Nigeria's Central Bank is doubling down on plans to issue new Naira banknotes

By: Mark Jessy

Nigeria's Central Bank is doubling down on plans to issue new Naira banknotes

November 1, 2022 2:12 AM

A few days after Nigerian Finance Minister Zainab Ahmad publicly questioned the central bank's intentions to alter the country's currency, on October 29, the bank was compelled to defend them. The CBN says this is long overdue and has asked the public for their "support of the currency redesign project, which is in the overall benefit of every person of the country."


Authorization from the Office of President Muhammadu Buhari

The CBN has argued that its recently disclosed proposal to issue new naira banknotes is both legal and "12 years overdue." The central bank claimed it had "obtained the authority of President Muhammadu Buhari in writing to redesign," an apparent rebuke to Nigerian Finance Minister Zainab Ahmad, who has openly questioned the idea.


Reportedly speaking to MPs the day after the CBN's unexpected statement, Ahmad claimed she had not been briefed and could not comment "on it as regards merits or otherwise." The Central Bank of Nigeria's (CBN) plan to launch newly designed naira banknotes is suspected to have triggered the local currency's parallel market exchange rate plummet, where it reached a new all-time low against the dollar of N781:$1.


However, critics of the CBN's contentious plan warn that if it goes forward, the naira-to-dollar exchange rate might plummet to as low as 1,000 naira per dollar by the end of January 31, 2023. On the other hand, the CBN issued a defiant statement asking Nigerians to back the currency redesign proposal on October 29, 2022.


The CBN has issued an appeal to the Nigerian public, saying, "The currency redesign project is in the general benefit of every person of the country. Anyone concerned with the welfare of the country, the central bank warned, "should discourage the hoarding of considerable sums of banknotes outside the vaults of commercial banks."


A World-Wide Currency Redesign Standard

After waiting 20 years to implement changes, the CBN said it "tarried for too long." In addition, the bank restates its past comments that releasing newly designed currency notes is an international norm that occurs every five to eight years.


On December 15, new 100, 200, 500, and 1,000 naira banknotes will be introduced into circulation. By the end of the month of January 2023, Nigerians will be required to give in their old banknotes. The newest local sources quote President Buhari as supporting the action, despite calls from critics of the proposal for the CBN to extend the deadline or abandon the scheme altogether.