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In the most recent episode of “Renewed Shege”, Nigerians have woken up to yet another thing to worry about. This time, it’s a new cybersecurity levy that’ll have citizens paying 0.5% on every electronic money transfer as “cybersecurity tax”. Meaning, you’ll need to pay ₦50 to send ₦10,000, separate from the normal stamp duty and other bank charges.
That’s a whole lot, so we had to figure out ways to avoid this billing.
Babalawo spiritual transfers
That’s a terrible name, but hear me out. If babalawos can make money appear out of thin air during money rituals, what’s stopping them from taking it a step further by helping a client “spiritually transfer” money to someone else?
Bring back bus transfers
Are you even a Nigerian student if your parents didn’t send money to you through an interstate driver? Of course, they hid the money inside garri so it wouldn’t grow wings. If you deep it, you’re killing two birds with one stone. Sending an item to someone and transferring money free of charge.
And bank deposits
According to CBN, the levy doesn’t apply to transfers done over the counter at physical banks. We shouldn’t need to make bank deposits in 2024, but it is what is.
Send the money as data
So they can sell it to get cash. And just like that, you’ve opened a business for them too. We rise by lifting others.
Or as fuel
Fuel scarcity happens every market day in Nigeria, so they can even make a profit. How will it get to them, you ask? We’ll cross that bridge when we get there.
POS agents
At this point, there’s no difference between doing it yourself and paying someone else to do it — you’ll pay extra for both. At least, with POS agents, there are fewer cases of your bank app disgracing you.
Stop transferring money altogether
Where did you even see the money you want to give out? It only means you have enough to spare and the federal government is right to tax you more.
Let’s say you’re President Bola Tinubu. You inherit a central bank that has lost its way under the leadership of its governor, Godwin Emefiele, who made life hard for the average Nigerian. For instance, his mismanagement of the Ways and Means advance, where he printed and recklessly advanced money to the government, contributed to inflation. As the new guy, you’ve had enough of him and decided to suspend him.
So far—DSS detainment of Emefiele aside—everything seems textbook. Until you decide to appoint someone to probe everything the CBN has done. The appointee is a man with a controversial history—a man whose name is Jim Osayande Obazee.
Who is Jim Obazee?
Obazee was born on March 28, 1965. He’s from Edo state. He is an accounting graduate from the University of Benin and holds a master’s degree in the same course from the University of Lagos. Obazee is also a member of the Nigeria Institute of Management and the American Accounting Association. He holds a certificate in strategic financial analysis for business evaluation from Harvard University.
Obazee was the Chief Executive Officer (CEO) of the Financial Reporting Council of Nigeria (FRC) between 2010 and 2017. The FRC was formerly the Nigerian Accounting Standards Board (NASB). It sets the accounting standards used in Nigeria. In January 2017, he was sacked by President Buhari. It’s here that things get very interesting.
What controversy has Obazee found himself in?
In 2017, The Cable reported on Obazee, describing him as the “man of controversies.” Going back to 2013, he was accused of sexual harassment by his then-personal assistant. The complainant wrote a letter to the FRC describing how Obazee professed his love for her even though she was married. She claimed he transferred and eventually sacked her when she refused his advances. He defended her sack by claiming the complainant had a “history of poor performance at work.”
Obazee has also sparred with influential people. These include the former CBN governor, Lamido Sanusi, whom he recommended for the sack due to financial recklessness. Based on the recommendation, former President Jonathan sacked Sanusi in 2014.
Obazee also took on the founder of Stanbic IBTC bank, Atedo Peterside. In 2015, the FRC suspended Peterside’s FRC number and those belonging to senior bank officials over financial infractions. The FRC also imposed a ₦1 billion fine on the bank.
In 2016, Obazee squared off against Pastor Enoch Adeboye of the Redeemed Christian Church of God (RCCG). The faceoff had to do with a directive that demanded heads of not-for-profit organisations step down after twenty years in office. This led Adeboye to step down while naming Joshua Obayemi as head of the RCCG in Nigeria while he remained General Overseer worldwide. Buhari fired Obazee and reconstituted the FRC board in 2017 due to the controversy this issue caused.
What does Tinubu want from Obazee?
According to Sahara Reporters, Obazee received his appointment letter dated July 28. The immediately effective appointment will see Obazee report directly to the president. Part of the letter reads, “You are to investigate the CBN and related entities using a suitably experienced, competent, and capable team and work with relevant security and anti-corruption agencies to deliver on this assignment. I shall expect a weekly briefing on the progress being made.”
What have reactions to his appointment been like?
There have been mixed reactions to his appointment. Some have asked whether a thorough vetting process was conducted before the appointment.
Others say the appointment was the right call.
In any case, the next few weeks will be interesting to watch. The President and Emefiele will—for different reasons—be looking forward to learning what Obazee uncovers.
On June 14, 2023, the Central Bank of Nigeria (CBN) issued a press release announcing new operational changes to the foreign exchange (forex) market. These changes, in summary, mean the CBN wants a unified exchange rate policy.
Most of the press release is filled with jargon that might be difficult to understand. We went through it to explain the parts that matter to you. We’ve also looked at the winners and losers of this new policy.
What are the highlights of this new policy?
The CBN is abolishing segmentation. As financial commentator Shuyi Olutimi explains, we operated in multiple market segments, including the interbank market, where commercial banks trade forex. The CBN, being the regulator of the banks, fixed the price daily.
There’s also the Bureau De Change (BDC) which comprises institutions recognised by the CBN to trade currency. These guys typically profit by selling on the parallel market, commonly known as the black market. Then we have the Investors & Exporters (I&E) window, a market established by the CBN in 2017 that allows more liquidity (cash) in the forex market to settle more significant transactions quickly.
The CBN is collapsing all these markets into the I&E window under a model called “willing buyer, willing seller.” This means the CBN no longer sets an official rate—everyone trades freely on an open market. Business Travel Allowance or Personal Travel Allowance (BTA/PTA) applicants will no longer get special subsidies on the dollar, the same as foreign students. Oil marketers will also have to get their FX via this window.
One significant implication is that arbitrage—taking advantage of price differences in currencies to make fast money—will no longer be attractive. Financial institutions are not allowed to have a spread, or profit, of more than ₦1 in this market.
At the I&E window, the naira ended at ₦664.04 per dollar yesterday, according to the FMDQ Securities Exchange. This marks a significant 29% depreciation compared to Tuesday’s rate of ₦471.67 per dollar.
Who are the losers?
Not everyone is excited by this news. Beyond some mentioned earlier, here are a few people who would feel the pinch.
Aliko Dangote
Africa’s and Nigeria’s richest man, Aliko Dangote, is by far the runaway loser here. The announcement of the exchange rate unification caused the naira to lose value and Dangote’s wealth to tank considerably. Nairametric reports that the billionaire’s wealth fell by $3.12 billion to $17.8 billion in one day. You see? The rich also cry.
The FG and, ultimately, you
Remember how we all wailed that Buhari and his cohorts threw Nigeria into debt? Well, that debt just got even bigger. Before the reunification, the public debt stood at around ₦73 trillion. The CBN’s announcement and subsequent naira devaluation have shot the debt up to ₦82 trillion. And you know what happens when debt goes up? The government passes the cost down to you in various ways, including, you know, taxes.
Fuel price and you, again
Don’t kill the messenger; I’m just doing my job. According to Taiwo Oyedele, the Fiscal Policy Partner and Africa Tax Leader at PwC, the unification would lead to a “possible impact on the pump price of petrol which could inch closer to the current pump price of diesel.” I know you think petrol is expensive, but have you seen the diesel price? Hmm.
Who are the winners?
The CBN’s announcement is excellent news for some people. Let’s run through a few of them.
Foreign investors
Following the campaign mantra of President Tinubu, foreign investors will have renewed hope in Nigeria. Knowing there’s a uniform exchange rate means investors don’t have to worry about repatriating their funds at a loss due to the disparity in exchange rates. Credit rating agencies may review our ratings positively. Foreign portfolio investment in Nigeria’s capital market will also rise.
The FG
Financial experts project that revenues to the federal government from government-owned enterprises will shoot up significantly with this news, rising by as high as 39%.
You—in the long run
The most crucial signal this policy sends out is stability. The average Nigerian will bear hardship in the short term, but in the long term, the Nigerian economy should become robust. That is, provided the FG follows through with implementing secondary policies that ease the burden passed on to ordinary Nigerians, such as unbanning the list of items prohibited for FX and an upward review of the minimum wage.
What else should you know?
The CBN set up the Naira4Dollar scheme in 2021. It was an incentive that gave ₦5 for every dollar you received to increase dollar inflow into the Nigerian economy. The CBN now says the “Father Xmas” promo will end on June 30. Do with that information whatever you will.
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On June 1, 2023, Daily Trust newspaper exclusively reported with the headline “CBN Devalues Naira To 630/$1”. On its Twitter page, the news has received over 426k views at the time of writing. It has also been retweeted 493 times.
On Wait First, we divide claims into three categories. A valid claim is a fresh banana. A false claim is a burnt dodo. And a misleading claim is cold zobo.
So, how valid is this claim?
Background
According to the news report by Daily Trust, the Central Bank of Nigeria (CBN) devalued the naira from ₦461.6 to ₦631 to the dollar. It then sold at the new rate in the “Importers and Exporters (I&E)” window on May 31.
Nigeria currently runs a multiple exchange rate system. The CBN provides its rates, and the parallel market, commonly known as the black market, provides another. The gulf between the two creates arbitrage. This is a situation where people trade in currencies by taking advantage of differing prices for the same currency.
As of May 31, the CBN’s rate was ₦461.26 to the dollar.
Not long after the news report was released, the CBN released a screenshot describing it as “fake news”.
The CBN then followed up with a statement signed by its acting director of corporate communications, Isa AbdulMumin. It read:
“The attention of the Central Bank of Nigeria (CBN) has been drawn to a news report by Daily Trust Newspaper of June 1, 2023, titled ‘CBN Devalues Naira To 630/$1’.
We wish to state categorically that this news report, which in the imagination of the newspaper is exclusive, is replete with outright FALSEHOODS and destabilising innuendos, reflecting potentially willful ignorance of the said medium as to the workings of the Nigerian Foreign Exchange Market.
For the avoidance of doubt, the exchange rate at the Investors’ and Exporters’ (I&E) window traded this morning (June 1, 2023) at ₦465/$ and has been stable around this rate for a while.
The public is hereby advised to ignore this news report by Daily Trust in its entirety, as it is speculative and calculated at causing panic in the market.
Media practitioners are advised to verify their facts from the Central Bank of Nigeria before publishing in order not to misinform the public.”
Verdict
The CBN has come out to state that the claim by Daily Trust is emphatically false. Therefore this news is nothing but burnt dodo.
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Ever since CBN governor, Godwin Emefiele, introduced the naira redesign policy in November 2022, it has brought nothing but chaos.
From a naira scarcity that impoverished millions of Nigerians to protests that led to the loss of lives and property.
The latest failure in the policy to rear its head is an inflation rate of 21.91%, which is the highest rate Nigeria has experienced in 18 years.
This comes off as strange however because there hasn’t been any money in circulation in the last two months. Isn’t there supposed to be a reduction in inflation when there’s hardly any cash in circulation?
How bad was the inflation and what is the government’s response to this? Let’s dig in:
The Inflation
In February, inflation was mostly caused by a rise in the prices of food, as it rose to 24.35 per cent year-on-year.
Food was more expensive in Kwara as food inflation hit 29.51 per cent, Imo (27.47 per cent), and Lagos (27.42 per cent).
It was lowest in Sokoto (18.54 per cent), Jigawa (19.67 per cent), and Yobe (21.89 per cent).
It was also disclosed that increase in the price of bread, cereal, rent, potatoes, yam, tubers, vegetables, and meat drove inflation up in February.
What was the CBN’s response?
It was one of defence. Emefiele claimed that the recent monetary policy decisions are working. According to him, “We have started to see inflation trending downwards and exchange rates relatively stable.”
Of course, the National Bureau of Statistics has proven that to be false.
But let’s hear from the Research analyst at Atlas Portfolios Limited, Olaide Baanu to tell us about this.
What does the expert say?
According to Baanu “The increase recorded can be attributed to the ongoing cash crunch, as some vendors now require extra charges for payments.”
The food inflation expanded by three base points to 24.35 per cent year-on-year following the cash crunch policy and dry-season effect as Nigerians search for cash to purchase scarce staple foods (like meat, tubers, vegetables, etc.) from farmers.”
What happens next?
Right now, CBN has granted citizens permission to make use of the old naira notes as legal tender, but would this reduce inflation? Would it be higher than before?
Let’s wait and see.
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To the joy of many Nigerians, on March 3, 2023, the Supreme Court ruled that the old Naira notes should remain Nigeria’s legal tender till December 31, 2023.
Nigerians to Meffy
Despite the court ruling, it wasn’t until March 13, 2023, that the Central Bank of Nigeria (CBN) released a statement directing commercial banks to the court. The statement also reaffirmed that the old Naira notes will remain the legal tender till December 31, 2023.
This hopefully marks the end of Nigeria’s long-drawn war with Naira scarcity. But, how did this problem start in the first place?
October 2022
On October 26, 2022, the CBN governor, Godwin “Meffy” Emefiele, announced plans to redesign the ₦200, ₦500 and ₦1000 notes. He also said they would begin circulating from December 15, 2022, and become the legal tender on January 31, 2023.
