Economists and public policy experts have commented on the disagreement between the Central Bank of Nigeria Governor, Mr Godwin Enefiele, and Minister of Finance, Budget and National Planning, Zainab Ahmed, over the proposed currency redesign, saying that it is a reflection of fiscal and monetary policies’ dissonance.
Emefiele had on Wednesday announced that the bank would release re-designed 200, 500 and 1,000 naira notes by December 15, 2022.
But responding during a budget defence at the Senate on Friday, Ahmed said the CBN did not consult her and other ministers in drawing up the policy.
The minister had stated, “As 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.”
CBN faults minister
In a response to claims by the minister that she was not carried along, the CBN said it followed the law and due process in the naira redesign project, which it noted was 12 years due.
Speaking with a group of journalists in Abuja on Friday, the spokesman for the CBN, Mr Osita Nwanisobi, expressed surprise at the minister’s claim, stressing that the apex bank remained a very thorough institution that followed due process in its policy actions.
According to Nwanisobi, the management of the CBN, in line with provisions of Section 2(b), Section 18(a), and Section 19(a)(b) of the CBN Act, 2007, duly sought and obtained the approval of the President, Major General Muhammadu Buhari (retd.), in writing to redesign, produce, release and circulate new series of N200, N500, and N1,000 banknotes.
Nwanisiobi said the currency redesign was in the overall interest of Nigerians, reiterating that some people were hoarding significant amounts of naira outside the vaults of commercial banks.
This trend, he said, should not be encouraged by anyone who meant well for the country, noting that currency management had faced several challenges threatening the integrity of the naira, the CBN and the country.
“Every top-rate central bank is committed to safeguarding the integrity of the local legal tender, the efficiency of its supply, as well as its efficacy in the conduct of monetary policy,” he said.
On the timing of the redesign, Nwanisobi explained that the CBN had even waited for too long, considering that it had taken 12 years to carry out a redesign whereas the standard practice globally was for central banks to redesign, produce and circulate new local legal tender every five to eight years.
While assuring Nigerians that the currency redesign was purely a central banking project and not targeted at any group, the CBN spokesman expressed optimism that the effort would, among other goals, deepen Nigeria’s push to entrench a cashless economy in the face of increased minting of the eNaira.
This, he noted, was in addition to helping to curb the incidents of terrorism and kidnapping due to access of persons to large volumes of money outside the banking system used as a source of funds for ransom payments.
Nwanisobi urged Nigerians, irrespective of their status, to support the naira redesign project, saying that it was for the greater good of the economy.
Section 18 of the CBN Act seen by one of our correspondents authorises the apex bank to arrange for the printing of currency notes and the minting of coins. Section 18(b) authorises the CBN to “issue, re-issue and exchange currency notes and coins at the bank’s offices and as such agencies as it may, from time to time.”
Section 20 says the currency issued by the bank “shall be the legal tender in Nigeria and the face value for the payment of any amount.”
It does not make provision for exclusively consulting the Minister of Finance.
However, experts believe the disagreement is a reflection of poor coordination between the monetary and fiscal policies’ managers, noting that the situation portended danger for the economy.
A professor of Economics and former central banker, Jonathan Aremu, said there was obviously no coordination between the fiscal and monetary policy managers and called for the amendment of the CBN Act to rectify what he described as “anomalies.”
“If the CBN can embark on such a huge project without the Finance minister knowing, it means there is no coordination between them,” he said.
Aremu agreed that the CBN Act gave autonomy to the apex bank to print currencies, but noted that the bank was no longer independent due to the alleged involvement of the governor in politics.
“It does not appear that the CBN governor needs to seek approval from any other person in the area of currency printing, but the governor’s autonomy is questionable in the eyes of the public due to his involvement in politics. It is important to repeal the CBN Act to correct some of those anomalies,” he said.
The Chief Executive Officer, Centre for the Promotion of Private Enterprise, Dr Muda Yusuf, said the minister should have been aware of the currency design irrespective of what the CBN Act said.
