By Joni Akpederi
Central Bank of Nigeria (CBN) must be the country’s most controversial institution of government today, on account of the monetary policy blitz emanating from the regulatory authority in recent times.
It seems the monetary authority has finally found its mojo, after being forced to clean up the mess it has allowed the national currency, the naira, to slide into due to its pursuit of odious, unimaginative policies and of course, the Bank’s helmsman’s unprecedented, foolish dabbling in partisan politics.
Suddenly, the CBN is now bent on actually having a handle on the off-the-hinge national currency. The naira has been “redesigned” and will not be as readily available in cash or susceptible to the terrible bashing it has endured from the public and dubious players in the economy.
For once, serious financial analysts and commentators are giving the thumbs up to the Bank for a plausible policy to save the embattled naira. The most controversial portion of the naira “redesign” policy is the stringent control over cash withdrawal limits at the country’s money deposit banks (MDBs) to a meagre N20,000 and N100, 000 per day and week respectively for individual and corporate depositors.
Not surprisingly, howls of objections are still being heard on all quarters of the economy, even as the Bank struggles to educate the populace on the soundness of its recent policy “blitzkrieg” against enemies of the naira.
The happy news here is that the Bank is absolutely right. Even the usually taciturn and aloof President Muhammadu Buhari has asked critics to keep their distance as he himself has chosen to.
It does not take an economics titan to see how the new policy is bound to help salvage the naira, which until now has taken such a battering not only the nation’s poorly-managed foreign exchange market but also in the domestic market where inflation has grown wings, sticking stubbornly above the 20 percent threshold.
The inconvenient truth is there’s just too much money chasing too few goods in this economy. Worse, the government has been on a borrowing and spending binge, funneling more and more money into a supine, unproductive rentier economy held captive by corrupt, government functionaries and their cronies in the corridors of power. Many months into the expose on the nation’s former Accountant-General’s incredible heist of N109 billion from the treasury, word is out that Ahmed Idris is waking the streets, perhaps eyeing an even more “ juicy” government position in the coming dispensation.
If all this is not standard recipe for inflation and an economy on the way to hell, as defined by classical economists, I don’t know what is. This is not just a conjecture. The media is awash with disturbing images of stashes of mounds of naira notes rotting away in different parts of the country ostensibly salted away by politicians and other shady characters. As the story goes, the huge stacks are meant to be unleashed as vote-buying resources around election time in 2023.
The Bank also argues, quite convincingly, that the easy availability of cash in the economy is making the kidnap-for-ransom business in Nigeria really easy for evil-gangs but difficult for the authorities to deal with. Cash movement is fiendishly difficult to track. Little wonder, the anti-corruption fight has been more talk and bluster than action.
The new notes went into circulation mid-December; and the populace will have to get used to handling them simultaneously with the old notes until January-end when the latter loses legitimacy.Average folk, who generally deal in cash, will also have to get used to making more payments electronically going forward.
Nothing would please the monetary authorities and security agencies more than the transparent transactions the policy would enable. Anti-graft and anti-corruption agencies would have the data they need to prosecute financial crime offenders. The CBN would get more useful data on the volume of money in circulation and other useful data needed for policy formulation, especially for its financial system and prize-stabilization mandate.
Added to the realization of the financial inclusion objective, as the unbanked are forced to patronize the banking system for sheer survival, the CBN could not have hit on a better super solution for its many operational problems.