His reason for the Naira redesign was to implement a cashless economy, boost our economy and combat hoarding, terrorists and kidnappers.
November 2022
On November 23, 2023, President Buhari unveiled the new Naira notes at a state house meeting in Abuja. However, to the disappointment of many, it seemed like a waste of public funds as the new notes looked like they were simply passed through a Snapchat filter.
January 2023
January showed that although it was a new year, Nigeria had the same old problems. Because despite the announcement of the new notes being in circulation from December 15, many people were still yet to see them. Banks still gave out the old Naira over the counter, and it was like ATMs had no idea new banknotes existed.
The CBN launched a cash swap programme on January 23, 2023, across all local governments to allow for the easy exchange of old banknotes for new ones. Still, as the deadline inched closer, it became more and more evident that an extension would be needed. And Meffy finally decided to extend the deadline by ten days to February 10, 2023.
February 2023
Following this extension, Nigerians began to feel the full effect of the Naira scarcity; crowds at banks and queues at ATMs became the order of the day. People started sleeping at ATM galleries, and POS agents began to charge arms and legs as withdrawal charges.
As expected, tensions began to rise, and it wasn’t long before protests and pockets of violence started happening around the country. Banks were burnt, and the staff wasn’t spared; some had to jump fences to escape.
Zenith bank staff fleeing through the back fence. This is the situation APC put us in this country. Atiku, please come. pic.twitter.com/7cY21mrZJy
On February 3, 2023, three states, Kaduna, Kogi and Zamfara, sued the federal government at the Supreme Court over implementing the new naira policy. On February 8, 2023, the Supreme Court adjourned the case to February 15, 2023, and banned the CBN from implementing the February 10 deadline.
Many Nigerians were hopeful that on February 15, 2023, the court would finally give a ruling that would stop the madness created by the Naira scarcity, but unfortunately, the court was adjourned again to February 22, 2023.
And on February 16, 2023, in what seemed like blatant disobedience to the Supreme Court’s order, President Buhari approved the continued use of just the old ₦200 notes till April 10, 2023. But this had little to no effect on the Naira scarcity problem as the old ₦200 banknotes comprised only 9.19 per cent of Nigeria’s currency volume.
When the D-Day finally came on February 22, 2023, much to many Nigerians’ chagrin, the court again adjourned the case for judgment on March 3, 2023.
At this point, many Nigerians had resigned to never seeing the Naira banknotes again. However, it surprisingly ended in praise when on March 3, the Supreme Court legalised the old banknotes till December 31, 2023.
Meffy’s Naira redesign has been a bad dream for many Nigerians that we hopefully never see a repeat of.
On March 3, 2023, the Supreme Court ruled on the Central Bank of Nigeria’s (CBN) naira redesign policy. It noted how the president flouted its February 8 order asking the Central bank of Nigeria (CBN) not to end the recognition of old naira notes as legal tender and described it as a hallmark of a dictatorship.
Here are the words of Justice Emmanuel Agim, who read the lead judgement:
“The rule of law upon which our democratic governance is founded becomes illusory if the President of the country or any authority or person refuses to obey the orders of courts. The disobedience of orders of courts by the President in a constitutional democracy as ours is a sign of the constitution’s failure and that democratic governance has become a mere pretension and is now replaced by autocracy or dictatorship.”
[CBN governor Godwin Emefiele / Channels]
The Supreme Court ordered that the old ₦200, ₦500 and ₦1,000 notes should remain in circulation until December 31, 2023. This was a week ago. While some banks have started issuing the old notes, it’s unclear whether compliance is universal because cash is still scarce.
A CBN spokesperson recently said the old notes are now legal tender. Still, the CBN hasn’t issued an official statement, and the federal government has maintained an unusual silence.
Citizen spoke to some Nigerians to hear their thoughts on this issue. Here’s what they had to say.
Elizabeth
“I see the step taken by the CBN to reduce the naira in circulation to conform people to digital money as a welcome development. This is because many transactions and businesses have been bypassing taxes for years. This will help to audit most of their records properly.
“Also, I see it as a means to reduce corruption and undocumented payment. As a citizen and civil servant, it has helped me curb avoidable and unnecessary expenses. It has saved me from billing — the usual ‘drop something’ when you go to offices and other departments.
“I mainly use naira notes for transportation purposes (when I am not driving). It also helped me to review my expenses, especially when I go on market errands.
“Regarding the charges, I use non-traditional bank apps and cards to pay, so instead of paying charges, I earn interest for using their cards to make purchases.
“The CBN governor hasn’t said a thing about it because he is trying to salvage the policy, maybe looking for means and ways to make it work. The Supreme Court has given an order. Based on the verdict, I think the Supreme Court told the FG to return the old notes than telling the CBN. The president’s silence is obviously because he still supports the policy. As far as I’m concerned, I’m 70% ok with the naira scarcity.”
Layi
“Malls are packed because it seems it’s the way people can buy things via e-channels. You’ll find 30-minute queues at Spar and Shoprite. Cards are failing, so you have to transfer and wait. It’s been very time-consuming, which is ironic.
“Regarding the Supreme Court ruling, I’m not a lawyer, but I don’t think the ruling is useful per se. If it’s legal tender, people should accept it. No one will have confidence in the notes if the CBN says nothing.
“Also, the ruling makes it look like the court is in charge of the money supply — which is wrong. As you can see, the CBN can still frustrate the whole ruling by not circulating old notes, not printing more notes etc.
“It’s a cashless policy — that was clear from the start, and it’s another attempt to get Nigerians to dump cash. It wasn’t Buhari’s place to intervene in the matter in the first place but the CBN’s. Perhaps, the faulty implementation made him speak, but it didn’t concern him. If all went well, no one would need his input.
“You don’t call Buhari when banks hold your money, and you rarely call the CBN except you need a firmer hand to put your bank in check. So Buhari doesn’t have to say anything, and the CBN ideally still has control of the legal tender, so what do we do with the ruling? At best, banks accept the notes again, which can solve the problem. I can accept the notes if I know banks would accept them from me.”
“The ruling has changed my purchasing experience. I now use Justrite Store more than I ever had. I only use cash for transport. The CBN won’t say anything till after the elections. They don’t need to since you can only spend the money if they release it. The policy has destroyed volumes of fast-moving consumer goods (FMCG). We are bleeding volumes massively.
“On Buhari, he can’t openly disobey the Supreme Court order, so I expect him to be mute.”
Bolaji
“For me, pardon my language; it’s pure BS. To even collect old notes from the banks is hard. To enter the bank, problem. I have failed POS transactions that they haven’t refunded. When I try to purchase stuff, sellers ask me to put ₦50 or ₦100 as an extra charge. What if what I want to buy is ₦400, and there’s ₦420 in my account? How do I wing it? I have to reduce whatever I want to purchase. It makes no sense.”
Victor
“The primary way this policy has affected me is to reduce my purchasing power. If I want to buy things like Suya or table water which the informal sector of the economy thrives on, I have to think twice because I don’t have an abundance of cash and transfers aren’t reliable. Who wants to wait for a Suya seller to confirm whether a ₦500 transaction has gone through?
“Everyone knows Godwin Emefiele is a yes man. At this point, the CBN doesn’t even have an opinion and is waiting on Buhari. Buhari himself appears confused. I think that’s why the CBN hasn’t said anything yet.
“Do I expect Buhari to speak on this issue? Yes, but not anytime soon because he has a lot on his plate with the controversies surrounding the conduct of the elections. He’s dealing with the transition as he’s tired of the office. The CBN is supposed to say something about it. When? I don’t know, maybe next week. That guy operates on vibes.”
Since the beginning of the year, every day for Nigerians has not been the day the lord made. We have been fuelled purely by chaos.
One of the problems started on October 26, 2022, when the Central Bank of Nigeria (CBN) governor, Godwin “Meffy” Emefiele, announced plans to redesign the ₦200, ₦500 and ₦1000 notes. A month later, the new banknotes were unveiled. Although some people predicted that it might be difficult for Nigerians to adjust to this change, no one could have foreseen the level of discomfort Meffy’s Naira makeover has caused.
What has happened?
Naira scarcity
Nigerians have been dealing with Naira scarcity while racing against CBN deadlines of January 31, 2023, subsequently extended to February 10, 2023.
Despite this, Nigerians have had to take the labours of Hercules to get their hands on the new notes.
Due to the tensions the Naira has created, some states, Kogi, Zamfara, and Kaduna, sued the Federal government at the Supreme Court over the current scarcity of banknotes.
After many complaints, on February 16, 2023, President Bubu tried to channel his inner Superman by approving the use of old ₦200 notes till April 10, 2023. But this has proven to be hardly helpful as statistics show that the old ₦200 notes make up only 9.19 per cent of the currency volume in the last seven years.
Meffy’s reason for the Naira redesign was to fight corruption and inflation, but so far, it seems like Nigerians have had to pay a high price for this. Let’s look at some things the Naira scarcity has cost Nigerians.
Their businesses
Since the Naira scarcity problem started, many traders have had to bear losses, especially those who sell perishable goods because they haven’t had enough customers.
Photo credits: Twitter/The Voice Of Port Harcourt/@TheVoiceOfPHC
Some traders don’t have bank accounts, and others who do and accept transfers have faced network challenges. This situation has forced many of them to slash the prices of their goods, though they might be incurring losses. Some herders complained that a big cow that’d usually be sold for around ₦400k now goes for ₦270k.
Their lives
On February 17, 2023, a 32-year-old woman, who was nine months pregnant, died in a specialist hospital in Kano because her husband didn’t have the new naira notes to pay the hospital on time.
The woman was in labour by the time they arrived at the hospital, and her husband tried to pay the requested ₦8,528 with the old notes but it was rejected. The hospital had no POS machine, and they asked the man to transfer the money instead, which he did. But the cashier had to wait to confirm payment. The medical personnel also refused to proceed with the treatment until the evidence of payment was brought.
The payment wasn’t confirmed until after three hours. The hospital requested an additional fee of ₦4000 for blood service, and the payment also had to be confirmed. This time, the man pleaded with them to proceed with the treatment, and they finally rushed her to the labour room around 1 a.m.. Unfortunately, his wife and child didn’t make it.
Their means of transportation
Many commuters have had to trek or face embarrassment from bus conductors who have refused to collect old notes. It’s 2023, and our train stations still only accept cash as a payment medium. It’s almost like if you can’t pull a miracle to get cash in hand, then the best thing for you would be to stay home or exercise your leg muscles and walk.
No one knows when or if the current wave of suffering in the country will end anytime soon. All we can do is hope that the new administration coming in after the upcoming elections will make our lives easier than it is currently.
Protesters burning an ATM fence in Benin, Edo State [Guardian Newspapers]
Here is how the government responded to this crisis so far:
The Federal High Court order
After the back and forth on a deadline for the expiration of ₦200, ₦500 and ₦1,000 notes, the CBN finally gave an extension. This was from January 31 to February 10.
But despite more time, the redesigned notes were still not available for use, as the February 10 deadline drew nearer. This made Nigerians question if the CBN would give a new deadline extension, or stand their ground.
Four days before the deadline, the answer came in the form of a restraining order from the Federal High Court to the CBN. The restraining order banned CBN and the Federal Government from trying to extend the February 10 deadline any further.
But just when Nigerians were getting used to this verdict, another ‘gbas gbos’ struck from the highest court in Nigeria — the Supreme Court.
The Supreme Court’s controversial judgement
On February 3, three frustrated governors from Kaduna, Kogi and Zamfara states, decided to drag the Federal Government before the Supreme Court. Their request? An injunction barring the CBN’s February 10 deadline on old naira notes as legal tender.
We imagine their faces look a lot like this
The Supreme Court gave a temporary order for CBN to halt the expiration of the old naira notes until the final judgement on February 15. This caused a lot of confusion as to whose order should be obeyed — the Federal High Court or Supreme Court.
But less than 24 hours after the adjournment, President Muhammadu Buhari announced in a nationwide broadcast that the old ₦200 notes should be in circulation beyond February 10, while old N500 and N1000 notes should not be considered as legal tender. This completely disobeys the Supreme Court’s ruling of halting old naira note expiration.
After all, the president is meant to be the boss
But, is this legal? Does the President’s declaration supersede the highest court in the land? Citizen brought back constitutional lawyer, Festus Ogun, to give us context.
“Buhari is exhibiting executive rascality.”
For Festus, Buhari is on the wrong side of the law in regard to his declaration. According to Festus:
“I don’t understand why the President would disobey the highest court in the land. There is a reason why separation of powers exists, and there is nowhere in the constitution where a President’s order supersedes that of the Supreme Court.
He may decide to say that the Supreme Court case is between the Federal Government and the governors, but the Attorney-General of the Federation was called to represent the Federal Government. The Federal Government includes the Presidency, the CBN and all other authorities underneath it. As far as I’m concerned, he too is part of the Supreme Court trial. He has showcased the highest disrespect for the rule of law and exhibited executive rascality.”
But despite the February 16 declaration by Buhari, the naira scarcity continues to get werser with even more protests setting in. Would we hear from the Supreme Court on February 22? Would bringing back the old N200 note improve access to cash in Nigeria?
Since the beginning of the year, every day for Nigerians has not been the day the Lord made. We have been fuelled purely by chaos.
