Article summary
- President Tinubu said he will review the naira redesign policy of the CBN.
- This may see the old naira notes remaining legal tender for a longer time than December 31 as declared by the Supreme Court.
- Tinubu also wants the CBN to rejig its monetary policy in favour of a lower interest rate.
- President Bola Tinubu has promised to revisit the naira redesign policy of the Central Bank of Nigeria (CBN).
In his inaugural speech in Abuja on Monday, President Bola Ahmed Tinubu announced that his administration would treat both the old and the new naira notes as legal tender.
Tinubu expressed his concerns about the harsh implementation of the policy by the Central Bank of Nigeria (CBN), particularly considering the significant number of unbanked Nigerians. He had previously criticized the naira redesign and the initial declaration that the old N1,000, N500, and N200 notes would cease to be legal tender a few days before the February 25 presidential elections.
- “Whatever merits it had in concept, the currency swap was too harshly applied by the CBN,” he said.
What to expect
Going by the Supreme Court’s ruling of March 3, 2023, on the naira redesign issue, both the old and the new naira notes are to continue to be legal tender until December 31, 2023. However, with the promise to revisit the policy by the new president, the old notes may continue to be legal tender for a longer time than December this year.
Earlier in February, Tinubu as the presidential candidate of the All Progressives Congress (APC), had asked the CBN to make available both new and old naira notes for the people in line with the directive of the Supreme Court.
He also commended the APC Governors that challenged the CBN policy in court, which led to the March 3 judgment. Tinubu had said:
- “I want to salute the courage of our Governors and most especially the Progressives Governors in APC who acted to save our country from avoidable and dangerous political crises and social unrest which the Central Bank policy on new Naira notes has brought on our country.
- “Our country was dangerously careering toward anarchy and political and economic shutdown. But with the Supreme Court interim ruling, our country has been pulled back from the precipice.”
He noted that the country was heading towards a precipice due to the poor implementation of the policy. Tinubu back then also said the federal government and relevant agencies must work out a better framework on how to proceed with the policy.
Monetary policy
Tinubu in his inaugural address also said that the country’s monetary policy needed thorough housecleaning. He urged the CBN to work toward a unified exchange rate.
- “This will direct funds away from arbitrage into meaningful investment in the plant, equipment, and jobs that power the real economy. The interest rate needs to be reduced to increase investment and consumer purchasing in ways that sustain the economy,” he said.
The unification of the exchange rate is expected to enhance transparency and create a level playing field for businesses operating in Nigeria. It will simplify transactions, eliminate complexities associated with multiple exchange rates, and provide a more accurate reflection of the true value of the Nigerian currency, the naira.
