The Trauma of Naira Seizure By Buhari
RingTrue By Yemi Adebowale
This is war. Yes, bullets are flying. There is already hunger and anger. Lives are being lost. Many of those alive are frustrated and distressed. The draconian instruction causing the deaths, anarchy and frustration is that the N200, N500, and N1,000 notes have been redesigned and Nigerians must deposit the old notes latest February, 2023 when they would cease to be legal tender. Well, President Muhammadu Buhari has extended the swap deadline of N200 notes to April 10 and directed that the old N200 should now recirculate with the new notes. Will this really make any difference after confiscating about N2.7 trillion from the people? It’s an emphatic no. The challenge is more about getting new notes and the CBN is incapable of providing the required quantity in the short run.
For me, Buhari shouldn’t be talking about a new cut-off date for N200 notes because the facts on ground do not support expectations that sufficient new notes would have been printed and circulated by then. Recirculating old N200 notes can’t solve the problem because of the huge backlog of demands. The old N500 and N1000 notes must be returned and allowed to recirculate with the new ones, at least till the end of the year. Nigerians have been battling with this currency swap war declared by Buhari and the governor of the Central Bank of Nigeria, Godwin Emefiele, since December 15 last year. It is shocking that Buhari and Emefiele only agreed to cosmetic changes last Thursday despite the pain nationals are experiencing.
This is the first time since the Nigerian civil war (1967 to 1970) that a large number of people won’t be able to access their hard-earned money in banks, leading to hunger, frustration, business closures and numerous traumas. Families have money in the banks, yet, are struggling to pay for food, medicals, transport and other necessities of life.
Nigerian households and firms already facing elevated financial pressures from prolonged high inflation/economic recession, compounded by external food and fuel price shocks are being further pummeled by Naira swap. The man who promised Nigerians change is looking the other way while agony continues to ravage our land.
The CBN mischievously calls it Naira redesign policy. In actual sense, it is a Naira confiscation policy by our President. This is because Nigerians can’t take their old Naira notes to the banks and have everything changed into new ones. In most cases, people deposit the old notes without getting a single new note. By February 10, the CBN had seized N2.7 trillion but printed and distributed only N300 billion. This is just about 11 percent of what was seized. It is deliberate. The plan is to reduce the Naira in circulation and force everybody to embrace digital transactions. It cannot work within such a short period in a country where just about nine percent of the population are making payments by digital means. This is the truth that must be told.
Payment digitisation is a basic challenge that will take time and require a methodical approach, especially to address inclusion issues. Our President and the CBN governor have decided to ignore the fact that there will be hitches in online payment platforms of banks because of the sudden surge transactions. That is what has been happening in the last two months. Failed electronic transactions are causing so much pain to Nigerians. Besides, petty payments are still done with cash in developed climes. So, what nonsense digital payment is the CBN talking about?
Because the CBN has printed just about 11 percent of the Naira confiscated, ATMs of banks across beloved Nigeria are still epileptic. Banks are dispensing very little across their counters. Some frustrated Nigerians are spending nights at ATMs, hoping to access the machine first, immediately cash is loaded. Banking halls have become war zones. Several bank branches have been vandalised and bank workers attacked by frustrated customers.
A Professor of Psychiatry at Ahmadu Bello University Zaria, Kaduna State, Taiwo Sheikh rightly noted that Naira scarcity will worsen cases of suicide in the country and plunge a lot of Nigerians into mental health crises that will require hospital admission: “Nigerians no longer enjoy optimum mental well-being as a result of recent happenings in the country. This scarcity of naira has already increased the rate of mental illness in the country. For an adult to strip himself naked in the bank is not normal.”
I’m shocked that Buhari and Emefiele have refused to listen to the voice of wisdom on this cash swap calamity and the challenges faced by Nigerians across the country. The International Monetary Fund was apt when it counselled the CBN to extend the swap beyond the first deadline of February 10, adding, “In light of hardships caused by disruptions to trade and payments due to the shortage of new bank notes available to the public, in spite of measures introduced by the CBN to mitigate the challenges in the banknote swap process, the IMF encourages the CBN to consider extending the deadline, should problems persist in the next few days leading up to the February 10, 2023 deadline.”
On its part, the World Bank said: “Periodic currency redesigns and demonetisation of older notes are normal internationally. However, they usually involve transition periods of one year or longer so as to minimise economic disruption.”
The World Bank also expressed concern about the timing of the Naira swap and further noted that rapid demonetisation could be costly to small businesses and poor and vulnerable households.