One of the problems started on October 26, 2022, when the Central Bank of Nigeria (CBN) governor, Godwin “Meffy” Emefiele, announced plans to redesign the ₦200, ₦500 and ₦1000 notes. A month later, the new banknotes were unveiled. Although some people predicted that it might be difficult for Nigerians to adjust to this change, no one could have foreseen the level of discomfort Meffy’s Naira makeover has caused.
What has happened?
Naira scarcity
Nigerians have been dealing with Naira scarcity while racing against CBN deadlines of January 31, 2023, subsequently extended to February 10, 2023.
Despite this, Nigerians have had to take the labours of Hercules to get their hands on the new notes.
Due to the tensions the Naira has created, some states, Kogi, Zamfara, and Kaduna, sued the Federal government at the Supreme Court over the current scarcity of banknotes.
After many complaints, on February 16, 2023, President Bubu tried to channel his inner Superman by approving the use of old ₦200 notes till April 10, 2023. But this has proven to be hardly helpful as statistics show that the old ₦200 notes make up only 9.19 per cent of the currency volume in the last seven years.
Meffy’s reason for the Naira redesign was to fight corruption and inflation, but so far, it seems like Nigerians have had to pay a high price for this. Let’s look at some things the Nigerians have lost due to the Naira scarcity.
Their businesses
Since the Naira scarcity problem started, many traders have had to bear losses, especially those who sell perishable goods because they haven’t had enough customers.
Photo credits: Twitter/The Voice Of Port Harcourt/@TheVoiceOfPHC
Some traders don’t have bank accounts, and others who do and accept transfers have faced network challenges. This situation has forced many of them to slash the prices of their goods, though they might be incurring losses. Some herders complained that a big cow that’d usually be sold for around ₦400k now goes for ₦270k.
Their lives
On February 17, 2023, a 32-year-old woman, who was nine months pregnant, died in a specialist hospital in Kano because her husband didn’t have the new naira notes to pay the hospital on time.
The woman was in labour by the time they arrived at the hospital, and her husband tried to pay the requested ₦8,528 with the old notes but it was rejected. The hospital had no POS machine, and they asked the man to transfer the money instead, which he did. But the cashier had to wait to confirm payment. The medical personnel also refused to proceed with the treatment until the evidence of payment was brought.
The payment wasn’t confirmed until after three hours. The hospital requested an additional fee of ₦4000 for blood service, and the payment also had to be confirmed. This time, the man pleaded with them to proceed with the treatment, and they finally rushed her to the labour room around 1 a.m.. Unfortunately, his wife and child didn’t make it.
Their means of transportation
Many commuters have had to trek or face embarrassment from bus conductors who have refused to collect old notes. It’s 2023, and our train stations still only accept cash as a payment medium. It’s almost like if you can’t pull a miracle to get cash in hand, then the best thing for you would be to stay home or exercise your leg muscles and walk.
No one knows when or if the current wave of suffering in the country will end anytime soon. All we can do is hope that the new administration coming in after the upcoming elections will make our lives easier than it is currently.
This is Zikoko Citizen’s Game of Votes weekly dispatch that helps you dig into all the good, bad, and extremely bizarre stuff happening in Nigeria and why they’re important to you.
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For the first time this year, there might be light at the end of the tunnel of suffering for Nigerians. Early morning on February 16, 2023, President Muhammadu Buhari ordered the Central Bank of Nigeria (CBN) to release old ₦200 notes into circulation. And it should remain the legal tender for the next sixty days, i.e. until April 10, 2023.
But while this news might have come as a surprise for many of us, Kaduna’s state governor, Nasir El-Rufai, like the man who saw tomorrow, predicted this would happen.
[newsletter type=”gov”]
Earlier this month, on February 3, 2023, Kaduna, Kogi and Zamfara states filed a suit at the Supreme Court to contest the February 10 deadline set by the CBN to make the new banknotes the official legal tender. Although the Supreme Court had adjourned the case, El-Rufai disclosed that the federal government had reached out to them to settle out of court. Their offer was to allow the circulation of old ₦200 notes till April 10, 2023, because the CBN was already destroying the old ₦500 and ₦1000 notes. However, the state governors declined the offer, and El-Rufai accused the government of lying about burning the ₦500 and ₦1000 notes.
Federal government to El-Rufai
This isn’t the first time the Kaduna state governor has been in the news for giving us inside gist from Aso rock. On February 1, 2023, he revealed that some people were trying to sabotage the presidential win of the All Progressives Congress (APC). But without waiting for the smoke from that to die out, he dropped another bombshell on February 14, 2023. During an interview, he said that a cabal around our President Bubu was trying to install an interim national government after the presidential elections because their preferred presidential candidate didn’t win the APC presidential primaries.
When asked to give the names of members of this cabal, he shied away by simply saying “they are nothing”. We’re eight days away from the presidential elections, and we can almost be sure that El-Rufai’s training his vocal cords to drop another record soon.
What else happened this week?
NGOs Must Go
Despite the Valentine’s Day celebration, there’s no love lost between Zamfara and Non-Governmental Organisations (NGOs) because, on February 14, 2023, the state government ordered all NGOs to leave immediately.
In a statement by Mamman Tsafe, the state’s commissioner for Security and Home Affairs, he said that some illegal NGOs played a role in fueling insecurity in the state. Security agencies were also ordered to investigate and prosecute any NGO defying the directive.
Due to the Naira scarcity caused by its redesign, protests have recently broken out around the country. Do you think this could cause INEC to postpone the upcoming elections?
Nigeria often feels like a simulation. We’re barely two months into the new year, but the government has put us through enough suffering to need years of therapy.
For weeks, Nigerians have been struggling with Naira scarcity due to the CBN’s Naira redesign, affecting ₦200, ₦500, and ₦1,000 notes. In this time, people have explored crazy options to get their hands on the Naira, and POS agents have shown us that cash is power.
[newsletter type=”gov”]
And while the Central Bank of Nigeria (CBN) and the Supreme Court are stuck in a power play over the Naira swap deadline, some commercial banks, exhausted from the smoke they’ve been getting lately, have started issuing Naira coins to customers.
Photo Credit: Twitter/Mayeni Jones(@MayeniJones)
This, of course, brings the important question:
Are coins still a legal tender in Nigeria?
According to the CBN Act Section 2, Naira coins are still Nigeria’s legal tender. Our currency structure is made up of three coin denominations: 50 kobo, ₦1 and ₦2, and eight banknotes denominations: ₦5, ₦10, ₦20, ₦50, ₦100, ₦200, ₦500 and ₦1000.
Why haven’t the Naira coins been in circulation?
In 2007, the CBN redesigned the ₦1 and 50 kobo coins and issued the ₦2 coins. However, these coins had almost no value due to Nigeria’s ever-present inflation problem.
In March 2022, the House of Representatives asked the CBN to reinforce the use of coins to help stabilise our economy, but nothing came out of it.
However, by the look of things, the Naira coins might be making a return to our currency scene. While coins are legal and Nigerians can spend them, don’t judge filling station attendants when they stone you with your bags of coins.
Some say it’s the most wonderful time of the year. And while some girls are saying “awwww” at the gifts they received, others will be serving their partners breakfasts soon because they couldn’t pepper people on Obasanjo’s internet.
But regardless of what your case might be, do you know that there are some valentine’s gifts that can earn you prison time in Nigeria?
On February 10, 2023, the Central Bank of Nigeria (CBN) announced that money bouquets and money cakes are forms of Naira abuse. And according to Section 21 of the Central Bank of Nigeria Act, 2007, anyone found guilty of this offence is liable to six months imprisonment or a fine of ₦50,000.
But these aren’t the only forms of Naira abuse. Let’s take a look at the others.
Spraying money
Asking Nigerians not to spray money at a party is like telling us Ghanaian jollof is better. Many people would give you the side eye if you said to them that it’s a form of abuse and illegal.
Why? For many years, no one could point to anyone being punished for breaking this law, at least until very recently.
On February 1, 2023, a Nigerian actress, Oluwadarasimi Omoseyin, was arrested by the Independent Corrupt Practices Commission (ICPC) after a video of her spraying and stepping on the new Naira notes circulated on the internet. She’s still in custody in Kirikiri prison, awaiting her trial on February 15, 2023.
Defacing the Naira
It’s against the law to write or stain the Naira with oil or ink. The banknotes are supposed to be regarded as sacred, but we’ve turned them into jotters to help us note things down quickly. This is a serious offence coupled with the fact that this habit reduces the durability of the banknotes, which would cost the CBN billions to replace.
Selling the Naira
If we had a working country, many POS agents would be serving jail time now. Since the issue of the Naira scarcity, Nigerians have had no choice but to “buy” money at different rates from them. According to the CBN act, selling banknotes is illegal, but perhaps Meffy has decided to ignore this law for now, given his hand in the crisis we’re facing.
Rejecting the Naira
Many Lagosians have almost lost an eye because a conductor rejected their money. But according to Section 20 subsection 5 of the CBN Act, it’s against the law to reject our banknotes.
So don’t be scared whenever you’re on a bus and the conductor tries to reject your money. He can’t; the law literally backs you. The only issue is you might have to get used to using one eye, but at least you defended your rights.
And for my fellow single pringles on Valentine’s Day, love might be in the air, but it’s time for us to show how much we can hate.
Send a picture of that person that received a money bouquet today to the CBN so they can learn the sacredness of our Naira notes.
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In a press release on February 10, 2023, the Central Bank of Nigeria (CBN) came out guns blazing to tell Nigerians that news of it being unable to distribute the new naira banknotes due to the mint’s shortage of printing materials were false.
Part of the statement, signed by its spokesperson, Osita Nwanisobi read, “we are alarmed at the extent to which vested interests are attempting to manipulate facts and pitch the public against the bank.”
The new scourge plaguing the Nigerian economy isn’t inflation or economic mismanagement. To the contrary, it’s a shadowy group of individuals described as “vested interests” by the CBN, or if you prefer Nasir El-Rufai’s version, the “cabal.”
While those in charge point fingers and abdicate responsibility for the current naira scarcity, we shouldn’t be distracted. Every Nigerian should ask: what’s the value of the new naira notes the CBN issued?
A house divided
On October 26, 2022, the CBN governor Godwin (Meffy) Emefiele took Nigerians by surprise when he announced he’d retire the big boy naira denominations of ₦200, ₦500 and ₦1000 notes to give them a facelift.
Meffy gave several reasons for this move. He said Nigerians were hoarding too much cash. Then there was that one about fighting counterfeiters and, our favourite — to choke kidnappers.
A couple of days later, we heard from the Minister of Finance, Zainab Ahmed, that she wasn’t consulted on it and received the news about the same time as we did. Granted, the CBN and the ministry of finance have different areas of remit. Still, the fact that a decision of this magnitude was taken without even briefing a related ministry was an early sign that the CBN was doing its thing, haters be damned.
At the time, we wondered if the redesign was just banter but Meffy has not stopped pressing our necks.
On November 23, 2022, the new notes were shown to the public for the first time, spawning questions about which Snapchat filters were used to redesign them. On December 15, the new naira notes entered circulation but were scarce. The House of Representatives summoned the CBN to explain the reason. They asked the Deputy Governor of the CBN how many new notes were printed. Her initial response was that she didn’t know, lol.
Only after continued grilling did she say the CBN ordered 500 million new naira notes for printing. Keep this number in mind.
Rumours and chaos
The CBN initially fixed a deadline for January 31, 2023 for the old banknotes to stop being used. It then extended it to February 10, 2023. The CBN remained adamant on this new deadline despite pleas from several Nigerians and even the International Monetary Fund (IMF), asking for an extension.
The scenes which played out over the naira scarcity nationwide include protests, riots and even vandalism. Some banks have had to shut down their branches because of the security threats posed by angry customers starved of cash. The CBN’s silence on the issue has created a hotbed of rumours. Some have accused commercial banks of hoarding money, and the banks have refuted those claims.
Dear @icpcnigeria, The allegation of a discovery, as presented in the narrative, is inaccurate and misleading. It must be noted that no cash was “stashed” in the vault of the regional office, and for emphasis, Sterling Bank has complied with all the guidelines#FactsOnlyhttps://t.co/aF4nMM78DJ
What’s the exact value of the naira notes that the CBN released?
According to BusinessDay, there’s some secrecy surrounding the exact volume of new naira notes in circulation. This is unusual. In 2019, 3.05 billion banknotes were produced. For 2020, the CBN released 2.52 billion banknotes. In 2021, 2.5 billion banknotes were produced at a cost of ₦58.6 billion. BusinessDay estimates they’d spend around ₦77.6 billion printing those 500 million banknotes, with another ₦6 billion to distribute across the country.
According to Punch, the total value of the new ₦1,000, ₦500 and ₦200 notes printed amounts to ₦500 billion. That figure varies with another source saying it’s ₦400 billion. Who do we believe?
Time for the CBN to open up
No one knows anything for sure, a blame that lies squarely on the CBN. Instead of issuing bland press releases that don’t address the issue, the CBN must, as a matter of transparency, tell us the monetary value of the new notes that have been printed. It should also tell us how they’re disbursed to the commercial banks in the country. That way, we’ll know who to drag.
In the meantime, the February 10 deadline has elapsed. However, some state governors dragged the CBN to court over the naira fiasco. The Supreme Court will rule on the matter on February 15.
