Business opportunities in the naira redesign policy

The Central Bank of Nigeria (CBN) announced its intention to redesign the two hundred, five hundred and one thousand naira (N200, N500 and N1,000) Nigerian currency notes on 26 October, 2022, to tackle corruption, kidnapping and currency counterfeiting. This exercise, no doubt, is a laudable one! The execution of the exercise in the approach to the 2023 major elections was an indication that it may also aim to curb vote-buying. CBN approved that, for ease of transition, the new redesigned naira notes should circulate concurrently with the old notes until January 31, 2023, when the old notes will cease to be legal tender. The sufferings caused by the scarcity of the new notes necessitated President Muhammadu Buhari to announce an extension of ten (10) days for the naira notes to be circulated. Before the expiration of the ten day extension, some governors, fighting on behalf of “many Nigerians”, approached the Supreme Court to restrain the federal government, the CBN, and commercial banks from suspending and ending the use of the old N200, N500 and N1,000 naira notes.

Since the new notes were unveiled, Nigerians across different parts of the country have been struggling to access them from commercial banks and ATM cash points. The naira notes scarcity and the mayhem it has caused is another case of a failed policy formulation in Nigeria. On Friday, 17th February, 2023, there was rumour that the commercial banks had been mandated by the CBN to open business offices to attend to customers’ deposit in respect of the old N500 and N1,000 notes on Saturday and Sunday 18th and 19th February, 2023. Businesses immediately picked up. The CBN denied this directive in a prompt memo to the public which was widely circulated and all businesses nose-dived. Though cashless policy is a good programme, the 2023 cash swap exercise in Nigeria was not well executed. There was inadequate information about the benefits and burdens of the exercise to the masses. The CBN is supposed to get the masses to have buy-in on the project. Public policy formulation refers to how problems identified in the agenda-setting phase transform into government programmes.

Policy formulation affects both the implementation and outcomes. There had been more damages than the benefits that are accruable to the masses from the naira redesign exercise. Bismark Rewane, the chief executive officer of Financial Derivatives Company, stated that Nigeria may suffer a loss of gross domestic product (GDP) of $18 million monthly owing to the negative effects of the CBN naira redesign policy. Major losers in this exercise are the Point of Sale machines (POS) operators and the petty traders in Nigeria who cannot do business without cash. The CBN failed to exploit the business opportunities in the naira redesign policy. In exploiting the business opportunities in the policy, the CBN ought to have studied the nature of the business environment in Nigeria. There are opportunities in POS machines distribution to petty traders, commercial bus drivers, retailers and artisans by the commercial banks prior to the implementation of the policy.

There are also opportunities for electronic payment using mobile phones Quick Response (QR) code on QR Code-based Attendance Machines. Nigeria will save money through cashless policy. Bukola Idowu writing in the Leadership newspaper stated that, “The CBN has spent N281.07 billion to print bank notes between 2016 and 2020 and another N3.88 billion to destroy mutilated notes within the same period. This amount could have been invested in critical infrastructural development, if our notes are well managed.

It is a known fact that spraying at parties is one of our endemic cultural traits. How do we make Nigerians refrain from spraying their hard-earned money at social parties? Do we kill social occasions totally? The value chain of social parties which are held all over Nigeria every weekend is unquantifiable. The ‘aso ebi’ sellers – those who sell the uniforms worn by all and sundry at the parties, the tailors in charge of sewing the clothes, the food contractors and the make-up artists who help party guests tie their headgears, etc.

What about CBN designing numbered and coded plastic tokens that will be bought by business men and women (money-hawkers) and will be sold at parties to those who must spray? After all, Section 21(3) of the Central Bank of Nigeria Act 2007 (as amended) stipulates that. “spraying of, dancing or matching on the Naira or any note issued by the Bank during social occasions or otherwise, howsoever, shall constitute an abuse and defacing of the Naira or such note and shall be punishable under the law by fines or imprisonment or both”. If the federal government can enforce this law and ensure that all party-goers observe the provisions of the law, it will help our token sellers to stay in business and our musicians to make money. Bouncers, a great part of our social occasions, are in business because people dance at these occasions and spray money. CBN ought to consider the amount of incomes that will accrue to Nigeria from violators of this law. In Ijara-Isin, a small community in Isin Local Government of Kwara State, Oba Ademola Ajibola, the traditional ruler, introduced the TLK Voucher in August 2021 as a means of exchange within the Ijara-Isin community. It has really helped the Ijara-Isin economy.

To operate a cashless policy in Nigeria, CBN ought to urge the federal government to make a law criminalising anybody that ‘imprisons’ our naira, or incentivise the usage of electronic and tokenised payments. In transport as a modern basic need, there can be a subsidised one-day, one-week and one-month pre-paid travel cards. These cards will be incentivised to encourage their usage. If a one-way journey price paying cash is one hundred naira, paying with a prepaid travel card should be eighty naira. With this arrangement, rational travellers will prefer to use the card to using cash. The same incentives should apply to using tokens to spray at social events instead of raw cash. How many of our pepper, grocery and commercial bus drivers/conductors know how to operate POS? Imagine the members of the National Union of Road Transport Workers (NURTW) and Road Transport Employers Association of Nigeria (RTEAN) collecting their fees from commercial bus drivers through POS. The gains to banks and bank loans seekers are unimaginable!

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