N1000 per dollar, the exchange rate would undergo a reset after January 31.

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