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They’ve Hidden Plans – Mixed Reactions Trail CBN’s New Naira Notes

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Nigerians have shared divergent opinions on the recently released new banknotes by the President Muhammadu Buhari administration.

The Central Bank of Nigeria, CBN, on Wednesday announced the entry of the new notes into the country’s financial space.

The CBN boss, while explaining the features of the redesigned notes, told State House Correspondents that it was in line with global best practices, noting that it was mandatory for the naira to be redesigned and re-issued every five to eight years.

The last time the bank redesigned the naira was in 2014 when it changed the design of just the 100 naira note to commemorate Nigeria’s centenary.

According to him, it is regrettable that the naira has not been redesigned for the past 19 years owing to lack of political will from previous administrations.

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“In the past, I have to confess that attempts by the CBN to redesign and re-issue the naira notes have been resisted. It is only President Muhammadu Buhari that has exhibited the courage to do so,” he stated.

Emefiele said it was the mandate of the CBN to redesign and re-issue the notes, stressing that the exercise would become a regular trend after five to eight years.

Meanwhile, Nigeria has in recent years undertaken the redesigning of her currency for various reasons.

READ ALSO: Why I Approved Redesign Of Naira Notes – Buhari

For instance, in response to the expansion in economic activities and to facilitate an efficient payments system, the ₦100, ₦200, ₦500 and ₦1000 banknotes were introduced in December 1999, November 2000, April 2001 and October 2005 respectively.

On 28th February, 2007, as part of the economic reforms, ₦20 was issued for the first time in a polymer substrate, while the ₦50, ₦10 and ₦5 banknotes, as well as ₦1 and 50K coins were reissued in new designs, and the ₦2 coin was introduced.

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On 30th September, 2009, the redesigned ₦50, ₦10 and ₦5 banknotes were converted to polymer substrate following the successful performance of the ₦20 (polymer) banknote. Thus, all lower denomination banknotes were now printed in the polymer substrate.

Speaking on the development, Godwin Emefiele, added that the move to introduce newly designed notes became imperative following the abnormalities bedevilling Nigerian financial, monetary and security systems.

The circulation of the new designs will begin on December 15, 2022.

But the introduction of the new naira banknotes has received a lot of reactions from Nigerians .

Some economic experts have pointed out that apart from the change in colour of the redesigned N200, N500 and N1000 naira notes, its security features have been enhanced.

But the presidential candidate of the African Action Congress, AAC, Omoyele Sowore knocked President Buhari and Emefiele, accusing them of playing Nigerians by redesigning the banknotes.

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Sowore slammed Buhari, saying that no significant change occurred to the naira, and it seems Nigerians have been deceived again.

For Shehu Sani, a former Nigerian lawmaker, it was only a colour change that was introduced in the new notes, saying, “If it’s Naira colour, the CBN should have just engaged Snapchat.”

A senior lecturer of the Department of Economics, Kaduna State University, Professor Abdulmalik Abdulkadir, said with the current redesign of banknotes, embezzlement of public money by those in position of power, would be minimised

Speaking to Journalists in Kaduna on Wednesday, Prof Abdulmalik noted that since the new notes are yet to be in circulation, what everyone is after is how to change the old currency which may soon fade away.

READ ALSO: JUST IN: CBN Gov, Emefiele Explains Features Of New Naira Notes

According to him, some public servants in positions of authority are also scared of stealing public funds as they would be caught anytime, anywhere.

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Few Nigerians, who spoke to our correspondent on the streets of Abuja, also shared their thoughts. While some of them believe that it is a good way to stop politicians from money laundering ahead of the 2023 general elections, some others feel it is a waste of time.

Jennifer Adimso said, “I’m surprised that people still believe in this government and their policies. You’re talking about preventing politicians from laundering money but that’s a lie. Who is Emefiele working for? He is working for the APC. In fact, he is a member of the APC. He was contesting for the APC presidential primary if not for the pressure from Nigerians.

“In fact he went to court to challenge Nigerians against him. He is working for his party and if anybody is planning to launder money, it is APC. You’ll see bullion vans parked in the compound of some individuals and no one will question them. I believe they have some politicians they’re targeting. They’ve concluded their plans. These people think way ahead of us. Changing the colours of the N200, N500 and N1000 notes is just another way to distract Nigerians. Nothing more.”

