Naira Redesign: Beyond The Face-Off Between CBN and Ministry Of Finance
The current face-off between the Central Bank of Nigeria (CBN) and the Federal Ministry of Finance has received a lot of reactions from economic and finance expert. A herd of experts have so far supported the Central Bank of Nigeria (CBN) as it insists that it followed the law and proper procedure to carry out the exercise, which has been overdue for 12 years.
This was in response to claims made by the Minister of Finance, Budget, and National Planning, Zainab Ahmad, that her ministry was not consulted by the CBN in the ongoing process of redesigning three series of the Naira.
The minister, who was responding to posers raised by Senator Opeyemi Bamidele (APC Ekiti Central) during the 2023 budget defence session at the Senate Committee on Finance, warned that the new notes could have dire consequences on the value of the Naira.
The CBN last week Wednesday announced that it will replace the ₦100, ₦200, ₦500, and ₦1,000 banknotes with new designs, effective December 15, 2022 – barely seven weeks before the current banknotes of these denominations become irrelevant.
The minister, who was responding to posers raised by Senator Opeyemi Bamidele (APC Ekiti Central) during the 2023 budget defence session at the Senate Committee on Finance, warned that the new notes could have dire consequences on the value of the Naira.
Bamidele had told the Finance Minister that barely two days after the announcement of the policy by the CBN, it had started having repercussions on the value of the Naira when compared to the US Dollar.
She said, “Distinguished Senators, we were not consulted at the Ministry of Finance by CBN on the planned Naira redesigning and cannot comment on it as regards merits or otherwise.“However, a Nigerian privileged to be at the top of Nigeria’s fiscal management, the policy as rolled out at this time, portends serious consequences for the value of Naira to other foreign currencies.“I will however appeal to this committee to invite the CBN governor for required explanations as regards merits of the planned policy and rightness or otherwise of its implementation now.”
A former CBN deputy governor Dr. Kingsley Moghalu says the Finance Minister Zainab Ahmed’s comment to the National Assembly that she was not aware of the Naira redesign by should not mislead anyone into thinking the CBN owes her that kind of information.
According to him, the Bank only needs the approval of President Mohammadu Buhari for this particular exercise and it received that approval.
He explained that there are only three issues on which, in the CBN Act of 2007, the Bank should obtain external authorization, and only from the President of Nigeria, for its operations: Any alterations to the legal tender (the Naira); any investment of the Bank’s funds outside Nigeria; and the Bank’s annual report.
Outside of these, the only approving authorities for CBN operations are its Committee of Governors (note the “s”) consisting of the Governor and the four Deputy Governors, and the Board of Directors of the CBN, which includes the Governor, the four Deputy Governors, and 7 external members which include the Permanent Secretary of the Federal Ministry of Finance and the Accountant-General of the Federation Moghalu clarified in ama post on his twitter handle @MoghaluKingsley.
“My criticism of the current Governor of the Bank in the past is that he has politicized the central bank by routinely subjecting its operations to the whims and caprices of the Presidency far beyond what is the appropriate relationship, and compromised the independence of the CBN as a result.
“That is why the Finance Minister erroneously feels entitled to be informed or consulted. The CBN should now focus hard on the implementation of this policy, which Moghalu says will impose huge pressures on the banking system.
Similarly, a public policy analyst Mr. Emmanuel Odunsi on his part said the roles of the CBN and Ministry of Finance are different, adding that the CBN is not a parastatal under the Ministry of Finance and the CBN Governor does not need to consult the Minister of Finance on monetary policy.
According to him, the National Assembly supervises the CBN. And the Finance Minister’s comments were a reply to the National Assembly questions.
To Oluseun Onigbinde, a Nigerian entrepreneur and the CEO of budgIT, but Permanent Secretary of Ministry of Finance is meant to be on CBN board. “So how’s she not aware of such huge decision?” he asks.
The CBN’s spokesman, Mr. Osita Nwanisobi, expressed surprise at the minister’s assertion in a Friday night interview with a group of journalists in Abuja.
He emphasized that the CBN is still a very meticulous organization that adheres to due process when making policy decisions.
Nwanisobi claims that in accordance with section 2(b), section 18(a), and section 19(a)(b) of the CBN Act 2007, the Management of the CBN properly requested and received President Muhammadu Buhari’s written consent to redesign, produce, release, and circulate new series of N200, N500, and N1,000 banknotes.
He added that the integrity of the currency, the CBN, and the nation were all at risk due to a number of escalating challenges facing currency management in the nation.
According to Nwanisi obi, every top-notch Central Bank was dedicated to preserving the credibility of the country’s legal tender, the effectiveness of its supply, and its ability to carry out monetary policy.
The CBN spokesman expressed optimism that the effort will, among other goals, deepen Nigeria’s push to entrench a cashless economy in the face of increased minting of the eNaira while assuring Nigerians that the currency redesign exercise was strictly a central banking exercise and not targeted at any group.
