Over the years, the Nigerian legal tender has been redesigned four (4) times; the first time was in 1965 when Nigeria became a republic, and the main reason why it was redesigned was so that it could reflect that it was now being issued by the Federal Republic of Nigeria. The Nigerian currency was redesigned yet again in 1968, following a civil war. Nigeria chose to modify the currency notes it printed in 1965 as a war tactic to counteract the misuse of the country's currency notes during the period. Nigeria implemented a genuine monetary system in decimal form in 1973, replacing the imperial system inherited from the British colonial administration, which resulted in a currency redesign then, as part of the economic reforms implemented in 2007, new banknotes with new designs were reissued.
The Federal Republic of Nigeria's Central Bank of Nigeria Act of 2007 stipulates that the Bank shall oversee and administer all monetary and financial sector policies on behalf of the Federal Government. Section 2 of the act provides that –
The Principal objects of the Bank shall be to-
Objects of the Bank.
(a) ensure monetary and price stability;
(b) issue legal tender currency in Nigeria;
(c) maintain external reserves to safeguard the international value of the legal tender currency;
(d) promote a sound financial system in Nigeria; and
(e) act as a banker and provide economic and financial advice to the Federal Government.
Section18 (a) & (b) and Section 20(3) of the Act empower the Central Bank of Nigeria to print, redesign, destroy, and re-distribute currencies-
The Bank shall-
(a) arrange for the printing of currency notes and the minting of coins;
Power to print notes
and mine coins.
(b) the issue, re-issue, and exchange currency notes and coins at the Bank's offices and at such agencies as it may, from time to time, establish or appoint;
(c) arrange for the safe custody of un-issued stocks of currency notes and for the preparation, safe custody, and destruction of plates and paper for the printing of currency notes and disc for the minting of coins; and
(d) arrange for the destruction of currency notes and coins withdrawn from circulation under the provisions of section 20 (3) of this Act or otherwise found by the Bank to be unfit for use.
While there are multiple opinions about the redesigning of the naira notes, this writer is of the opinion that the redesigning will help curb the hoarding of currency by Nigerians- It is no news that corruption thrives in Nigeria, and many corrupt persons keep large sums of money in soak-aways or overhead tanks and even unoccupied houses, These monies have been alleged to be stolen public funds. Instances of such corrupt practices abound, and recent examples are the Ikoyi gate scenario, the Kaduna gate scenario, and the Benue example, where monies were stashed in bags discovered in their decomposed state. These instances and other reasons necessitated the need/urgency for the redesign of the Nigerian Legal Tender, which the federal government believes/expects to curb once and for all, instances of hoarding, insecurity, and the bastardization of the Nigerian currency.
The Central Bank of Nigeria also instituted a withdrawal policy that restricted withdrawals from ATMs, point-of-sale devices, and over-the-counter locations to just N100,000 per week for individuals and N500,000 for corporate organizations, but it was increased to N500,000 for individuals and N5,000,000. The Central Bank of Nigeria ordered banks to stop handing out new, redesigned notes over the counter and to reload ATM machines instead to aid circulation at the beginning of this year. However, because there is an insufficient supply of new notes, banks are left with old notes that they must load into ATM machines. This is despite the announcement that all Nigerians should deposit old notes as they will no longer be accepted as legal tender as of January 31.
Even though organizations like the Nigeria Governors' Forum (NGF) and Bank Customers Association of Nigeria (BCAN) expressed concerns and appealed for the Central bank of Nigeria to extend the date and even the House of Representatives and the Senate urged CBN in separate statements to extend the date, Mr. Godwin Emefiele, the Governor of the Central bank of Nigeria, confirmed in a recent interview that the old currency notes will be phased out of circulation by the end of January.
Everyone is still advised to obey the directives of the Central bank of Nigeria since their decision is final.
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