For now, we’re in limbo, and no one’s quite sure how to proceed even though the federal government has said it’ll await the court’s ruling. We all look forward to the February 15 ruling with bated breath.
Regardless of the outcome, we must continue to ask: what’s the value of the new naira notes the CBN released in circulation?
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For a Nigerian currently living in Nigeria, holding new naira notes is as difficult as finding an oasis in the Sahara desert.
This is because of CBN’s expiration date on the old N200, N500 and N1,000 to be implemented on February 10. So far, there has been a scarcity of the new naira notes in circulation which has caused mobile banking app downtimes and even a ‘naira to naira’ exchange rate from POS operators.
This left Nigerians with a lot of mixed emotions on social media, with some jubilating, while others heavily criticised the order and even later had a protest at CBN headquarters.
But, how did the matter go all the way to the Supreme Court? Is the Supreme Court ruling legal or not? What should we expect next?
Let’s dive a little bit into the backstory.
How did the matter reach the Supreme Court?
On February 3, three frustrated governors from Kaduna, Kogi and Zamfara states, decided to drag the Federal Government before the Supreme Court. Their request? An injunction barring the CBN’s February 10 deadline on old naira notes as legal tender.
We imagine their faces look a lot like this
This request means serious trouble, as the Supreme Court is the highest court in Nigeria. Any decision that is made in this court is final.
In other words, if the Supreme Court is against the CBN’s deadline order, who is CBN to object?
The High Court to CBN, Buhari and commercial banks
But which direction will Nigeria face? High court and CBN or Supreme Court?
Supreme court vs federal high court: who’s the winner?
Before we decide who wins this fight, it’s important to note that the Supreme Court’s decision right now is not final. This is because the injunction was given under an ex-parte motion (i.e with only one party involved (the governors)).
The Federal Government is to come together and a final judgement is to be given on February 15.
Now to get back to our important question – whose ruling shall we believe?
The side of the Supreme Court?
In an interview with Channels Television, a Senior Advocate of Nigeria (SAN), Mike Ozekhome, maintained that the Supreme Court is the highest court in the land and that other lower courts “blow muted trumpets” when the matter is taken to the Supreme Court.
In his words, “Notwithstanding the fact that a high court or Federal High Court had granted an order telling the CBN, ‘You can stop this naira swap policy on February 10 as you have decided to do,’ the Supreme Court today said, ‘Hello? Don’t do that!” he said.
He also explained that the apex court’s judgement allows the old and new naira to be in the same position. He called this status quo ante bellum, which according to him means “the state of affairs before the crisis broke out.”
According to Ozekhome, “[The Supreme Court says] ‘Allow it to continue. Come back on February 15 and let us hear you people,’” he added.
Or the side of the Federal High Court?
To get another perspective on the situation, Citizen contacted human rights and constitutional lawyer, Festus Ogun.
For Festus, even though the Supreme Court may want to use the law of original jurisdiction in Section 232 of the 1999 constitution (a law that allows interference from the Supreme Court when a dispute is between states and the nation), the CBN is an independent body outside the Federal government. Therefore, the ruling is not even legal.
According to Festus, “By Section 232 of the 1999 Constitution, the Supreme Court can only activate its original jurisdiction when a dispute arises between the Federation and States or between states. The current dispute is clearly not one between the Federation and States. The CBN is an independent agency of the Federal Government. Any dispute relating to its monetary policies cannot be mistaken for a dispute involving the “Federation”.
He also added that the Supreme Court can only entertain issues involving CBN when the subject matter is an appeal arising from the decision of the lower courts.
This means that the only way the governors can legally get the Supreme Court “big boys” on their side is to beg or appeal the Federal High Court’s (the lower court) ruling.
What is the way forward on CBN’s deadline extension?
On the side of the Supreme Court, Nigerians have no choice but to wait it out. This is until both the governors and the Federal Government meet in court until February 15.
But when asked by Festus, he said that if one approaches the Federal High Court and sues Buhari, CBN, Godwin Emefiele (CBN Governor) and the Attorney-General of the Federation, then the deadline could be extended based on a breach of Section 20 of the 2007 CBN Act.
According to Festus, “If carefully litigated, I think the law, as far as I know, and practice it, supports an extension. The timeframe given by the CBN, with the greatest respect, is not reasonable as required by Section 20 of the CBN Act. [This section] says the deadline must be reasonable. What is reasonable is always a question of fact. So, it is desirable for the court to really determine if the CBN timeframe and deadline are reasonable.”
What would be the final judgement of the Supreme Court after February 15? Will the High Court use the constitution to get its way? Would Nigerians come out of the palaver that is the scarcity of the new naira notes?
Well, we have no choice but to wait and see.
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If you’re a Nigerian and you’ve been able to get the new naira notes (without stress), say hi.
*inserts cricket sounds*
It has been “survival of the fittest” to get Nigeria’s new naira notes. Ever since CBN governor, Godwin “Meffy” Emefiele launched them in November 2022, Nigerians have not been able to get easy access to these notes.
To add to the commotion, a crazy deadline was earlier set for January 31, 2023, for phasing out the old naira notes. But still, no new naira notes were in sight.
However, today is February 1, which is a day after the deadline. Has anything changed? Here are the latest updates we have concerning CBN and this issue so far:
The deadline has been extended to February 10
Nigerians currently have 9 days to stop spending the old naira notes before it ‘expires’. Although Nigerians can still deposit old notes at banks after this deadline, it just would cease to be legal tender.
But there is STILL a scarcity of new naira notes in banks
Most commercial banks in Nigeria have found it very hard to obtain an adequate supply of new naira notes from the CBN. This has produced very frustrated Nigerians who have even fought at Automated Teller Machines (ATMs) in a bid to get the new naira.
Nigerians struggling to get the new Naira notes from an ATM in Lagos
But this doesn’t seem to go down, even with the extension deadline. A teacher, Ebele* in Ajah, Lagos told Citizen about her ordeal with collecting new naira notes from commercial banks as of today.
According to her “As I’ve done for the past five days, I went to five different ATMs close to my place of residence and three of them weren’t dispensing cash at all. The remaining two have only been dispensing money in N100 denominations. Even when I went to Fidelity Bank at Ajiwe, they were only able to give me up to N5000 in N100 and N20 notes.
A software developer based in Abuja, Favour* told Citizen that he has gone “completely cashless” since the naira note scarcity started.
“I can remember the last time I used an ATM on January 14. On that day, I went to the Guaranty Trust Bank branch in Kubwa for almost five hours to ‘cop’ my new naira notes. Only for me to reach my turn and these naira notes had finished, both in the bank and everywhere. Since that day, it’s only cashless transactions I have been making with my bank app.”
But even mobile banking apps are having issues
For the past couple of days, many Nigerians like Favour have been going the cashless route via mobile app and USSD transactions, but even that hasn’t worked out.
Popular commercial banks like Guaranty Trust Bank (GTBank), United Bank for Africa (UBA), Zenith bank and even digital banks like Kuda have had complaints from several customers. This is concerning their inability to make transactions on the respective bank apps, amongst other issues.
I have been having some issues with withdrawals and cash transfers since yesterday on my account. The issue is the withdrawal limit placed on my account.
Besides, I am unable to sign in to my dashboard on the bank app.
Gtbank did me shege today. POS declined my card, Couldn't transfer cos app was showing invalid details, USSD wasn't working too. Thankfully my heritage bank became my saving grace. See eh, e dey always good to have back up for everything in case of necessities. pic.twitter.com/OWErhi9Orx
According to a source from Fidelity Bank at Ajiwe, Ajah, these sets of people are heavy contributors as to why the new naira notes are so scarce.
“Most times, these POS operators come in through the back of the bank premises very early in the morning (before working hours) and are able to withdraw the already scarce new notes in high volume. The banks also need the money too so they can’t refuse.” the source said.
Money changers are also not left out. In a viral video released on January 30, large volumes of new naira notes were sprayed at a wedding, which makes one wonder — are the new naira notes really scarce, or are they hoarded?
One thing Nigerians can agree with for sure is that Meffy certainly needs to provide an effective means of supplying the new naira notes nationwide, otherwise things could really start to get ugly.
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There seems to be trouble after trouble for CBN governor, Godwin “Meffy” Emefiele as he is in the news again.
Over the years, Meffy has introduced many controversial policies; however, what takes the cake is the recent naira redesign and cash withdrawal limit policies. Since the CBN announced these policies, Meffy has been under fire from Nigerians and has received summons from the House of Representatives which he did not honour.
However, things began to take a different turn on December 20, 2022, when the Department of State Security Services (DSS) joined the list of those looking for Meffy. They went even further to file for his arrest on the charges of financing terrorism. Although the court refused to grant their request due to lack of evidence, it doesn’t look like they have plans to give up anytime soon, as they recently took the Deputy CBN Governor and other top officials in for questioning.
After weeks of playing hide and seek, Meffy finally decided to come back home, and while still trying to shake the DSS off his back, he seems to have landed in fresh trouble.
A federal High Court in Abuja has summoned the CBN Governor over a $53 million judgement debt owed due to the Paris Club refund. We can see that Meffy’s village people have decided to carry his matter on their heads this year.
Village people to Meffy
What Else Happened This Week?
Oshodi/Apapa Gridlock: Policemen Abandon All Hope
Over the past few months, Nigeria has shown us that no matter how bad we think a situation is, it can always get worse. Unfortunately, the traffic situation along the Apapa-Oshodi expressway has taken a turn for the worse despite promises of a solution. To give you an idea of just how bad the problem is, the Divisional Police Officer (DPO) of the Mile-2/Apapa axis declared on January 17, 2023, that they need ideas on how to solve the problem.
However, he didn’t miss the opportunity to point accusing fingers at the Nigeria Union of Petroleum and Natural Gas Workers (NUPENG) officials as being responsible for the traffic. And the NUPENG workers, in turn, passed the blame onto the government. With the blame game going on, a solution to this problem won’t be coming anytime soon.
This week, INEC Chairman, Prof. Yakubu Mahmood, during his speech at Chatham House, about the possibility of using body odour for voters’ identification in the future. What other “interesting” ideas do you think INEC should consider?
Ehen, one more thing…
Big Brother Titans launched this last Sunday. Do you think it can distract people from voting in the upcoming elections? Here’s what other Nigerians think.
Here’s what it is, how it works, and how it benefits YOU.
What is the cash swap programme?
In the programme, any Nigerian can either go to Deposit Money Banks (DMBs), Mobile Money Operators (MMO) (aka your “POS” plugs), and super agents (companies licensed by CBN for the purpose of agency banking) to exchange the old notes for the new. These old notes are in the denominations of ₦1000, ₦500, and ₦200 notes.
How will the programme work?
News flash — this isn’t a means to dump your entire cash savings to be changed. Each person only gets to deposit a maximum of ₦10,000 with an agent to be changed.
However, if you are an ‘Odogwu’ with more than ₦10,000 at home, the cash will be deposited in your online wallet or bank account. In that case, the Bank Verification Number (BVN), National Identification Number (NIN), or Permanent Voter’s Card (PVC) details of the customers will be captured as much as possible.
But don’t expect this programme to be done for free. CBN has permitted agents to add their profit in the form of “cash out fees” to all cash swap transactions.
How will this benefit you?
As much as it may suck to have to pay additional fees to collect new notes, it also has some benefits. The new notes are not only at the mercy of your legacy banks alone. It can also be collected via accredited POS operators, which is an easier channel for money distribution. It will also help people living in rural areas where banks are not as accessible.
If you don’t have a bank account or wallet, then this is the perfect time to acquire one too. Agents would set up bank accounts using CBN Tiered Know Your Customer (KYC) Framework. This will ensure that you are able to exchange or deposit your cash seamlessly without taking unnecessary risks or incurring undue costs.
After all this, what are you waiting for? Check out these CBN-accredited DMBs and MMOs today and get your new naira notes! Remember, time is ticking.
In October 2022, the Central Bank of Nigeria (CBN), led by Godwin “Meffy” Emefiele, announced it’d launch a domestic card scheme in January 2023. If the last few months are a pointer, you’d know the CBN doesn’t play with its announcements.
On January 16, the CBN officially launched the scheme. If it all sounds odd to you that the CBN is distributing ATM cards, that’s because it is. Let’s get into the gist of it, along with other exciting policies Meffy has introduced since his appointment in 2014.
Debit cards and why the CBN wants to issue them
The CBN is now distributing debit cards, that much is obvious. But why? In October, when it was first announced, the apex bank identified a couple of reasons for this move.
One, it wants to boost financial inclusion and transition to a cashless economy by operating a credit card scheme that is significantly cheaper than what traditional banks offer.
All interbank payments done in Nigeria use an infrastructure known as the Nigeria Inter-Bank Settlement System Plc (NIBSS). NIBSS is a shared-service e-payment infrastructure company owned by both the CBN and all licensed deposit money banks (DMBs) in Nigeria. The new cards will be issued through NIBSS.
Two, it wants to enhance what it calls “data sovereignty.” Common cards in use in Nigeria include Visa and Mastercard, both foreign-owned. The CBN hopes to compete with those and become the card of choice for Nigerians.
A scheme like this isn’t new and is already in place in India. However, there are worries that this might create unfair competition with the CBN being a player and regulator. We’ll see how that plays out.