It added that it was highly unlikely that digital payments would increase fast enough to cover up for the shortage of new notes: “This concern is based on international experience which suggests that rapid demonetizations can generate significant short-term costs, with small-scale businesses, and poor and vulnerable households, including in rural areas, being particularly affected as they are liquidity-constrained and rely heavily on day-to-day cash transactions.”
The key point from the World Bank and IMF’s interventions is that cash swap should take at least one year. This is the global standard. All forces of good must hammer this into the heads of Buhari and Emefiele.
The Chief Executive Officer, Financial Derivatives Company, Mr. Bismarck Rewane, who is also one of the economic advisers of Buhari recently raised the alarm about this disjointed Naira programme. Rewane projected that Nigeria would suffer a total GDP loss of $18 million and total man hour loss of 120 hours (five days) per month due to the disruption in economic activities triggered by poor implementation of the currency swap.
Some state governors are at the Supreme Court to challenge the Naira swap programme. This is good for our democracy. The governors through their umbrella body, the Nigerian Governors Forum (NGF) made sensible points against the poorly-managed Naira swap programme. Unfortunately, our President is unwilling to listen.
The NGF declared: “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 Section 20 (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.
“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 so wish. The Forum believes that to deploy a cashless policy and deepen digital transactions, the best practice around the world is to create a suite of incentives to attract customers; rather than a draconian approach as we have witnessed in the last three months.”
Now, a quick recall of why the CBN plunged this country into this Naira redesign mess. The CBN tells us that the programme is targeted at controlling currency in circulation as well as curbing counterfeiting and ransom to terrorists; that it would promote the integrity of a local legal tender, the efficiency of its supply, efficacy in the conduct of monetary policy and financial stability. It will also help drive its cashless policy. For me, these are all balderdash. Only failed governments raise points like these ones. The Buhari government is obviously one of them.
If President Buhari and his CBN truly want to strengthen the Naira and turn around Nigeria’s economy, then, they must go beyond Naira redesign. According to the IMF, there must be decisive fiscal and monetary tightening to secure macroeconomic stability, combined with structural reforms to improve governance.
The CBN must fully sterilise financing of fiscal deficits and also phase out credit intervention programmes, says the IMF. The global institution also urged the Nigerian government to finalise securitisation of the CBN’s Ways and Means Advances, while emphasizing that the bank’s budget financing should strictly adhere to the statutory limits. It called for a continued move toward a unified and market-clearing foreign exchange rate by dismantling various exchange rate windows at the CBN. This is the way forward for Nigeria.
Umahi Has Messed up Ebubeagu
Governor Dave Umahi of Ebonyi State has terribly messed up Ebubeagu, a well-conceived regional security outfit, with his mischiefs. This governor has swiftly turned Ebubeagu into a tool for oppressing his political opponents. As a result, the security outfit designed to protect the people of Ebonyi State is now synonymous with human rights abuses, extortion, illegal arrest and illegal use of firearms.
It did not come as a surprise, when Justice Riman Fatun of the Federal High Court, Abakaliki, reprimanded Ebonyi’s Ebubeagu early this week and ruled that it should be disbanded. Justice Fatun declared that Ebubeagu had no powers to mount roadblocks on federal highways and major roads in Ebonyi State and ordered that personnel of the security outfit be disarmed.
The judge also ordered the Ebonyi State Government to, as a matter of urgency, pay N50 million to a former Commissioner for Information in the state, Chief Abia Onyike, who was abducted in November 2022 and tortured for over two hours by the security outfit.
Well, the illegality of Ebubeagu in Ebonyi State as declared by the judge may not be sustained by a higher court, but the conviction of the security outfit for the illegal arrest, detention and torture of Onyike on November 11, 2022 is sound and speaks volumes. It is a validation that Umahi has been bullying everybody with Ebubeagu. So sad.
The list of Umahi’s preys is growing daily. Labour Party’s Senatorial candidate for Ebonyi South, Linus Okorie was also a victim. The “crime” committed against Umahi is Okorie’s growing popularity in Ebonyi South, where the governor is also running for the senatorial slot under APC. Umahi unleashed Ebubeagu on Okorie for “dealing in hard drugs” in his night club. What is the business of Ebubeagu with drug traffickers? Has Ebubeagu taken over the responsibility of NDLEA?
Many will also remember how Umahi recently harassed and dehumanised PDP’s Publicity Secretary in the state, Chika Nwoba, “for circulating fake news in the social media.” Because Nwoba was punching holes in the rambling administration of Umahi, with facts and figures, the badly shaken Umahi decided to send Ebubeagu after him. He was arrested, thoroughly beaten and handed over to the police. This is how Ebubeagu works under Umahi. One thing is certain: Umahi will pay for all his atrocities after his tenure.