OPEN THOUGHTS ON THE RE-DESIGNED NAIRA BY THE CBN AND, COMMERCIAL BANKS JOINING FORCES CAN MITIGATE EMERGING CHALLENGES IN THE SECTOR
“If you want to learn something, read about it. If you want to understand something, write about it. If you want to master something, teach it.” ― Yogi Bhajan
SECTION A - NAIRA RE-DESIGN IS AN EXCELLENT INITIATIVE BY THE CENTRAL BANK OF NIGERIA (CBN)
According to (The Premium Times Nigeria), A cycle of banknote redesign is generally aimed at achieving specific objectives, including but not limited to:
- Improving the security of banknotes.
- Mitigating counterfeiting.
- Preserving the collective national heritage.
- Controlling currency in circulation and;
- Reducing the overall cost of currency management.
Ultimately, this new policy would heal the lingering hyperinflation, while also factory-resetting the Naira and the economy on a guaranteed path to recovery.
Everyone is aware of the consistent and unrelenting efforts of the Central Bank of Nigeria (CBN) and, the government to mitigate the hyperinflationary situation faced by Nigeria, in recent months and past years, with the current inflation rate at 21.09 percent, the prices of basic household items have soared, with workers’ disposable income in sharp decline (Okonkwo).
According to the (International Monetary Fund), hyperinflation and exchange rate collapse slash the value of a national currency, forcing the issuance of banknotes in ever higher denominations. In Yugoslavia in 1993, a banknote reached 500 billion dinars, and Zimbabwe’s highest banknote issued was 100,000 trillion Zimbabwe dollars in 2008. In such situations, a redenomination of the currency is not only appropriate but also necessary.
Interesting read published by Tribune on the 14th of November 2022 -
“Currency: Redenomination Outweighs Redesigning”
https://tribuneonlineng.com/currency-redenomination-outweighs-redesigning/
Introducing a new currency is a complex process, but one that Turkmenistan completed successfully as published in “New Money” by Åke Lönnberg.
Publication Reference -
https://drive.google.com/file/d/1qGT2fCYmrXgRTODvBn-RD6J_76jbpTVp/view?usp=sharing
I want to believe that this new currency redesign process adopted by the CBN and the Nigerian government is similar to the model published in the article referenced above in “New Money” by Åke Lönnberg.
Irrespective of diverse opinions, criticisms, and comments about the Naira Re-design, this is a good policy by the CBN at this time.
The current global challenge is termed by the World Bank as “the most pronounced global inflation cycle in decades”.
The Director of the World Bank’s Prospects Group and EFI Chief Economist, which produces the Outlook report, Ayhan Kose stated:
“The combination of elevated commodity prices and persistent currency depreciations translates into higher inflation in many countries. Policymakers in emerging markets and developing economies have limited room to manage the most pronounced global inflation cycle in decades. They need to carefully calibrate monetary and fiscal policies, clearly communicate their plans, and get ready for a period of even higher volatility in global financial and commodity markets.”
Here is the complete article from The Guardian (27 October 2022)
World Bank warns global inflation may worsen as currencies depreciate
I have also read many funny publications -
‘What kind of colour is this?’: Reactions trail newly redesigned naira notes By Vanguard (November 23, 2022)
“It’s Only Colour Change”: Nigerians React As Photos of the New Naira Notes Trend By Legit (November 23, 2022)
https://www.legit.ng/nigeria/1505636-s-colour-change-nigerians-react-photos-naira-notes-trends/
Disappointed Nigerians say new naira notes printed with “Snapchat filters” By Nairametrics (November 24, 2022)
According to Åke Lönnberg’s publication, decisions on the artistic design of banknotes are almost always complex and time-consuming.
1. The design must be integrated with necessary security features: the higher the denomination, the more advanced security features are required. These often include watermarks, security threads, see-through registers, and hidden numerals.
2. Decisions also need to be made on the size of banknotes—a uniform size as for U.S. banknotes or a different size for each denomination as for euro banknotes.
3. Finally, the color scheme should be determined—again, uniform colors, like U.S. banknotes, or clearly different colors as for most other banknotes.
What is the best categorization for the publications below - “MISINFORMATION” or “DISINFORMATION”?
Naira redesign: Buhari, Emefiele played Nigerians, only changed dye of currency – Sowore By Daily Post (November 23, 2022)
CBN’s redesign of Naira will spell doom for Nigeria – Pastor Giwa By Daily Post (November 2, 2022)
https://dailypost.ng/2022/11/02/cbns-redesign-of-naira-will-spell-doom-for-nigeria-pastor-giwa/
New naira notes look fake – Pastor Giwa By Daily Post (November 24, 2022)
https://dailypost.ng/2022/11/24/new-naira-notes-look-fake-pastor-giwa/
MISINFORMATION is false or inaccurate information—getting the facts wrong.
DISINFORMATION is false information that is deliberately intended to mislead—intentionally making the misstating facts.
The objective of this post is aimed to present an independent and personal opinion, view, and thoughts on the “Naira Redesign”, and also welcome constructive feedback that is debatable for learning and knowledge sharing.