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He said, “It means both are working in silos, always in parallel lines, which is not good for the economy.”
“The Ministry of Finance is closest to the CBN, and I do not think there is an absolute independence even in the CBN Act. The way it is going, the National Assembly may need to review the CBN Act.”
He explained that either should let the other know of their policies as they were intertwined.
“Some of the monetary policies are affecting fiscal policies already. Go to the ports and see how they affect fiscal issues. So, I do not think that what the CBN is doing is in the spirit of the Act,” Yusuf noted.
Agbakoba, Moghalu disagree
A maritime lawyer, Olisa Agbakoba, however, backed the CBN, insisting that the minister and Emefiele were responsible for two separate important functions.
He said, “The minister is responsible for the fiscal policy about how the Federal Government spends money, and the main tool the minister of finance uses is the budget. The minister does two things: expand or contract spending.
“The CBN governor, on the other hand, does something different called monetary policy regulation. The central bank regulates, very importantly, inflation. So, the central bank is independent of the Minister of Finance. He does not report nor is he under her.”
Agbakoba also expressed concern over the minister’s comment, stating that he found it rather shocking that she made such a statement knowing full well that they ran two different portfolios.
He added, “The comment by the Minister of Finance is quite surprising because the governor of the central bank is not bound to consult her under the CBN Act.
“It’s like telling the Chief Justice of Nigeria to consult the Minister of Justice before he makes a decision; it doesn’t make sense. It is good that the fiscal and monetary authorities talk, but the CBN is not bound to consult the minister. It’s just the way the Minister of Finance will not consult the CBN when planning her budget.
“The Finance minister and the CBN governor are performing two different functions, hence I was shocked when I watched her say she wasn’t consulted.
“She was trying to score a point when the country was trying to fix a challenge. The policy isn’t even just for the finances; it is also an issue of national security. There is a lot of money outside of the control of CBN, stolen money, money in the hands of kidnappers and the rest.
“This is perhaps the most important monetary policy decision the government has ever taken. Anyone who understands monetary policy would applaud the governor, he wants to remove bad money.
“He wants people who have acquired money illegally not to be able to use the money with them. The Economic and Financial Crimes Commission also issued a warning that they were watching. The CBN governor also waived the penalty for people who want to deposit money in banks. He asked them to bring the money back into the system, then they can now ask questions about where the money was got from.”
A former CBN Deputy Governor, Prof Kingsley Moghalu, on his part, said Ahmed’s comment “should not mislead anyone into thinking that the CBN owes her that kind of information.”
He said the apex bank only needed the President’s approval for the project.
“This is why the Finance minister erroneously feels entitled to be informed or consulted. The CBN should now focus hard on implementation of this policy. It will impose huge pressures on the banking system,” he added.
AGF on diversion
Meanwhile, the acting Accountant-General of the Federation, Okolieboh Sylva, has come under fire over alleged “unremitted” charges deducted from the Remita payment platform into the Federation Account.
Sylva came under scrutiny when he appeared before the Senate Committee on Finance to defend the budget of the office on Friday.
Unable to provide satisfactory answers to questions raised by lawmakers about the disbursements and utilisation of the billions of naira allegedly raised through the payment platform in the last 10 years, the Chairman of the Senate Committee on Finance, Solomon Olamilekan, ordered a full-scale investigation to unravel the mystery surrounding the unremitted funds.
Sylva explained that even though his office was in charge of the Remita payment platform, it did not receive any amount from the service charge, which he said was shared among the CBN, commercial banks and the service provider, SystemSpec.
The explanation did not sit well with the senators, who said they found it “strange” that the accountant-general’s office received nothing from the billions of naira deducted through its own platform.
The Senate panel subsequently ordered a full probe of the matter and summoned Emefiele, the AGF office as well as the service provider to appear before it unfailingly on November 16, 2022, to give explanations. ,
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