The newly redesigned N200, N500, and N1000 notes are expected to enter circulation on December 15, 2022, according to the Central Bank of Nigeria (CBN). Recently, Governor Godwin Emefiele gave a special briefing at which he disclosed this. According to him, the redesign of the naira notes was made possible with the approval of the Federal Government. Among the key reasons cited were the widespread hoarding of banknotes, the scarcity of clear, usable banknotes, and the simplicity of counterfeiting banknotes.
Why is CBN changing naira notes?
The transfer from the old to the new notes, according to Mr. Emefiele, resulted in an immediate cessation of bank fees for cash deposits. The new and old naira notes would continue to be legal tender and circulate side by side until January 31, 2023, when the current currencies cease to be legal tender.
This also made ransom transactions like kidnapping and terrorism difficult, reducing the crime rate. The following are the rules set for large transactions by the CBN:-
- A deposit fee must be paid by Nigerians who want to deposit more than N150,000 in cash. As a result, this is a successful strategy for the government to obtain quick cash.
- Nigerians were urged by the governor of the apex bank to visit their banks and deposit their naira bills since transactions with a value of less than N150,000 would not be charged a deposit fee.
Economic Implications
When the new naira notes will be introduced in 2023, there won’t be much of a boost to the economy. It is unlikely to result in a significant acceleration of Nigeria’s GDP growth rate or a reduction of the inflation rate. It affords the present central bank a chance to incorporate cutting-edge technology into the layout of the new naira notes, though. The use of the eNaira, which offers the central bank more control over the tracking and administration of the country’s currency, may also benefit from introducing these new naira notes.
Upcoming Elections
Vote buying will be much more difficult in 2023, as politicians will likely have to give out cash before the end of January or defer to electronic money transfers. Politicians with significant cash hoards in preparation for the election will be forced to deposit their money on or before January 31, 2023, or the money will no longer be legal tender. While they can still distribute freshly produced notes, we believe the central bank will include tracking mechanisms in the new notes.
Money Laundering
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Some people would look for alternate methods of depositing money out of desperation due to the impact of the 2023 elections and corruption. One method is to use legal ways to launder part of the money gained unlawfully. Some people might feel compelled to utilize the funds to buy goods that can later be sold for cash that can be put in the bank easily. This would probably be impacted by the real estate industry and profitable establishments like eateries, bars, clubs, dry cleaners, supermarkets, etc.
Online Exchange Money/Currency
Some people will be compelled to exchange their naira for dollars through forex brokers in Nigeria to comply with the central bank’s deadlines. Particularly those who are curious to turn illegal monies into legitimate currency and those who require the money for elections.
People believe that converting money into dollars at any desired rate is one simple way to accomplish this. The hasty conversion of the currency into dollars would probably affect the exchange rate, further devaluing it.
In contrast, people who sell dollars would take care to avoid receiving cash to avoid paying fines or coming under the EFCC’s scrutiny. The implications might be disastrous for money changers, particularly those who sell fresh notes at weddings and gatherings. They will be pushed to sell as many notes as possible to avoid missing the bank’s deadline.
Now that the apex bank is issuing new notes that are probably traceable, their company will probably be in danger. The nature of this activity after January 2023 should be more carefully considered by bankers who collude with money dealers.
Conclusion
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Customers of banks are also anticipated to start depositing cash into their accounts so they may withdraw the new banknotes when circulation starts in mid-December 2022. Therefore, it is predicted that all banks will maintain their currency processing facilities open from Monday through Saturday to accommodate any cash their clients will return.
