A political scientist named Jibrin Ibrahim has exposed the naira redesign policy for what it is – a complete farce. According to him, everyone in the CBN, banks, and federal govt knows that it won’t work because the mint lacks the capacity to print sufficient notes. It is an opportunity for CBN insiders to make a lot of money while appearing to fight corruption. The financial industry is playing along to avoid CBN sanctions.
Currently, we are supposed to be in the process of changing our old naira to new naira notes, which involves another massive logistics challenge. Just six weeks were allocated for the change from 15 December to 31st January. To convince us that it is for real, President Buhari was displayed on television launching the new notes. When 15th December came and banks did not have the new naira notes to distribute, except for a few samples, the take-off date was pushed to 9th February. In conformity with the six-weeks allegedly needed for the swap, the end date should have been adjusted, but it was not; hence, what needed six weeks will now be done in three weeks.
Two days ago, the Central Bank warned banks to ensure they put enough new notes in their ATM machines for customers. Encouraged, I went to my bank, only to find out that they still do not have the new notes. I drew their attention to the warning of the Central Bank that they would be dealt with if they don’t give out the new notes, and the manager laughed. The Central Bank does not have the notes to give them, so the warning is just a public relations exercise, because the banks would all be afraid to expose the lies from the Central Bank for fear of repercussions, he explained.
I spoke to some people with inside information and was told essentially that the whole charade is some drama. By law, only the mint can now print our currency. However, the capacity of the mint is minuscule in relation to the volume of new notes required, as such everybody in the CBN, banks and government, know the plan will not work simply because of the capacity limitation we have. Nonetheless, we have to pretend it will work because there is a nice narrative to sell – that the currency swap will expose corrupt politicians who have stolen government money to give bribes during the coming elections, and the government is committed to its anti-corruption policy, as such it is a smart policy move to deal with corrupt politicians.
The real story is something else – some people will make a lot of money in the printing process. Central Bank staff will preside over the distribution of the scarce new notes and many will have to bribe them massively to get access to the new notes. Meanwhile, the crisis will soon become serious when markets start to breakdown as the countdown to the withdrawal comes closer. In the coming days, people will start rejecting the old notes, as the end date approaches, but there will be serious scarcity of the new ones. The pressure will mount on government and a two-month extension for the withdrawal of the old notes will be announced and repeated, again and again. Everybody knows that will be the eventual outcome, so we just love living in our narratives of delusion.
