Time to embrace CBN’s naira redesign policy

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There have been ripple of reactions following the latest Central Bank of Nigeria (CBN) revised policy on cash withdrawal.

CBN’s revised guidelines on the effective implementation of the naira redesign policy states that  from 9th January 2022,  Automated Teller Machines, ATM/ Point of Sales, POS withdrawals would be limited to N20,000 Per Day.

The notification also disclosed that Automated Teller Machines (ATM) will dispense N200 and below denominations, defaulters of maximum deposit limit will have to pay 5 per cent and 10 per cent respectively on amount to withdraw above N20,000.

It added that Over the counter (OTC) withdrawal won’t be more than N100,000 per individual and N500,000 per corporate organization; Only N200 and below will be loaded on ATMs and Third Party Cheques over N50,000 will not be cleared over the counter.

The issuance of the directive in a letter by CBN’s director of banking supervision, Haruna Mustafa, to all Deposit Money Banks, other financial institutions, primary mortgage banks and Microfinance banks on Monday.

After the announcement, it has been a blend of kudos and knocks. Whatsoever position one is coming from, the ingenuity of the apex bank is clear, that is to see the Nation’s economy is sanitized for the good of all.

On the one hand, some economic experts say the policy is commendable, indicating that it portend a heavy blow on looters of government funds, kidnappers and fraudsters as mixed reactions trailed the announcement. For others, the policy is as a waste of time and resource, stating that there are other pressing issues such taming Nigeria’s 46 trillion domestic debt and lifting over 133 million Nigerians from poverty.

Upon comprehensive thought, the policy is solid and it has come to stay.

Nigerian NewsDirect earlier reported that a don of Accounting and Financial Development at Lead City University, Ibadan, Prof Godwin Oyedokun, said only looters of Government treasury would fault the policy.

He explained that the policy is not in any way targeted at the poor and may likely not affect rural dwellers.

He says, ““If I say I don’t expect this, I will be deceiving myself, but the magnitude of the cash contraction is shocking. I didn’t expect it that this low in terms of volume. If you ask me, it is not targeted towards the poor; nobody should blackmail this initiative because of their self interest.

“The policy will reduce the volume of money in circulation and the capacity for the rich to spend anyhow.”

Also, an economic expert, Dr Boniface Chizea urged CBN to carry out mass englightment in unbanked areas for an effective implementation.

He disclosed that the policy would halt random payment in cash by kidnappers and restore sanity to the nation’s currency if implemented.

He added that the federal government together with relevant stakeholders must address the issue of inadequate telecommunications network in some areas.

Similarly, a financial inclusion/wealth management expert, Mr Idakolo Gbolade said the efforts of CBN would reduce cash circulation and impact positively on cashless policy.

He stated that the policy would boost the value of naira and thereby reduce inflation.

“The Central bank of Nigeria has to make sweeping policy changes due to the fact that at a point in time the amount of cash outside CBN control was about 80 per cent of cash in circulation. This measure will to a large extent reduce the cash in the economy to an acceptable minimum as stipulated by the CBN guidelines.

“The measure will also boost the value of the Naira when there is less of N500 and N1,000 naira notes in circulation as it is being done with other major currencies of the world.

“This policy implementation will go a long way to increase the use of other means of transactions like the internet banking, USSD, ATMs and POS to boost the cashless policy of the CBN.

“We know that our economy has been a cash economy for a long time, so this measures will initially cause disruptions in the economy but things will settle on the long run and the economy will be better for it.

“Nigerians that are planning to use higher denominations of Naira notes for occasions during this festive period will have to make do with the lower denominations the CBN is willing to release to the economy,” he disclosed.

Recall that less than two months again, by 26th October 2022, the apex bank announced the redesign of N200, N500, N1000 denominations. It gave 15th December, 31st January 2022 as the day to start circulation and stoppage of the new notes respectively.

Outside taming the excess cash flow in the economy, CBN said the policy would help address the 21.07 per cent October inflation rate, make naira stronger against the dollar in the foreign exchange market and boost its cashless policy framework.

Nigerian NewsDirect urges all Nigerians to embrace the policy because the CBN is truly interested in the transformation of Nigerian Economy with this policy.

Still, CBN must be seamless yet all encompassing in implementing the policy. Here all stakeholders should be carried along towards effective implementation.