David Sam Ade said, “All I can say is that the colour of those banknotes have changed. I’m not an expert to know the security features but all I can tell you is that the change won’t contribute anything. Now tell me, will it change the prices of garri, rice, yam, onions and other food items in the market? Buhari and his team are bent on deceiving Nigerians. We can’t wait for their tenure to end. People are suffering and all you can do is change the colour of money. It makes no sense to me. The reason why Emefiele is still there as the CBN governor is because he’s as clueless as the President himself.”

Pastor Jewel Abianso said, “Nigerians should be prayerful. Nigeria is drifting under the current government. See, the redesigning of the naira note may be good to many of us but we may not know the idea behind it. The question is why is it happening now? They said it is to stop money laundering against the election but how do we know the other underlying reasons? When a government has established itself on deceit, it becomes difficult to know when it is taking a good measure that would be beneficial to its people. I believe Nigeria has more significant problems than changing the colour of some currency denominations. Once again, I’ll encourage Nigerians to pray hard ahead of the forthcoming elections. Let’s pray for change and to have a government we can trust.”

Meanwhile, Abdulrasheed Bawa, Chairman of the Economic and Financial Crimes Commission (EFCC), had described the development as apt and commendable.

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He said it was “a well-considered and timely response” to the challenges of currency management.

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Only Seven Banks Can Meet CBN Recapitalisation Requirements – Report

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No fewer than 17 out of the existing 24 Deposit Money Banks may be unable to meet the Central Bank of Nigeria’s capital requirement if it is increased from its current N25bn, according to a report by Ernst and Young.

The new report, titled “Navigating the Horizon: Charting the Course for Banks amid Plans for Recapitalisation”, noted that if the apex bank raised the capital base of commercial banks in the country by 15-fold from the current N25bn, only seven banks may survive.

The CBN Governor, Olayemi Cardoso, had in several fora stated that the apex bank would consider an increase in the minimum capital base of banks in the country as part of its efforts to strengthen their capacity to support Nigeria’s drive to become a $1tn economy by 2026.

The current capital base is stratified based on the type of banking license – banks with regional, national and international licenses are currently expected to maintain a minimum capital base of N10bn, N25bn and N50bn, respectively.

READ ALSO: JUST IN: CBN Begins Sales Of Dollars To BDCs

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The proposed increase in the capital base is coming nearly two decades after the CBN’s 2004 banking reform, which led to an increase of the then prevailing capital base from N2bn to N25bn.

The 2004 banking reform was characterised by massive mergers and acquisition activities, which ultimately resulted in the reduction of the number of banks in the country from 89 to 25 banks.

In the last few months, FBN Holdings, Wema Bank and Jaiz Bank had proposed Rights Issues, while Fidelity Bank announced plans to raise additional capital via the issuance of 13,200 billion ordinary shares via public offer and rights issue.

Ernst and Young, a global financial services company, said in the report that some banks may depend on different recapitalisation options, which include mergers and acquisitions, initial public offerings, placements and/or right issues and undistributed profit (retained earnings) despite financial soundness indicators show that Nigerian banks were largely safe and resilient as of 2023.

According to the report, the recent plan by the CBN to increase the capital base of banks will lead to a series of mergers and acquisitions as witnessed during the last recapitalisation exercise in 2004/2005.

READ ALSO: FG Breaks Silence On Alleged Suspension Of Student Loan

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The report read partly, “The recent plan by the CBN to increase the capital base of banks could again lead to M&A activities but not as widespread as was the case in 2004/2005 given the relatively solid financial positions of the banks today as well as the occurrence of several M&A activities in the banking sector over the past 10 years.

“While the CBN governor did not indicate the magnitude of the proposed hike in the capital base, we have assumed what the proposed increment will be based on three different scenarios underpinned by current macroeconomic conditions. On the back of that, we were able to determine the number of banks (across the three licence types) that may fall below the new minimum capital thresholds.

“In a worst-case scenario, i.e., given a capital multiplier of 15, about 17 out of 24 banks would not meet the new minimum capital.”