Anchor Borrowers’ Programme
In November 2015, President Muhammadu Buhari, in conjunction with the CBN, launched the Anchor Borrowers’ Programme (ABP). Essentially, it’s a scheme that allows smallholder farmers to receive loans at low interest from the CBN through banks, to help them boost production.
Much money has gone into this scheme, as much as ₦2.1 trillion. And while there have been some benefits, like improved local rice production, it’s hard not to wonder whether it was worth it.
There’s also the fact that most of these loans have turned out to be awoof. Many farmers who got the loans were discovered to be “ghost farmers.” Sometimes, people just opened accounts to collect their share of the national cake, never to be seen again.
While we won’t dare accuse Meffy of having the anti-Midas touch, the CBN governor has a knack for experimentation which often has weird consequences — to put it mildly.
Take your pick from asking banks only to include 200 notes in ATMs, placing limits on withdrawals and, of course, the ugly naira redesign. Yet, we can’t forget the e-Naira launched in 2021.
E-Naira is a Central Bank Digital Currency, a digital form of money widely available to the public, made using blockchain technology — the same tech that powers bitcoin.
The CBN launched it following a crackdown on cryptocurrencies, which declared them illegal. The problem is e-Naira is pegged to the naira, which is notorious for its wild fluctuations. Who wants semo when there’s pounded yam?
In November, Meffy announced that after a year of its launch, e-Naira was a “success” having recorded 700,000 transactions worth ₦8 billion. “Success” is doing heavy lifting in that sentence. That’s less than 2,000 transactions a day for a banking population of at least 68 million people.
The jury’s out on whether the CBN debit cards will gain wide acceptance. But given Meffy’s mixed record with policy implementation, we wouldn’t hold our breaths.
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What if I told you that since the Central Bank of Nigeria (CBN) released the new naira banknotes on December 15, 2022, I’m yet to get my hands on them? This is a subject I write about frequently and even I have only ever seen them once physically.
As it turns out, there are many Nigerians like me who haven’t seen them either. This is abnormal because according to the deputy governor of the CBN, Aisha Ahmad, 500 million pieces of the new notes were ordered. It’s also alarming because the old notes will no longer be recognised as legal tender by January 31. So why are the new banknotes so scarce?
No more over-the-counter withdrawals
To start with, the CBN on January 7, ordered banks to stop giving the new notes to customers over the counter. Anyone who wants to go to the bank to exchange notes shouldn’t bother anymore.
The exact reason for this policy change wasn’t stated but one possible reason might be fears that the new banknotes are being hoarded. Instead, the CBN directed that banks load their ATMs with the new notes for customers to withdraw. But that has created another wahala.
ATM machines don’t recognise the new banknotes
According to Punch, one challenge that the new naira banknotes bring is that the ATMs don’t know them.
Banks are having to reconfigure their ATMs so they can recognise the new naira banknotes.
Apparently, one bank claimed that only one denomination was accepted. This forced banks to mix up new notes with old ones which if we’re honest, defeats the purpose of the policy.
One economic expert believes the CBN is not forthright on exactly how much new notes have been printed because it would have to explain how much it cost to do so. For comparison, the CBN in 2021 spent ₦58.6 billion to print 2.5 billion naira notes. Assuming constant cost — which is impossible — that’s around ₦12 billion to print the 500 million new notes.
What is being done to address these issues?
The Nigerian Senate on December 28, urged the CBN to extend the deadline for phasing out old notes from January 31 to June 2023. The CBN doesn’t send the Senate. It maintains that the deadline won’t be extended.
While the CBN and the Senate are playing a game of who’s who, please don’t slack. The deadline ends in exactly three weeks. Maybe between now and then some of the challenges are resolved and the new notes fully circulate. Or maybe the CBN backs down and extends the deadline. We’ll continue to observe how things play out.
About two years ago, the federal government announced plans to finally renovate the National Theatre. The government handed the project over to the CBN’s Bankers’ Committee, who worked with an initial budget of $100 million. But on December 10, 2022, Meffy said it would take about $200 million —an estimated ₦89 billion — to complete the project.
Judging by how expensive the project is, you may wonder why this national monument is necessary and why the government is willing to spend so much money on it.
The history of the National Theatre
The National Theatre, located in Iganmu, Lagos State, is often referred to as the home of entertainment and performing arts. It’s to Nigeria what the Sydney Opera House is to Australia and also, it’s to many of our parents what malls and cinemas are to us now.
The construction of this military hat-shaped landmark started in 1973 and was completed during the regime of General Olusegun Obasanjo in 1976. It was the centre for preserving and promoting black arts and culture and housed banquet halls, two cinema halls and a world-class 5000-seater amphitheatre. It also hosted many historical events, people, and shows like the Festival of Arts and Culture in 1977 (FESTAC ‘77), Fela Anikulapo-Kuti and Stevie Wonder.
Unfortunately, as with most things in this country, the theatre fell into poor management, and it wasn’t long before it entered a state of deterioration and left at the mercy of hoodlums.
The renovation of this national monument wouldn’t only fix the damaged parts of the theatre but also restore over 70 historical artworks and sculptures.
Why’s this renovation necessary?
Job creation
Unlike the naira redesign, which is creating some new problems, the restoration of the National Theatre is projected to create over 1,000 jobs. This would be a big relief considering Nigeria’s unemployment rate is at 33%. It’s not a lot, but it’s something.
It would diversify the economy
A significant problem Nigeria has is the government’s obsession with oil money, so it more often than not seems like they’ve turned a blind eye to many other sources of revenue. According to Meffy, India makes about $240 billion from exporting movies, music, fashion and technology. With this renovation, we’d finally be able to earn billions with the creative industry and compete internationally.
Tourism
The renovations include plans to create hubs and centres to showcase our fashion, music, film and technology. This should encourage foreign investors and open up a way for the monument to serve fully as a tourist site.
The renovation of the National Theatre is expected to be completed in May 2023. Hopefully, with the funds injected into this project, this national monument will be restored to its former glory.
On December 15, 2022, the Central Bank of Nigeria (CBN) officially released the new naira banknotes to the Nigerian public. And like the superstars these new notes are, Nigerians feverishly looked forward to receiving them from the ATMs and bank counters. But just like waiting for a superstar Nigerian artiste at a Detty December concert to perform on time, Nigerians ended up disappointed.
Some of the people lucky enough to get these new notes couldn’t get more than ₦2000 at a time. So why exactly are these notes playing hide and seek with us?
Banks don’t have enough of them
CBN governor, Godwin Emefiele, wants to create a cashless economy by encouraging electronic payments, so the bank didn’t print these new notes in large quantities.
As a result, the new notes were rationed between banks, and some are even still waiting to get their quota.
Some ATMs can’t recognise the new notes
You might still get old notes from ATMs because many of them haven’t been reconfigured to recognise the new naira notes. Until this is done, the circulation will remain slow.
Some people want nothing to do with the new banknotes
Some people are scared of change, and we can’t blame them because Buhari promised us change yet look where we are. One of the easiest ways for money to circulate is through everyday transactions. But Nigeria’s informal sector is yet to fully embrace the new notes and some even rejected them on the day they launched.
Meffy has already threatened warned us that the old notes will become outdated from January 31, 2023, but the government needs to solve the problem of circulation first.
The long-awaited day is finally here. Today, December 15, 2022, the Central Bank of Nigeria (CBN), under Godwin “Meffy” Emefiele’s orders, will publicly release new naira notes for the ₦200, ₦500 and ₦1,000 denominations.
We spoke to some Nigerians about their thoughts on the new banknotes and asked one question, “What’s the first thing you’ll do when you get your hands on the new naira notes?”
Here’s what they said.
Damola
My friend went to the bank yesterday to withdraw a lump sum of about ₦300k. The bank gave him the new naira notes and I was fortunate enough to see them this morning. The notes are average. It’s just as if they went to put filters on them. I prefer the old notes, seriously.
On what I’m going to do with the new notes? Well, it’s just for spending. Everyone needs cash now since Christmas is around the corner.
Tunde
I run a logistics business so definitely the first thing I’m spending the new notes on is fuel. I’ll also service my bikes and maybe get Christmas items for myself and my family.
Feyisayo
I’m not anticipating the release at all. I think I’ve overgrown the thrill of acquiring new naira notes probably because the value of the currency is nothing to be happy about. I’m not looking forward to it. I’m a little curious to see how they look but beyond that, no extra feelings at all.
Still, if I get my hands on the new notes first thing I’ll spend them on? Probably transport fare and then groceries.
Karina
I’ll keep them in my purse and laugh out loud. For sentimental reasons, I’ll hold on to the new notes. I’ll probably not spend till the old notes are out of circulation. Besides, there’s no difference between the old and new notes — just shades of colour. How are we sure that when the new notes get dirty and start fading they won’t look like what we currently have?
Toluwani
I’ll take a picture of them and send to my family group chat.
Victor
I’ll stare at them so as to recognise them physically and differentiate from counterfeits. But I think I’ll still use the old naira notes until they’re completely phased out. I know there’s a risk that banks won’t accept old notes after some time has passed but I’ll still keep mine.
People can be somehow. You may offer someone the new notes and they’ll say they want the old one. Some don’t even know the old ones have expiration dates. This delays transactions. So I’ll still have both. If I’m going out for example, I could have ₦4k old and ₦4k new — just to be safe. I don’t want to be fully dependent on the new notes because I don’t know if they’ll be generally accepted.
Deborah
Touch them to have a feel. Did the texture change? Or is it just the colour that was changed? I’ll take a closer look too. I’d most likely keep them until next year, because I’m not sure conductors or drivers will collect them yet. So to be safe, I’ll definitely not spend them until next year when I’m certain that’s what everyone is using.
Timi
Naira is useless, so I’ll basically spend them lol. I’m a collector of notes so I’d keep the old ones alongside the other currencies of any country I’ve visited as reference. I’ll also make sure to break them into change so I can see the various redesigns in their different types. First thing I’ll spend on? Either food or a hangout since it’s December.
Chiamaka
I’d most likely not spend them until it’s necessary — possibly on transport or food or some other necessity. Oh, and take pictures of them and post on my status, lol.
Niyi
I’ll take a picture of them and most likely spend them on fuel. I have no issues with the policy to be honest. I just don’t use cash much but for the people who pack my dirt and clean my office, I pay them in cash. They might not be fully informed about this policy so that may be interesting to see. I’ll probably give them the new notes and tell them about the new policy. Cue the weird looks and questions like “Oga, wetin be this?”
Abisola
I’ll hold them in my hand to get myself familiar with their new features and differentiate them from fakes. I won’t spend them immediately, but keep them for like three days. Because I’m not ready to buy fish by the roadside and have to start explaining that the new denominations are legit.
Nigerians have been following every move of Godwin “Meffy” Emefiele ever since he announced plans to redesign the naira. In that time, the naira has wobbled, rebounded and wobbled again. While the currency was still finding its feet, the central bank governor sent a memo to banks to impose restrictions on cash withdrawals next year. We spoke to an expert about that and you can read more on it here.
What’s clear about the cash withdrawal policy is it’ll affect everyone to varying degrees. But some people will feel the heat a bit more than others. Let’s run through a list of them.
Artisans
Artisans like mechanics, welders, and technicians who rely heavily on cash for daily operations will feel the bite of the policy. Petty traders too aren’t left out from the abara Meffy’s policy will land on their backs.
POS operators
In one policy move, Meffy has poured sand in the garri of point of sale (POS) operators. The profit margins they’d ordinarily make from high volume transactions may be about to crash. And you know what that means? More poverty.
There are 133 million Nigerians living under Multidimensional Poverty.
The informal economy employs more Nigerians that the formal.
POS vendors exist for a reason, a CBN policy that makes their lives hell will affect you..
Nigerian police officers are notorious for forcing people to withdraw heavy sums of money from ATMs. The good news is, the new policy will, at least, curb such incidents. The bad news though is that the Nigerian police are notoriously stubborn. And where there’s a will, there’s a way.
As Burna Boy never tires to tell us, “Last last, na everybody go chop breakfast.” And it looks like this dish Meffy has served belongs to everybody. On December 8, 2022, the House of Representatives asked Meffy to suspend the cash withdrawal policy and to come explain himself.
On December 12, 2022, Punch reported that political parties too have joined in calling for Meffy’s head. The People’s Democratic Party (PDP) even dragged Buhari into it by saying he’d never have become president if such restrictions were in place in 2014.
The chairman of the Africa Democratic Congress (ADC), Chief Ralph Nwosu also joined in.
‘’How do you expect the ADC candidate to have the cash to do the things he wants to do and how do you think this is the best time for such an undertaking? We have almost 200,000 agents that we must pay and 80% of them live in rural areas. Is it that ₦2,000 or ₦5,000 that you pay them that you would transfer to each of them? How many of them have such a facility? It’s completely inconsiderate of them.”
Some critics just think the parties are salty because the new policy will make vote-buying more difficult during the 2023 general elections.
Emefiele should enforce the new CBN policy only for the purpose of the election and revert back to the normal policy after the elections. The politicians complaining are those who want to engage in vote buying.
On December 6, 2022, Godwin “Meffy” Emefiele’s Central Bank of Nigeria (CBN) wrote a memo to bark orders at Nigerian banks over the rollout of the new naira banknotes.
CBN came in with a Banga
Those mostly affected are Cash carriers, bribe collectors, POS vendors etc.
