Nigeria, a country with a population of over 200 million people, has faced its fair share of economic challenges over the years. From high unemployment rates to galloping inflation and a struggling economy, the country has had to rely heavily on its central bank to come up with solutions to these problems. However, in recent times, the Central Bank of Nigeria (CBN) has introduced policies that are causing more harm than good to the already struggling economy. One such policy is the introduction of new naira notes in October.
On October 2, 2022, the CBN announced the introduction of new naira notes to replace the old ones. The aim was to make the currency more secure and harder to counterfeit. The new notes came in different denominations – N5, N10, N20, N50, N100, N200, N500, and N1000. The CBN also announced a deadline of January 31, 2023, for the swapping of the old notes for the new ones. The deadline was extended by two weeks due to the scarcity of new notes.
The introduction of the new notes should have been a welcome development as it would have helped to address the issue of counterfeiting. However, the botched implementation has ensued a scarcity of the new notes causing immense hardship and frustration for Nigerians who have been unable to access them. Many Nigerians have also complained about the difficulties they have faced trying to swap their old notes for new ones. This has led to long queues at banks, with some people waiting for hours without getting new notes or even old notes.
The scarcity of the new notes can be attributed to the CBN’s poor planning and lack of coordination. The CBN should have anticipated the demand for the new notes and made adequate preparations to meet it. It underestimated the reliance on cash for everyday transactions, especially by millions of poor Nigerians. The apex bank had stated that the N2.8 trillion in money was in circulation but the outside bank was one of its primary goals for implementing this policy, however, it appeared to have underestimated the number of Nigerians who rely on cash for commuting, and daily household consumables.
The introduction of the new notes is not the only controversial economic policy of President Buhari’s administration. The controversial fuel subsidy removal is another policy that has caused a lot of controversies. The policy involves the payment of subsidies to oil marketers to enable them to sell fuel at a reduced price to consumers. The aim of the policy is to make fuel affordable for Nigerians. However, the policy has been criticized for being a drain on the country’s resources. It is estimated that the subsidy costs the country billions of dollars annually.
The management of the exchange rate is another controversial economic policy of President Buhari’s administration. The country operates a controlled exchange rate regime where the CBN determines the value of the exchange rate and resists the invisible hands of market forces. The policy has been criticized for being opaque and for benefiting a few individuals at the expense of the majority. The policy has also been blamed for the shortage of foreign exchange, which has led to a rise in the cost of imports and a decline in the value of the naira.
Whilst the benefits of the introduction of the new naira notes and by extension going cashless cannot be overemphasized, its poor implementation risk defeating the purpose before we even start to enjoy its benefits. The implementation of the policy has caused a lot of pain and frustration for Nigerians, especially those in rural areas and low-income earners.
The new naira note policy has been criticized for being insensitive to the plight of Nigerians who do not have access to banking services or are not financially literate. The policy has also been blamed for the increase in bank charges, which has made it more expensive for Nigerians to carry out financial transactions. This has further deepened the financial exclusion of the poor and vulnerable groups in the country.
The policy is an example of how the implementation of a good policy can be marred by poor planning and implementation. The policy could have been a good step towards a cashless economy if the CBN had made adequate preparations to ensure that it does not hurt the livelihoods of Nigerians.
The introduction of the new naira notes, the fuel subsidy policy, the management of the exchange rate, and the cashless policy are examples of how the CBN’s policies are tainting what is left of President Buhari’s economic policies. These policies have caused pain and frustration for Nigerians, especially those at the bottom of the economic ladder.
The CBN should review its policies to ensure that they are pro-poor and are aimed at promoting economic growth and development. The government should also focus on addressing the root causes of the economic challenges facing the country, such as corruption, poor infrastructure, and insecurity. Only then can Nigeria begin to build a strong and sustainable economy that benefits all Nigerians.