The report noted that the plan to recapitalise banks was premised upon the recent devaluation of the naira in 2023.

It explained that the exchange rate as of 2005 during the last exercise in 2005 stood at N132.9/$ but the naira currently exchange for over N1400/$.

According to the firm, this implies that the recapitalisation may require a capital multiplier of 10 or more based on the exchange rate differentials.

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“On this basis, a worst-case scenario given a 15x capital multiplier for 24 banks will be considered based on the type of banking licenses held. We have benchmarked the current capital of these banks against the current capital requirement and four recapitalization scenarios,” it noted.

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Naira Continues Appreciation Against USD At Forex Market

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The Naira ended last week on a positive note as it continued its appreciation against the US Dollar at the foreign exchange market.

FMDQ data showed that the Naira appreciated to N1,602.75 on Friday from N1608.98 recorded on Thursday.

This represents a N6.23 gain compared to the N1,608.98 recorded the previous day.

The development comes despite the USD transactions plunged by 44.7 per cent to $137.43 million from $248.75 million on Thursday.

At the parallel market, the Naira traded between N1,610 and 1,620 per USD.

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READ ALSO: Naira Depreciation Continues Against USD At Forex Market Days After Binance Exit

DAILY POST reports that all through last week, the Naira had settled at an average of N1,608 per USD.

On Thursday, the Central Bank of Nigeria in a circular warned that commercial banks should desist from profiting through Naira revaluation.

Recall that between June last year and March 15 2024, CBN had floated the Naira twice which saw the Country’s currency trading at N1,602.75 per USD from N460 in May 2023.

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JUST IN: Nigeria’s Inflation Hit 31.70% In February – NBS

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Nigeria’s inflation rate rose to 31.70 per cent in February from 29.90 per cent recorded in January 2024.

This figure indicates an increase of 1.80 per cent, the National Bureau of Statistics said in its latest CPI and inflation report released on Friday.

This indicates that in February 2024, the rate of increase in the average price level was more than the rate of increase in the average price level in January 2024.

The report read, “In February 2024, the headline inflation rate increased to 31.70 per cent relative to the January 2024 headline inflation rate which was 29.90 per cent.”

READ ALSO: Tinubu Converts Enugu Dental College To Varsity

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Comparatively, on an annual basis, February 2024’s inflation rate was 9.79 per cent higher than the 21.91 per cent recorded in February 2023.

Also, the month-on-month headline inflation rate in February 2024 reached 3.12%, an increase of 0.48% from January 2024’s rate of 2.64%.

This indicates that the pace at which average prices rose in February 2024 exceeded the rate of price increase in January 2024.

The NBS further stated, “Looking at the movement, the February 2024 headline inflation rate showed an increase of 1.80 percent points when compared to the January 2024 headline inflation rate. On a year-on-year basis, the headline inflation rate was 9.79 percent points higher compared to the rate recorded in February 2023, which was 21.91 percent.

READ ALSO: Order My Predecessor To Vacate Secretariat, NURTW President Begs Tinubu

“This shows that the headline inflation rate (year-on-year basis) increased in the month of February 2024 when compared to the same month in the preceding year (i.e., February 2023).

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“Furthermore, on a month-on-month basis, the headline inflation rate in February 2024 was 3.12 percent, which was 0.48 percent higher than the rate recorded in January 2024 (2.64 percent).

The latest inflationary surge is despite tightened monetary policy by the Central Bank.

At the latest Monetary Policy Meeting, the apex bank increased the benchmark interest rate by 400 basis points to a record 22.75 per cent.

Justifying reasons for the hike, the CBN Governor, Olayemi Cardoso, explained that members considered various scenarios including whether to hold or hike policy and concluded that inflation could become more persistent in the medium term and pose more regulatory issues if not well-anchored.

Thus, members voted for a significantly high policy rate hike to drive down the inflation rate substantially.

He mentioned that the meeting extensively discussed various distortions in the foreign exchange market, particularly the impact of speculators exerting upward pressure on the exchange rate, leading to a significant pass-through effect on inflation.

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The consensus reached involved a substantial policy rate hike aimed at effectively reducing inflation.

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