1. Limit 100k per, 500k Coop OTC 2. 3rd Party Cheque above 50k ❌ 3. 100k max 🏧 withdrawal, 20k max daily 4. 🏧 dispenser 200 notes lower 5. POS max cash 20k a day⬇️ pic.twitter.com/0PD5cUL61a
— Capt. J A M i L👨🏾✈️ (SkyDanfoDriver) 🛫 (@CaptJamyl) December 6, 2022
The memo dropped just a week before the new notes are scheduled to enter public circulation on December 15, 2022. But the instructions won’t go into effect until January 9, 2023.
What’s in the memo?
Let’s run down the highlights:
The maximum any individual can withdraw over the counter (OTC) per week is ₦100k. For corporate organisations it’s ₦500k. Anything higher will attract processing fees of 5% and 10% respectively.
Third party cheques above ₦50k won’t be paid over the counter.
The maximum you can withdraw from an ATM is ₦20k per day, and ₦100k per week.
Only ₦200 banknotes will be loaded in the ATMs.
In serious situations where you need to go above these limits, the maximum you can withdraw as an individual is ₦5 million and ₦10 million for corporate organisations. And for that to happen, you need to meet some conditions, including uploading valid means of identification, your bank verification number (BVN), a notarised document of purpose, letter to the managing director of the bank, and approval from senior management of the bank.
To make sense of what it all means, Citizen spoke to Adedayo Bakare, a macro and investment analyst who works with Money Africa.
What do you make of the CBN’s withdrawal restrictions?
“I think the fundamental thing everyone should know is, the entire restriction is part of the CBN’s plan to phase out cash in circulation and cash outside the banking system. Regardless, it doesn’t matter.
“Cash is the liability of a central bank because they’re the ones who issue it. Now, when the CBN issues cash, it doesn’t do so out of thin air. It prints it because people need it for transactions. When people need cash, they go to the commercial banks.
“When customers request cash, it becomes the responsibility of the banks to get it from the CBN. What this means is that the excess of cash in circulation isn’t just because the CBN wants to put cash out there, it’s because people are demanding it. The CBN therefore has to print it.
“The CBN is trying to do so many things at once with the currency redesign. They think that there’s too much cash in circulation with some of it being hoarded. In Nigeria, the banknotes in circulation, the one we spend, is less than 2% of the gross domestic product (GDP). If you look at the UK or USA, the level of cash in the system relative to the size of the economy is consistent with what we have in Nigeria.
“In Nigeria, the level of cash in circulation compared to our GDP is lower than what you’d find in Kenya. Yet, Kenya has advanced payment systems. Nigeria, where such infrastructure hasn’t penetrated enough, is now saying it wants to introduce a cashless economy. According to the CBN, it’s to boost financial inclusion and to ensure their policies are more effective, fight money laundering, terrorism, kidnapping and all sorts of ambitious goals. But, cash isn’t the problem.
“If you want to fight money laundering, it’s to ensure regulation guiding the financial system is more sophisticated and more advanced to detect and prevent money laundering.
“If you want to stop terrorism, kidnapping and ransom payments, you have to ensure security is better in the country. You can’t do this by phasing out cash or saying people shouldn’t hold cash because there are more creative ways. If a kidnapper says they want ransom they’ll get it whichever way they want because people will have to go and find that cash.”
What does this new policy mean for Nigerians?
“Essentially, this policy will create hardship for Nigerians. When you go to the US, the EU, and even Kenya like I’ve mentioned, people still need to hold cash. This is especially true in rural areas where people aren’t very educated, in lower income groups, and are elderly. These people rely on cash.
“When you look at the purpose of cash itself, it’s the most inclusive payment system we have in the country. For me to use my bank app, I need to have access to the internet. To use USSD, I need to have access to mobile phones. For internet banking I need to have a smartphone. How many people have these? How many people have the education to use Paystack, Flutterwave, or any of the other payment systems?
“Cash also doesn’t rely on any third party. Once you have it, there’s complete autonomy to conduct transactions. True, holding it comes with its security risks and it loses value, but that’s people’s preference. Think about it, this new policy is saying the money you have in the bank you can’t do this with it, you can’t withdraw it all at once. If I’m holding cash, nobody can tell me that. Cash is also instant which is why people use it for settlement. There are cases where people get fraudulent alerts, which is why they resort to cash instead.
“Cash won’t affect monetary policy. Banknotes in circulation relative to total money, that is, money available to be spent, including the deposits in your bank account, is just 6%. So when you say 6% of the money you have in your economy is what is slowing down the effectiveness of your economic policy, it doesn’t make any sense.
“You can’t say you want to restrict one of the primary ways people conduct transactions in your economy. This policy will only slow down transactions in the informal economy and affect the economy negatively in terms of output, job opportunities and what they can earn. It’s not a crime to hold money.
“There are rumours that the policy might be connected to the current political cycle, I can’t speak on that. All I know is, the benefits the CBN has outlined and the decision to redesign the currency and the timeline and suddenness of its decision to restrict withdrawals won’t lead us to a cashless economy, won’t make policy effective and won’t lead to financial stability.
“Overall, the CBN is using the currency redesign and the withdrawal restrictions as a silver bullet to achieve things it can’t do. We’ve had experiences in India where these policies failed woefully because fundamentally, cash is a way to ensure transactions. The government needs to do its work to solve insecurity and other issues, not the CBN.
“At this point one has to ask, why should Nigerians bear all this pain? Why should Nigerians bear all the cost for a policy that’s likely to achieve nothing? These are questions the CBN has to answer.”
The governor of the Central Bank of Nigeria (CBN), Godwin “Meffy” Emefiele loves dropping bombshells on Nigerians — from banning crypto trades to redesigning the naira. He dropped another one at the 57th annual banker’s lecture on November 25, 2022.
“The official foreign exchange receipt from crude oil sales into our official reserves has dried up steadily from above US$3.0 billion monthly in 2014 to an absolute zero dollars today,” – Emefiele
From Emefiele’s revelation, we now know Nigeria no longer earns anything from selling crude oil. It would be so funny if it wasn’t so sad. A country of 200 million people went from being ballers to mechanics in eight years under a government that promised to deliver positive change.
How did Nigeria get here?
When Russia invaded Ukraine in February 2022, the war presented opportunities for other oil-producing countries. With Russia, a major oil producer cut off from the global oil market, other countries could step up and grab the money on the table. Many countries stepped up but Nigeria has proved to be the black sheep of the oil-producing family.
The signs were already there. In February 2022, Timipre Sylva, the minister of state for petroleum resources, said the increase in prices of global crude oil was bad for Nigeria. When the seller of a product complains that prices are too high, despite the fact that there are willing buyers, you know there’s fire on the mountain.
In June 2022, Angola surpassed Nigeria for the first time as the biggest oil producer in Africa. It’s even worse that this happened at a time when Angola was reporting declining figures.
So why’s Nigeria not earning from oil?
Well, we can think of a few reasons.
Subsidy
In September 2022, The Economist wrote a report on how Nigeria was failing badly while its classmates were flying high. The newspaper identified several reasons why Nigeria wasn’t remitting forex earnings from oil.
A major issue highlighted is what economists describe as “price control”. It’s what happens when instead of allowing the market to dictate the price of a commodity, the government intervenes by introducing price caps. The intervention allows consumers to buy the product at a lesser price than it would ordinarily cost. If that sounds familiar, that’s because it’s what Nigerians know as oil subsidy.
The NNPC pays the difference from its profits and sends whatever’s left to the government as remittance. So zero remittance means there’s nothing to declare because subsidy has gulped everything and subsidy is a glutton. By next year, subsidy payments by the Buhari administration since 2015 would hit ₦11 trillion.
Oil theft
You could write 1,000 books about the scale of oil theft in Nigeria and they wouldn’t cover the depths of the problem. The unending large-scale theft of oil has gone on for decades in Nigeria and depleted our output. Between January and July 2022, for instance, Nigeria lost $10 billion to oil thieves. The reason Angola can buga for us is because we’ve not been shining our eyes. As a result, we’re not producing enough to meet our quota and be profitable.
Cash shortage
Everyone knows you need money to make money. But the NNPC is so short of cash after paying for subsidies that it struggles to cover production costs for pumping crude oil. Remember that our oil refineries don’t work, so the cost of refining our oil is also part of what gulps money and ensures that the CBN’s vault remains cold and lonely.
What can be done about this?
The buck stops at Buhari’s table. It doesn’t look like he has the will to solve the crisis as he’s already decided to unlook the current fuel scarcity that has seen marketers sell petrol at wild prices.
Clearly, leakages need to be plugged and we have to come to terms with the fact that subsidies are unsustainable. Already, the Buhari administration has announced the move to end subsidy payments by June 2023 — when it would no longer be in power. Things could get very tough before they get better.
You know how people say, “Time is money”? The idea behind that saying is the value of money you hold today is different from the one you hold tomorrow.
To illustrate this, think of 10 or so years ago when ₦100 could buy you enough chow to fill your belly. To get that same quantity of food today, you’d have to spend at least ₦500. The quantity of food is constant, but the value of money has depreciated over time because of inflation.
To account for this inflation, people who lend money like to charge what’s known as interest. And the biggest lenders in any economy are the banks. The grandfather of all commercial banks in Nigeria is the Central Bank of Nigeria (CBN) and it’s the one that determines the interest rate. That’s where this guy comes in.
The interest rate is the amount banks charge borrowers and is a percentage of the amount loaned. Using Nigeria’s example, with the interest rate at 16.5%, it means anyone who borrows ₦1 million from the bank will have to pay back the original ₦1 million loan plus ₦165,000 as interest at the end of the year. That means the cost of borrowing is quite high. But that’s not just what’s messed up about this.
Nigeria’s inflation rate rose to 21.09% in October 2022. This means even at the high cost of borrowing, anyone lending money will still be doing it at a loss because the inflation rate exceeds the interest rate.
Wow. But why’s the CBN raising the interest rate?
That’s a good question and the answer may surprise you. The reason the CBN is raising the interest rate is to…fight inflation. In fact, this is the fourth time in a row it has raised the interest rate, yet inflation is still doing agidi.
It’s a circular problem. The government wants to mop up excess money in circulation and has been trying various moves. It introduced the Snapchat naira notes and has been raising interest rates while confidence in the naira remains low.
One of the key reasons for the persistent inflation is our foreign exchange (forex) which is highly volatile. We already did a story explaining how the EFCC is going after bureau de change (BDC) operators who the government keeps blaming for causing the naira to depreciate in value.
Another important component of our inflation is food inflation. With the rising cost of obtaining agricultural produce particularly with floods ravaging farmlands, our situation is pretty bad.
How does this affect you?
If you’ve been following so far, you can already see how the interest rate and inflation rate are connected and how it affects the cost of food you get at the market. But it goes even beyond that.
Experts have warned that factories will likely shut down which obviously means more unemployment. There’s also what’s known as nonperforming loans (NPL), or simply bad loans. Imagine borrowing ₦10 billion and having to repay that, along with ₦1.65 billion as interest in an economy where everything is upside down. Most businesses will find it hard to repay and that just keeps domestic debts mounting. Already, the manufacturing sector is indebted to the tune of ₦5.1 trillion to Nigerian banks. So don’t expect inflation to ease off anytime soon.
What can be done?
Fixing this challenge requires attending to the fundamentals which includes the government providing more support for farmers. If they can get special interventions and exceptions from the high interest rates, they can get cheap loans that can help them with farming and producing more crops. This can address food inflation.
The CBN can also restore some confidence in the economy by easing off a bit on the interest rate. It’s clear that the continuous hike is hurting more people than it’s helping. We can only hope that whoever comes in by 2023 has a better handle on this issue.
We have some very important questions Meffy needs to answer.
Who exactly redesigned these notes??
The only thing the designer did was to change the colours of the old notes and we’re a little bit confused. We want to know who’s responsible.
We just want to talk
What’s the real occupation of the designer?
We’ve seen these new notes and we can only assume it’s the tie-and-dye project of a secondary school student or a makeup artist experimenting with new colours.
How much will this redesign cost taxpayers?
Printing money is expensive and Nigeria spent about ₦281 billion on new notes between 2016 and 2022.
We need to know how much the CBN spent on this Snapchat makeover and how much the designer collected without conscience.
How much time did this even take?
Now that we think about it, it’s not a surprise the CBN fast tracked the unveiling date of the notes. We can clearly see the designer spent 10 minutes to find the right filter and submitted to Meffy for approval.
It’s the definition of soft work
Is this intentional?
Nigerians love to drip and display their wealth but these new notes are about to cramp our style. If Meffy’s plan to fight inflation is to release these ugly notes to stop Nigerians from having too much of it in circulation, then he’s an evil genius because it’s working.
Despite the Finance minister having zero ideas on the matter, Meffy isn’t turning back on his plans to release the new naira designs on December 15, 2022. Here are three things we at Citizen would love to see (or not see) with the new naira notes:
We are tired of seeing great Nigerian women relegated to the back of the naira notes.
What happened to women like Funmilayo Ransom-Kuti, Queen Amina, Margaret Ekpo, and the rest of them? They too, need to stand out boldly at the front of the naira notes like the men.
More pop culture icons
Have you ever reasoned that the lack of Nigerian pop culture icons may be what is making our naira fall?
Maybe if we are always seeing Burna Boy and Asake on our naira notes every day, we may decide to thrash dollar notes in the bin and appreciate our currency more.
