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My thoughts on the CBN’s naira policy By Jekwu Ozoemena

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One day to the original CBN exchange deadline and we should have about N780 Billion of old naira notes left to be deposited with the CBN (N2.68 Trillion less the N1.9 Trillion that has been deposited). In this N780 Billion are the lower lower denomination notes that were not redesigned and are not expected to be deposited.

Note that I have used "deposited" rather than "exchanged" because the CBN is not exchanging old currency value for new currency value with the banks but is using this as a means to reduce the high denomination notes in circulation, essentially mop-up currency in circulation outside banks, which in itself is a good thing.

But I still think that there is something not adding up in the narrative that the CBN’s currency redesign program is meant to force corrupt politicians who have stockpiled cash for elections to deposit the money in the bank.

Currency in circulation outside banks was N1.47 Trillion in 2015 and has increased to N2.68 Trillion as at August 2022. However, like I have noted several times, Narrow Money M1 (defined as money supply that includes all physical money such as coins and currency, demand deposits, and other liquid assets held by the central bank) has more than tripled from N6.9 Trillion by December 2015 to N21.4 Trillion in August 2022. I would have argued that coupled with inflation, in a cash driven economy such as ours, this would have an impact on currency in circulation outside the banks, particularly if juxtaposed against Broad Money (the totality of money circulating in the economy) which increased from N21.7 Trillion to N49.35 Trillion within the same period.

What the politicization of the currency redesign deadline has done effectively is to distract Nigerians from the real issues.

"How and why did Broad Money increase from N21.7 Trillion in 2015 to N49.35 Trillion in 2022?"

"How and why did Narrow Money increase from N6.9 Trillion by December 2015 to N21.4 Trillion in August 2022?"

My take on this is that we should not be fooled. If truly politicians have hoarded money to use for this election, trust me that for the powerful politicians in government, a lot of that money has already found its way back into the banking system and would be on the streets on due date as new naira notes if available (remember that totality of Money in Circulation increased from N21.7 Trillion in 2015 to N49.35 Trillion in 2022).

Essentially, what they would have done is to arm themselves with a massive war chest while handicapping the ability of their opponents to influence the elections with cash.

Anyway, what do I know, February 25th 2023 is just a few days away.

Sagay backs Tinubu over conspiracy claims

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Chairman of the Presidential Advisory Committee Against Corruption (PACAC), Prof. Itse Sagay (SAN) has thrown his weight behind the claim by Asiwaju Bola Tinubu, presidential candidate of the ruling All Progressives Congress (APC) that there are attempts to sabotage his presidential bid through naira redesign and fuel scarcity.

Tinubu during his rally in Abeokuta, Ogun State on Wednesday specifically said the fuel crisis and the scarcity of the redesigned naira notes were artificially created to discourage people from voting for the APC and sabotage his election.

Tinubu said, “We will use our PVCs to take over government from them, if they like let them create fuel crisis, even if they said there is no fuel, we will trek to vote. They are full of mischief, they could say there is no fuel. They have been scheming to create a fuel crisis, but forget about it. Relax, I Asiwaju have told you that the issue of fuel supply will be permanently addressed”.

Mr Sagay said he was surprised that President Muhammadu Buhari had not called Godwin Emefiele, Central Bank Governor (CBN) to order on his insistence that there is no going back on the January 31 deadline for the usage of the old naira notes.

“I suspect that because when people in responsible positions begin to create hardship and annoyance and anger in the population which will be directed against the government, just before an election, the effect of that is that the government is going to be blamed by the voters and they may decide out of anger to vote for another party.

“It will drive away votes from the ruling party which they will blame for the conditions and circumstances being created by these very dangerous people”.

“What Emefiele is trying to do in saying you cannot use the existing currency after the 31st of January in a situation where the new currency is not available to be used is a plot to create disaffection for the government and indirectly create an unfavorable image for that government before the populace in a few weeks to an election. There is no question about that”.

“What is surprising is that no one stopping him. The president has not stopped him and he is saying there is no going back in an action which is a sabotage of the goodwill of that government. It is just incredible”.

“On fuel scarcity, I can’t understand it. It has never happened before. This is going to be three months now and the NNPC is saying there is no shortage, they have enough supply for another three months. Yet, we cannot find petrol anywhere. Somebody is playing a game. I suspect after the election we are going to have petrol”.

“I agree with what Tinubu is saying. Something underhand is going on in this country which is intended to affect the outcome of the election”.

Obaseki says Edo has spent $150 on erosion and flood control

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[Headlines]

Governor Godwin Obaseki says the Edo government spent $150 million on flood control and erosion management in different locations.