SECTION B - COMMERCIAL BANKS JOINING FORCES CAN MITIGATE EMERGING CHALLENGES IN THE SECTOR
According to Thisday Newspapers -
“As the Central Bank of Nigeria (CBN) steps up effort to redesign N200, N500, and N1,000 notes currently, in circulation, currency outside the banks added N108.67 billion to N2.84 trillion in October 2022 from N2.73 trillion in September, the CBN money and credit statistics have currently revealed.
According to the CBN data, currency outside the banks appreciated by 11.07 percent Year-on-Year (YoY) from N2.54 trillion reported in the corresponding period of 2021.”
Publication - Currency Outside Banks Increased by N108.67bn to N2.84trn in October By Thisday Newspapers
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DISCLAIMER - There are lots of kindhearted, integrity-driven, high-moral, and ethical bankers still in the Nigerian banking system. Perhaps, many of them are powerless at confronting this growing concern, due to unanticipated repercussions.
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No one can really blame stakeholders (the average Nigerians) for losing confidence in saving money with the banks. There is an African proverb that reads: “When there is no enemy within, the enemy outside can do you no harm.”
Even Certified Fraud Experts will sum up the probable solution in these few words -
“To mitigate insider-related fraud risks, you need to -
1. Implement stronger controls.
2. Leverage data from different processes, and:
3. Develop a corporate culture of accountability.
OVERVIEW OF A FEW ARTICLES -
EFCC Arrests 12 Bankers For Suspected Insider Fraud In Enugu
https://www.channelstv.com/2022/10/16/efcc-arrests-12-bankers-for-suspected-insider-fraud-in-enugu/
Insider-related bank frauds rattle industry
https://thenationonlineng.net/insider-related-bank-frauds-rattle-industry/
How insider abuse affects bank customers’ deposits
https://thenationonlineng.net/how-insider-abuse-affects-bank-customers-deposits/
Bank customers lament ‘illegal’ withdrawals demand urgent action
https://punchng.com/bank-customers-lament-illegal-withdrawals-demand-urgent-action/
Fraud in the banking sector, mostly insider perpetrated – EFCC
https://www.vanguardngr.com/2021/11/fraud-in-banking-sector-mostly-insider-perpetrated-efcc/
According to (The Nation Newspaper), internet-banking and card-related frauds constituted 92.68 percent of the reported cases of insider-related frauds in the banking industry. Sixty-seven bank customers lost over N11.7 billion to insider-related frauds in one year, a petition to the Chartered Institute of Bankers of Nigeria (CIBN) showed.
Other miscellaneous crimes such as fraudulent transfers/withdrawals, cash suppression, unauthorized credits, fraudulent conversion of cheques, diversion of customer deposits, diversion of bank charges, and presentation of forged or stolen cheques, among others, also made the list of malpractices.
Aside from SIGNIFICANT FINANCIAL LOSSES, the sector is also EXPOSED TO POTENTIAL COMPROMISE and loss of customer data, and disruption of operations, WHICH UNDERMINE STAKEHOLDERS’ CONFIDENCE IN FINANCIAL SYSTEM STABILITY.
So far, indicators are glaring, if commercial banks are not collaborating to mitigate the growing concern in the industry, in no distant time, more Nigerians irrespective of class “go chop breakfast”, as formally assured by Burna Boy “last last”, “the devil will be wearing Prada, and inmates will be running the asylum”.
According to Elon Musk, Vox Populi, Vox Dei "The voice of the people is the voice of God".
I hope this was informative.
Thank you.
Aderogba Otunla
A SMALL DISCLAIMER - It's OK for the devil to wear the extremely high-end luxury Prada brand - just for clarity, Lol. I assume most readers are familiar with the popular wit “The Devil Wears Prada”, It doesn't mean anything other than someone comparing her unpleasant boss to a well-dressed devil.
Secondly, “inmates WILL BE running the asylum”, the keywords “WILL BE” are used to talk about what is going to happen in the future, and the paraphrased quote, is a common reference to a situation in which the people least capable of running a group or organization will be in charge.
WORKS CITED
“Internal Fraud.” Fraud.net, https://fraud.net/d/internal-fraud-insider-fraud/. Accessed 24 November 2022.
International Monetary Fund. “New Money - Finance & Development, December 2013.” International Monetary Fund, https://www.imf.org/external/pubs/ft/fandd/2013/12/lonnberg.htm. Accessed 24 November 2022.
The Nation Newspaper. “Insider-related bank frauds rattle industry The Nation Newspaper.” The Nation Newspaper, 19 September 2022, https://thenationonlineng.net/insider-related-bank-frauds-rattle-industry/. Accessed 24 November 2022.
Okonkwo, Kenneth. “Curbing the rising cost of living.” The Sun Nigeria, 23 November 2022, https://www.sunnewsonline.com/curbing-the-rising-cost-of-living/. Accessed 24 November 2022.
The Premium Times Nigeria. “Why I approved redesign of naira notes — Buhari.” Why I approved redesign of naira notes — Buhari, 23 November 2022, https://www.premiumtimesng.com/news/top-news/566945-why-i-approved-redesign-of-naira-notes-buhari.html. Accessed 24 November 2022.
Re-design Naira picture reference
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