Have any more ideas on what you wish to see on the Naira? Let us know.
On November 1, 2022, the Economic and Financial Crimes Commission (EFCC) raided offices of bureau de change (BDC) operators in Abuja. Videos have surfaced online showing EFCC officers arresting dealers, and many Nigerians have the same question: why?
BDCs are the latest scapegoats
According to Vanguard, the reason for the raid stems from fears that BDC operators are behind the current dollar scarcity and the naira’s continuous fall. But the highhandedness of the raid isn’t new, and is only the latest in a long list of bizarre attempts to stop the naira’s decline.
For example, in September 2021, the Central Bank of Nigeria (CBN) banned AbokiFX from publishing parallel market rates, aka black market rates. The bank accused the organisation of undermining the economy and the CBN governor, Godwin “Meffy” Emefiele, even publicly offered to fight the owner of AbokiFX.
I am not on social media. Let AbokiFx come out, let's fight – CBN Governor, Godwin Emefiele pic.twitter.com/mWXYaaPx6b
Before the AbokiFX ban, the naira was ₦520 to the dollar at the black market. It’s now down to ₦816 to the dollar.
The Abuja raid is also not the first time the government has directly targeted BDC operators. In 2015, when the CBN was desperate to defend the weakening naira, it came up with a brilliant idea — cut down trees in Abuja. As the logic went, the BDC operators would no longer be able to use the trees as shade from the sun while conducting their business.
What’s the real reason for the scarcity?
According to a report by Guardian, the dollar scarcity is fuelled by a number of factors. One of those factors is that domiciliary account holders are now restricted to one-way transactions. That is, they can deposit money into their dollar accounts but can’t withdraw. Wary customers who no longer have faith in banks are seeking alternatives and leaving banks dollar-strapped.
Another factor is rationing as banks are only getting a stipulated amount of dollars from the CBN which is clearly not enough to serve their customers.
Ultimately, the big elephant in the room for the dollar scarcity is the rapidly declining naira. The value of transactions conducted in the local currency fluctuates quickly from day to day, so most people would rather save or transact in dollars.
So what next?
For starters, the solution to the naira’s decline can’t be the harassment of BDC operators. They’re simply a consequence of an untenable economic situation. Confidence in our currency is at an all-time low and this has made people resort to more stable currencies.
The CBN is adopting other measures to address the problem, including the recent plan to redesign the naira. Yet, even that move has been met with doubt bythe Ministry of Finance. The low dollar remittances from the global oil boom also hasn’t helped our cause either.
Meffy has to step in and resolve this crisis or we may be heading for ₦1,000 to the dollar by the end of the year. By then, not even cutting all the trees in the world would save the naira.
If you’ve paid for your aso-ebi for the launching ceremony of Nigeria’s new naira banknotes in December, you may want to cancel your order. Because only two days after the governor of the Central Bank of Nigeria (CBN) Godwin Emefiele, aka Meffy, announced that three naira banknotes will be redesigned, we’ve found out that he didn’t inform everyone in the federal government that should’ve known.
Seriously, we’re not making this up. The Minister of Finance, Zainab Ahmed, said she heard the announcement the same way we all did. We’re still reeling from the shock of this claim. The guy in charge of Nigeria’s monetary policy announced a plan that affects our money, but the federal minister in charge of our money said, “For where?”
Chale, what else came up?
Other than being sidelined, Ahmed wasn’t convinced that Meffy had done his homework before his announcement. The minister noted that the cosmetic plan would have serious consequences on the value of the naira. And when you remember how much the naira’s value has suffered already, this should make everybody’s chest tight.
The naira can get worse?
Is this sort of thing unprecedented?
The thing with Buhari’s Nigeria is that even the most outrageous things aren’t new. If the plan to redesign the naira is canceled, it wouldn’t be the first time the government has walked back on an announcement. On August 8, 2022, Buhari approved the acquisition of Exxon Mobil shares by Seplat. Two days later, he woke up on another side of his bed and reversed the approval.
So what’s next?
When he announced his plan, Meffy said he already got Buhari’s blessing. But how could this process have happened without consulting the Ministry of Finance? So the current disconnect between the head of our monetary policy and the head of our fiscal policy has to be resolved soon. And if it means Buhari stepping in, then that’s what we should expect him to do. But are we even sure that Buhari knows?
On October 26, 2022, the Central Bank of Nigeria (CBN), through its governor, Godwin “Meffy” Emefiele — the crusader who just loves conducting experiments with our money — announced that it would redesign our big boy banknotes: ₦200, ₦500 and ₦1000.
We know you don’t take money matters lightly so we’d love to help you understand why this is happening.
Who sent Meffy work to redesign?
When Meffy calls for a special press briefing, you should know something’s cooking. No one saw it coming when he announced at the October 26 briefing that Buhari had given his blessing for the CBN to put some make-up on our most elite banknotes. He said he’s observed all the terrible things done to the naira notes and it was time to restore order. The CBN just wants to put the…
As the senior man of the Nigerian economy, Meffy gave us a breakdown of the reasons for redesigning the naira. Here they are:
It’s long overdue
According to Meffy, the global best practice is for the CBN to redesign banknotes every five to eight years. But Nigeria hasn’t redesigned banknotes in 20 years and Meffy needs to show Buhari he’s working.
Nigerians are hoarding too much cash
Meffy said Nigerians are hoarding over 85% of naira banknotes in circulation outside the banking system. Nigerians are hoarding his notes and he wants them back.
To be honest, we can’t say we blame people who aren’t leaving their money in banks knowing the numerous bank charges they pay and the regular disappearing acts of the money in their accounts.
Banknotes need a bath
Lowkey, it’s been a while since we saw fresh naira notes and Meffy doesn’t like that. Omo, we can’t complain and maybe clean banknotes will allow the naira to gbera against the dollar.
Producing fake banknotes is too easy
Meffy also doesn’t like how technology and advancement in printing has made it easy for fraudsters to produce fake naira banknotes. So… he wants to throw them a fresh challenge?
Meffy thinks the redesign will give the eNaira a helping hand and boost Nigeria’s drive for a cashless economy.
Meffy wants to choke kidnappers
Times are about to get very hard for kidnappers if Meffy’s plan works. Apparently, the news of Nigerians paying millions in ransom has reached his ears and he wants to put an end to it. Meffy’s plan is to mop up the cash outside the banking system and dry up ransom payments for kidnappers.
What else should you know?
The new banknotes will launch on December 15, 2022 and coexist with the old ones until January 31, 2023. If you’re still holding the old banknotes by February 1, 2023, Meffy says you’re on your own.
The good news is the CBN has ordered banks to open their currency processing centers to accommodate cash deposits. You now have enough time to dig up those naira notes buried in your backyard. And the sweet part is Meffy has ordered banks not to charge you for cash deposits to ensure a smooth transition.
It’s time to say goodbye to your beloved old banknotes and prepare to say hello to new ones. Meffy just needs to tell us where to show up for the welcome party.
In September 2022, the Debt Management Office (DMO) released its report on Nigeria’s total public debt stock. It had risen to ₦42.84 trillion ($103.31 billion) at the end of June 2022.
If you do the math, you’d notice that the exchange rate used is the ojoro one — the Central Bank of Nigeria’s (CBN) exchange rate. This stood around ₦414 to the dollar at the time. By October 19, 2022, the rate had depreciated to ₦436 to the dollar. Don’t even get us started on the black market rate. That’s when the true extent of Nigeria’s debt will leave you in tears.
On October 19, Oluseun Onigbinde, the director of BudgIT, a civic organisation that tracks public expenditure, raised the alarm in a tweet. He said that ₦20 trillion of Nigeria’s domestic debt would be spread over 40 years at an “unrealistic” 9% coupon rate, meaning that our debt servicing would amount to ₦1.8 trillion annually.
If all this sounds like I’m speaking Greek, let me break it down for you.
The debt profile problem
Nigeria’s debt profile can broadly be grouped into two: external and internal (domestic) debts. The external debt can further be broken down into various categories. Multilateral debt, which is the type we owe to the IMF, World Bank and AfDB, bilateral debt, which is the type we owe to foreign countries, especially China, and others like commercial debts and promissory notes.
The ₦20 trillion that Mr Onigbinde was lamenting about is our domestic debt, which is composed of different kinds of bonds and treasury bills, financed mostly by the CBN. Most of it came through Ways and Means advance, which ordinarily is something that’s used when the federal government has a budget deficit, that is, when money the government spends in a given year is more than than the revenue it receives.
In Nigeria, CBN’s statutes allow it to finance the government’s deficit at a limit of no more than 5% of the previous year’s revenue. But trust the CBN to flout its own laws by financing the deficit by as high as 80% of revenue. In the CBN’s defense, it claims it’s the Federal Government that “frustrates” it by disregarding the limits it sets.
So while Sinzu and Spending are doing their thing, our debt profile keeps mounting.
Emefiele and Buhari [Image source: Punch]
Is Nigeria’s debt sustainable?
Debt, in itself, is not a bad thing. Global debt for instance surpassed $300 trillion in 2021. Who the world is owing is a question for another day. The real question with debt is whether it’s sustainable. According to the IMF, a country’s debt is considered sustainable if the government is able to meet all its current and future payment obligations without exceptional financial assistance or going into default.
This begs the question, is Nigeria’s debt sustainable? Well, the World Bank and IMF recently said they would reassess Nigeria’s debt sustainability. In the meantime, these are the hard facts.
Nigeria is struggling with a very high unemployment rate. It’s also experiencing dwindling returns from oil, thanks to mismanagement and organised oil theft. The NLNG, another moneymaker for the economy, recently declared force majeure due to increased flooding. Even our sugar daddy, China, has stopped giving us loans.
When you add inflation, the depreciating naira, debt servicing, and an all-round struggling economy, it’s tough to imagine that we can still keep on accumulating more debt.
What’s a debt trap?
A debt trap describes a situation where a borrower is forced to take on new loans simply to repay existing ones. It occurs when debt obligations surpass one’s loan repayment capacity. Sound familiar?
Mr Onigbinde’s projection for Nigeria is that Nigeria will borrow an additional ₦10 trillion. Foreign exchange and domestic loans will stand at ₦4 trillion while the CBN prints ₦6 trillion.
By 2027, we would have acquired another ₦24 trillion in CBN debt and we would sell to the markets again, expanding debt servicing. Onigbinde calls it a “disastrous loop”, economists call it a debt trap. We should ask our elected officials many questions before we enter one.
Kobo and naira coins in Nigeria must feel like the introvert that withdraws to a corner of the party to watch everyone else have fun. In fact, talking about coins as legal tender in Nigeria feels like time-travelling back to 2007 when Obasanjo was still president and sardine wasn’t a luxury item. So, why are kobo and naira coins back in the news?
What’s old?
In 2007, the governor of the Central Bank of Nigeria (CBN) at the time, Charles Soludo, rebranded and reissued ₦1 and 50 kobo coins and introduced ₦2 coins.
The Bank expended a huge budget in sensitisation and advocacy for Nigerians to use them, but commercial banks and citizens were not feeling them.
Kobo and naira coins have grown over time to have low purchasing power in the markets, which means trying to sell them to Nigerians is like mining snow in the desert.
In 2012, another CBN governor, Lamido Sanusi, announced a proposed currency restructuring exercise that was codenamed “Project CURE (Currency Restructuring)”. The project was the Bank’s attempt to respond to the changing needs of the economy and to stay on top of evolving trends.
When he announced the project, Sanusi admitted that Nigerians didn’t seem to care for coins. What was his cure for that problem? More coins!
Sanusi said the CBN would coin ₦5, ₦10 and ₦20 and put them in circulation in 2013. The proposed currency lineup looked like this:
President Goodluck Jonathan killed Project CURE in September 2012, else you’d be buying gala right now with coins. Jonathan asked the CBN to pause the project, and nothing was ever heard of it ever again.
What’s new?
The House of Representatives passed a motion on Tuesday, March 22nd 2022 urging the CBN to reinforce the use of kobo and naira coins as legal tender in Nigeria. Honourable Muda Lawal Umar sponsored the motion and pleaded that the coins shouldn’t be allowed to go extinct.
His motion argued, “Injecting low denominations into the economy will go a long way in curbing price inflation and stabilising the economy.”
And by that argument, we imagine he means something like this:
Some economists consider the absence of kobo and naira coins in circulation one of the reasons for Nigeria’s struggles with inflation. For example, if a low-priced item increases its price today, it’d have to go from, say, ₦5 to ₦10. But if coins are available, they could slow down that inflation rate, as the item would likely first increase to ₦6 or ₦7 instead of just jumping to ₦10.
But Nigerians’ history with coins has shown they’re unlikely to hook up with them again. Who wants to risk being stoned with coins by an angry bus conductor? Or go around like a walking alarm bell? Also, you can’t do this with coins:
What will happen with this new motion?
The House Committee on Banking and Currency has been charged with ensuring the CBN complies with the motion on reinforcing the use of kobo and naira coins. This entails communication to the Bank that’s currently under the leadership of Godwin Emefiele.
Since he was appointed CBN governor in 2014, Emefiele’s not messed with the natural order of things for coins.
The only coin he’s interested in is Bitcoin and how to ban it. It’s unlikely this new motion will lead to anything meaningful.
The biggest problem Meffy, as he’s called by fans and haters, has faced is the management of Nigeria’s foreign exchange (FX) market.