Mr Obaseki disclosed this at the official launch of the Edo State Flood, Erosion, and Watershed Management Agency (Edo FEWMA) in Benin at the weekend.

Edo FEWMA is a new agency established by the government to sustain the gains recorded in erosion control and flood management started under the World Bank-assisted Edo State Nigeria Erosion and Watershed Management Project (Edo NEWMAP).

In a statement issued on Monday by his spokesman Crusoe Osagie, Mr Obaseki reassured that the government would sustain efforts at protecting the environment and ensure improved livelihoods for the Edo people.

The governor decried that most of the environmental challenges faced by the state were man-made.

He noted that the government was taking critical steps at building a progressive and prosperous Edo that was resilient to climate change and anchored on sustainable environmental development and a circular economy.

Mr Obaseki, therefore, warned that any agency intending to build roads in the state, including the Niger Delta Development Commission (NDDC), must first register its design with the Edo FEWMA to ensure proper engineering design and erosion control mechanisms.

“Over the last 10 years, we have spent over $150 million trying to repair what we have damaged by ourselves. We should ask ourselves if this is the way we should continue to go,” the governor added. “Can we not prevent some of these things that are leading to the environmental challenges we are faced with?”

Buhari nominates Arase to head Police Service Commission

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[Briefing]

President Muhammadu Buhari has written the Senate seeking the confirmation of the appointment of former police inspector-general Solomon Arase as the next chairman of the Police Service Commission (PSC).

The request was in a letter addressed to the President of the Senate Ahmad Lawan and read during plenary on Tuesday.

The letter is, titled: Confirmation of Appointment of Chairman of Police Service Commission, said: “In accordance with the provision of Section 154(1) of 1999. Constitution of the Federal Republic of Nigeria (as amended), I write to forward for confirmation by the Senate, the appointment of Solomon Arase (retd) Inspector-General of Police, as Chairman, Police Service Commission.

“It is my hope that the Senate will consider and confirm the appointment in the usual expeditious manner”.

Mr Arase, 66, was the police chief from April 2015 to June 2016 when he proceeded on retirement. He was popular among civil society players during his decades-long career as a senior police officer.

Senate asks CBN to extend deadline for phasing out of old naira notes

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[Headlines]

The Senate has asked the Central Bank of Nigeria (CBN) to extend the deadline for the deposit of old notes from January 31 to July 31.

The upper chamber also urged the CBN to open an exchange window where people who do not have bank accounts deposit their old notes.

The Senate’s resolutions were sequel to a motion by Sadiq Suleiman (APC-Kwara) during Tuesday’s plenary.

Moving the motion, Mr Suleiman recalled that the Senate, in its resolution on December 28, 2022, urged the CBN to extend the use of the old notes from January 31 to June 30.

He said the bank had insisted on terminating the old naira notes by the end of January despite not having enough new naira notes in circulation.

“Experiences around the world have shown that such abrupt decisions, if not controlled, usually created chaos,” he said. “The Senate should extend the use of the old notes to July 31.”

Supporting the motion, Ibrahim Hadejia (APC-Jigawa) said the call for extension was for their constituents and not their (lawmakers’) personal benefits.

“In my constituency, no Automated Teller Machine (ATM) is dispensing the new notes.”.

Similarly, Adamu Aliero (PDP-Kebbi) said the policy would inflict untold hardship on people living in rural areas.

“The CBN governor should be invited,” he said.

Adamu Bulkachuwa (PDP-Bauchi) said the extension was necessary otherwise, there would be chaos.

Biodun Olujimi (PDP-Ekiti), who decried that in her local government area, about 90 per cent of the people have not seen a glimpse of the new naira notes, called on the apex bank to “look away from the elections”.

She said that if the date was not extended, it would lead to collateral damage which would not augur well for the economy.

Mohammed Ndume (APC-Borno) called on the Senate to use its oversight responsibility on the CBN to “order the CBN governor to extend the date”.

He said that the power of the Senate should not be played down, calling on the senators to stand firm on the call for an extension.

For Sam Egwu (PDP-Ebonyi), who was the only senator who opposed the motion, “Nigerians do not have the culture of keeping their money in the bank.

“It is in Nigeria where cash is used arbitrarily; other countries use electronic means. Nigerians are just averse to change,” Egwu said.

In his remarks, Senate President Ahmad Lawan said most of the senatorial districts did not have banks.

“There is no doubt that we must have a window for exchange. We must have policies by the CBN to have bank branches established in rural areas.

“We need this extension for the most ordinary Nigerians,” Mr Lawan said.

CBN had, on October 26, announced plans to redesign the 200, 500, and 1,000 naira notes.