$1 was ₦133 when he was appointed in June 2014, and we all thought that was rock bottom.
The good old days when you could fill your dinner table with just 5k
$1 now trades at ₦417 which, if you’re paying attention, is a 213.5% increment from 2014, and 41600% off the target of ₦1 = $1.
Let’s not even talk about the black market where $1 is trading for over ₦570.
Who is making Meffy’s job difficult?
Nigeria’s main FX earning is derived from crude oil export profits, which can be unstable depending on the global demand for oil, as well as pricing.
Other channels for our FX inflow are proceeds from non-oil exports, diaspora remittances, and foreign direct investment (FDI), all of which are even more unreliable than crude oil profits.
Nigeria’s unstable FX earnings put pressure on the reserves, which everyone in the country relies on for foreign trade.
One of the biggest dependents were importers who needed dollars to trade until Meffy decided they were sucking the life out of the reserves.
So he started restricting the sale of FX to importers of certain goods like pork, beef, cement, mosquito repellant coils, toothpicks, maize, sugar, and many others.
Also, bye bye foreign rice. It was nice to know you.
But Meffy was not done because foreign reserves still suffered from the Sapa wave.
Last year he accused Bureau de Change operators of sabotaging his goal of safeguarding the value of the naira.
This left just the banks as the direct recipients of dollars from the CBN who gave strict instructions regarding who they are allowed to sell to.
Banks are on the menu nowtoo
No one is safe from Meffy’s trigger fingers, and now banks may have to watch themselves or may sooner or later have their own taps closed too.
The CBN governor said at a media briefing last week that he wants the banks to start generating their export proceeds and stop bringing their begging bowls to his door.
“It is coming to an end before or at the latest the end of this year. We will tell them don’t come to the Central Bank for foreign exchange again,” he said.
Meffy’s plan
Meffy now expects banks to build their own FX earnings from their export customers to fund the demand of their import customers.
To help boost FX inflow, the CBN has launched the RT200 FX Programme. The key goal of this is to rely less on oil profits and earn more FX from non-oil exports.
Meffy expects the programme will help Nigeria earn $200 billion in FX exclusively from non-oil exports over the next three to five years.
This will be achieved by funding businesses that add value to non-oil commodities, making them more lucrative for export.
This would make it possible for Nigeria, as a major exporter of cocoa, to earn more than the $800 million it currently gets annually from the chocolate market worth over $130 billion.
According to Meffy, Nigeria had no problem meeting its FX obligations with non-oil export sources until crude oil was discovered decades ago and everybody went mad.
Import obligations were funded from exports like cocoa, palm oil, rubber, and a lot of goods that had nothing to do with oil.
Meffy wants banks to return to that past where they didn’t need dollar handouts from the CBN.
All of this hard work, we figure, is to make Meffy’s job easier as he prepares to be begged to run for president.
On Friday, September 17, 2021, a video of the Central Bank of Nigeria’s (CBN) governor, Godwin Emefiele – lovingly called Meffy by the interwebs – went viral. In it, Meffy was calling out abokiFX — a website popular for publishing currency exchange rates. While speaking to journalists, he said that abokiFX engages in “foreign exchange manipulation and speculation”, and that Olumide Oniwinde, the owner of abokiFX, is an illegal foreign exchange dealer.
Meffy also warned that “those who feel they want to support him (abokiFX) to fight me, come out, let’s fight”.
So basically this was Meffy that day:
Why Is The CBN After abokiFX?
abokiFX posts information about the exchange rate of the naira. The website provides official Bureau De Change (BDC) and black market rates of the naira, including other forex information.
But the Central Bank is not convinced that publishing information is all abokiFX or its owner does. According to Meffy, the owner of abokiFX, Olumide Oniwinde, directly benefits from the rates he quotes daily on his website.
At the press conference, Meffy questioned the operations of abokiFX:
Have Nigerians ever asked how abokiFX collects its data?
How many BDCs have seen staff of abokiFX come in to ask for daily rates?
How many BDCs send daily returns on exchange rate to abokiFX?
How does abokiFX determine what the FX rate is?
How does abokiFX collect its data?
How can an unlicensed single person be the one that sets exchange rates in a country?
Why is abokiFX setting the exchange rate in Nigeria?
Why is Olumide Oniwinde targeting Nigeria?
The CBN is concerned about how abokiFX comes about the exchange rate information it displays on its website. The CBN believes that abokiFX is setting the price of the naira out of its own imagination so that its owner can benefit from the fake rates by selling naira at unnecessarily high prices.
Section 2 of the CBN Act gives the CBN the power to ensure price stability of the naira. By looking at the activities of abokiFX, the CBN is exercising this power.
What Is The Real Forex Rate of the Naira?
The official exchange rate to the dollar is ₦410.60. The CBN says this rate is the genuine rate and that it has enough dollars to meet the needs of every Nigerian who needs dollars to import goods, pay international school fees or do other things.
The CBN claims that every Nigerian can buy dollars and other foreign currencies they need at the official rate and that banks will attend to Nigerians even if their dollar needs are more than the recommended amount.
But some Nigerians don’t believe this. They say that the exchange rate to the dollar at the BDC and parallel market is still at ₦570 and Bureau De Change operators and black market operators are still relevant in the forex market.
Why Do Nigerians Buy Forex From Black Market Operators?
The reason why many Nigerians patronise BDC operators and black market forex dealers aka “Aboki Wire” is because of the lack of access to foreign currency at the banks. Some Nigerians claim that bank officials keep forex while others claim that banks won’t sell dollars or other foreign currencies to them to pay for visas and other personal things.
According to a comment from a Nairametricsarticle:
Since 2015, the CBN has banned 41 items including rice, furniture and textiles from access to forex so as to “help conserve foreign reserves”. The CBN also banned the sale of forex to Bureau De Change operators to help stop illegal activities. But these moves may be part of the reasons why the unofficial rate of the naira to the dollar and other currencies keeps increasing.
At the moment, the price you have to pay to get dollars may just depend on who you believe more — Meffy or Aboki Wire.
The news about the Central Bank of Nigeria’s ban on cryptocurrency transactions has generated a lot of buzz and worry amongst Nigerians online. But while the very notion of banning a popular and heavily rewarding financial channel raises cause for concern, most Nigerians are still unclear on what this ban really means and so we decided to speak to business analysts on three points you should keep in mind about this ban. Especially as it concerns the everyday Nigerian.
Nigeria is the biggest cryptocurrency market in Africa. How does the Nigeria government support that or tap into it? By banning it.
This regulation, while being unclear, has the potential to shut down services and apps that are partly providing cryptocurrency services to Nigerians. This is particularly because they need Nigerian banks, which are being heavily targeted by this policy, for their work. And as you can imagine, shutting down those channels could have steep consequences for the Nigerian economy.
Nigerians who already have bitcoin accounts do not have much to worry about.
From the viewpoint of all the business analysts and cryptocurrency experts we spoke to, this new law does not affect the average Nigerian’s bitcoin stash. Yes, they can no longer withdraw it through a Nigerian bank, but their money is safe and they can employ other means like the peer-to-peer option to be able to withdraw their money.
It will make it harder for Nigerian entrepreneurs to access funds from foreign investors.
If you were worried about what this would mean for young Nigerian entrepreneurs looking for funding from foreign investors to set up, well according to the business analyst we spoke to, this law will surely deplete investor confidence in investing in Nigeria and subsequently growing the economy. And so while it is safe to continue to watch how this plays out, or if the government might reverse its decision as India did in 2020 after placing a ban on it in 2018 , this raises questions on the sustainability of investing in Nigeria and subsequently growing our economy.
In normal times, it would take Amaka less than five minutes to receive money from her brother in the U.S, but it was December 2020 and the new Central Bank of Nigeria’s International Transfer policy had just been announced, so she wasn’t able to receive the money through Sendwave, the channel her brother normally used. And like many Nigerians, She hadn’t paid enough attention to the policy announcement enough to realise how much it would affect her.
“I was doubtful when I first heard about the policy. I was like, how is this possible? It just seemed very impossible that we would no longer be able to receive money directly in Naira. Plus, I was so certain that it wouldn’t affect the app my people abroad would usually use to send me money, so I wasn’t really afraid until I actually had to receive money,” the 26-year-old entrepreneur tells us.
On December 2, 2020, the CBN issued a directive barring International Money Transfer Operators from directly sending money to Nigerian accounts and mandating that they be made as cash-pick-ups instead. “So, if you have someone wanting to send you dollars, you will receive the money in a domiciliary account as against the bank converting it for you in Naira. The policy is just to curb dollar arbitrage. A situation where some people buy low, hoard it and sell to the market when the dollar is rising,” Tunde, a financial analyst explains.
Amaka’s brother would eventually switch to WorldRemit, but it would take up to a month before the money would actually get to her. Between visiting banks, getting her I.D authentication delayed due to network problems at those banks, finally receiving the money in her domiciliary account, and having to exchange, at an unfavourable rate in the black market, the new CBN policy took a toll on her as she needed the money to make an urgent business transaction that would enable her resume operations for the new year.
Unfortunately, Amaka isn’t the only one who has been affected by this policy. “I was expecting payment in USD from the UK and to be on the safer side, I filled in my friend’s domiciliary account details on the invoice (I didn’t have a domiciliary account at the time). After waiting three long weeks for the payment to come in, I received a mail from the sender saying that they had tried twice to send my payment but it simply wasn’t going through. Strangely, the system was not recognising it as a USD dominated account, they said.” 22-year-old Halima, tells us.
“At this point, I was already very frustrated because I was quite broke. I suggested the cash pickup option on World Remit to them. They sent it that night and I went to the bank the following morning to get it. We started the process but we got stuck midway because I was supposed to receive an OTP on my phone but it simply did not come through. I had to reach out to the sender to confirm my phone number and full name and address and all such details. For hours, we did this back and forth. The same happened to other customers. I went home, came back the next day, the same thing. And then I contacted WorldRemit, and they said they couldn’t do anything or tell me anything unless the sender contacted them. Very nerve-racking because I truly did not want to bother the sender again, but they were so kind and reached out to WorldRemit. WR then gave them the OTP and they sent it to me. I took it to the bank and finally got my money,” she says.
The top reasons the Nigerians we spoke to have cited for not feeling excited about the new policy rests with the danger and anxiety of carrying hard cash around as well as the arduous task of visiting banks in Nigeria. And oftentimes, opening domiciliary accounts.
Simone, who lives in the U.S hasn’t had much trouble with sending money back to Nigeria. Before the CBN policy, she would normally use WorldRemit and Sendwave, but when she was notified of the policy, she switched to Sendcash, a bitcoin platform she had signed up to some months prior. “As far back as October, I’d started doing USD to BTC to NGN transactions due to the quick changes in the exchange rate. The Naira devaluation made me move to other platforms and the policy change cemented the move.” She says.
23-year-old Ovie, on the other hand, has found that his clients are wary of bitcoin transactions and as a freelance graphic designer who often works with clients outside of Nigeria, it has been hard figuring out how to receive money, especially when those clients are often unlikely to want to use unconventional payment methods that aren’t wire transfers or Paypal, which isn’t fully available to Nigerian users.
“I’ve not quite found a solution that fits all my clients. And this is why I’ve been avoiding most foreign gigs at the moment. I don’t want to end up disappointed,” says Ovie.
But some people whose accounts cannot be directly credited into their domiciliary accounts are turning to services such as the aforementioned WorldRemit, Western Union, and Sendcash for ready alternatives. Halima was able to receive money that was sent to her that same week through Western Union. “The cash pickup didn’t take much time. Thirty minutes max. I didn’t need an OTP. Just my ID card and the sender’s details,” she explains.
For Simone, all her transactions are now carried out with Sendcash. “For friends here (in the US) who have had the same issues, I’ve been like, just use Sendcash since the rate has always been better anyway. I buy Bitcoin on Cashapp, use Sendcoins to convert to naira, then the recipient gets Naira.”
And according to Tunde, the banks are the major channels authorized for transactions. “Banks are required to pay the dollars to the beneficiaries either via transfers to domiciliary accounts or in cash. So the recipient has two options: leave your money in the domiciliary account with the bank or take cash. But essentially, the intention of this is to ease the pressure on the exchange rate, but the economy needs diversification, not the plug and fix CBN is doing. And at the end of the day, Nigerians bear the brunt for this through low exchange rates amongst other risks.”
So the Central Bank of Nigeria (CBN) recently mandated a charge (or fine) on any amount above a cash deposit of over 500k. It might sound like a big deal, and there was a social media outrage, but many people remain unlooking. The truth is most people are broke, so the issue doesn’t concern them at all. In fact they wish this was their only problem.
Here are five reasons why you and most people don’t care about the CBN cashless policy:
1. Your account balance is not even up to 500k; the N52 and other charges deducted by your bank is still paining your soul. You cannot come and carry another cross on your head.
2. The noise and complaints are not putting money in your pocket. What do these people know about cashless? They should come for a masterclass; you are a master at being cashless!
4. You’ve not been in the banking hall for months to collect one kobo, not to mention depositing over 500k…
5. If you get 500k today, you won’t put it in a bank. You don’t want to hear stories that touch; it’s someone’s 800k one bank swallowed like that o.
Well, until the champagne problems comes your way, you’d rather just stay in your lane and calculate how much food you’ll buy today based on your lean budget.
