Abuse oI The Naira: Will CBN Fulfill It’s Promise?

“We must respect, protect, manage, and handle our new money efficiently and effectively. If the CBN cannot do this, it has misused the currency and the Act that set it up. Therefore, a central bank or currency management regulator should not sit back and watch people mutilate our money.”

On November 23, 2022, the federal government unveiled the new Naira note to the public. President Muhammadu Buhari performed the ceremony in the morning before the Federal Executive Council (FEC) meeting at the state house in Abuja. The Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, was in attendance during the unveiling ceremony. The unveiling marked the first time in 19 years that Nigeria redesigned its currency notes. Following the unveiling of the new notes was a briefing in front of the Federal Executive Council meeting. Responding to questions, the CBN governor dismissed the suggestion that the Naira redesign was a ploy against some Nigerians. Mr. Emefiele appealed to members of the public, urging them to desist from making such speculation, adding that there is no reason to perpetuate such an act on any Nigeria. But Mr. Emefiele stressed that the CBN would step up the monitoring process and interrogate any withdrawals. According to him, the bank would impose a heavy restriction on the volume of cash that people can withdraw over the counter. It will work with the Economic and Financial Crimes Commission (EFCC) to monitor the purpose of any heavy transactions.

The question is, will the Central Bank of Nigeria fulfill its promise? What is the next agenda for CBN? The next issue after unveiling the Naira is for CBN to fulfill its promise. While announcing his intention to redesign the currency, the CBN governor announced that the new design would make Nigeria a cashless country. Being a cashless nation will reduce corruption, counterfeiting, terrorism, kidnapping, and mutilated Naira notes. But is it the first time we heard about a cashless society? On October 25, 2021, the CBN governor launched the central bank digital currency (CBDC) known as the eNaira. The eNaira is designed to provide Nigerians with a cheap, safe, and trusted means of payment in the domestic and global economy. Its objective is to enhance financial inclusion and poverty reduction, enable direct welfare disbursement to citizens, and support a resilient payment ecosystem. It is also to improve the availability and usability of central bank money, facilitate diaspora remittances, reduce the cost of processing cash, and reduce the cost and improve the efficiency of cross-border payment, and many more. According to the CBN governor, the idea was to move Nigeria from a cash-based society to a cashless society. In a workshop organized in Lagos, the governor stressed that the introduction of CBDCs differs from cryptocurrencies, such as bitcoin, as they are issued and backed by states. They also differ from mobile money apps, as they operate on a peer-to-peer basis – a customer can deposit a merchant using the eNaira directly without the need to go through an intermediary. In addition, he emphasized that the value of the eNaira is the same as that of the cash naira – it does not rise or fall independently with other currencies. While Emefiele was positive on the take-up of the digital currency, Bloomberg reported that less than 0.5% of Nigerians are using the eNaira. Today, the eNaira continues to struggle, especially among the poorest communities it’s targeting. The reasons include the need to educate Nigerians about digital currency, the lack of incentives for banks to market it, and suspicion of the CBN’s project among millennials and users of cryptocurrency. Most Nigerians still stockpile cash in their houses. This idea is why financial literacy education campaigns mean so much as we move forward. To get this product ready for its versatility, where we can quickly and easily deploy it to give out stimulus checks to the lowest income groups who need government handouts and intervention the most, especially during a recession or during a big situation like the one we experienced during COVID-19 pandemic.

The second issue the CBN will have to address is the misuse of the local currency. There are many ways we abuse the naira without fear of being punished. The foremost abuse comes from celebrities, business people, and politicians who squeeze, spray and wrinkle the naira on every occasion. A year ago, I watched the footage of how the naira and other currencies rained at the burial ceremony of the mother of the Chairman of Cubana Group Obi Iyiegbu, popularly known as Obi Cubana. Several videos emerged online showing celebrities, business people, and politicians spraying money indiscriminately during a concert held after the interment of the mother of Obi Cubana. In one of the videos, Obi Cubana displayed his football skills while one of the guests threw wads of cash at him. The event occurred at Oba, a town in the Idemili South Local Government Area of Anambra State. Several celebrities and government dignitaries attended the funeral ceremony. Mr. Kanayo O. Kanayo, a veteran actor turned trained attorney was among the many dignitaries that sprayed Obi Cubana with mint currency at the funeral. More interesting to note is that Abba Kyari, a former Deputy Commissioner of Police and former leader of the Police Intelligence Response Team, with other police officers and security operatives, attended the burial ceremony to honor the mother of Obi Cubana. Nigerians, hoping to see punitive measures from either the CBN or law enforcement agencies, were disappointed as the apex bank and security agencies remained mute. We should recall that among the functions of the Central Bank of Nigeria is to guide against the misuse of the naira. According to Section 21 of the CBN Act, 2007, a person who tampers with a coin or note issued by the apex bank risks imprisonment for a term not less than six months or a fine of not less than N50,000. A country’s domestic currency is like the national flag. It symbolized sovereignty and authority. The Nigerian flag illustrates the history, vision, and ambitions of everyone. No emblem should be placed or flown higher than the flag of Nigeria as a sign of ultimate respect. Today, it is natural to associate the Nigerian currency with the flag because having money and being comfortable with finances gives you freedom and options to facilitate trade and address long-term needs. We must respect, protect, manage, and handle our new money efficiently and effectively. If the CBN cannot do this, it has misused the currency and the Act that set it up. Therefore, a central bank or currency management regulator should not sit back and watch people mutilate our money.

On several occasions, Nigerians have raised concerns about the culture of making money rain at parties. In the U. S, spraying money for an African American is synonymous with the phrase "Make it Rain." It is a time-revered tradition of splashing the cash on strippers at nightclubs. At these strip clubs, athletes, celebrities, and rappers throw crazy sums of money at ladies who entertain with their dancing services. The way of making it rain at parties has permeated the whole nation. Regardless of financial status, many people attend weddings, burials, child dedication, naming ceremonies, and birthdays to participate in this practice to demonstrate their affection for the celebrant. During such a celebration, people come forward while dancing to make it rain on those on the dance floor and the musicians. But aside from flamboyance and affluence, throwing money at events can signal social status. It is often an expression to assess how much a person appreciates his peers, friends, and relations. Over the years, several people have raised concerns about the scandalous cash spraying on musicians at events. But the culture continues to be indisputably outrageous and embedded in us. Despite some tribal differences between the Efiks, Yorubas, Kalabaris, Urhobos, Igbos, Fulanis, and others, there is something we all share. We love to have a good time and throw cash on people and in the air to create that nostalgic feeling. CBN has repeatedly warned that throwing money at parties can lead to a devaluation of the local currency, as people usually match it, thereby mutilating the currency. Despite the declaration and warning, nothing visible has happened as the culture of spraying money during parties continues across the country. The appeal to stop the mutilation of the local currency has gone unheeded as people continue to do it during ceremonies and parties. As the CBN begins distributing the new notes, it must put in place legal instruments to halt the spraying of money, which it has identified as the chief cause of the abuse.

While launching the new Naira, President Muhammadu Buhari said that the new Naira banknote has features that make it difficult to counterfeit. He expressed delight that the Nigerian Security Printing and Minting (NSPM) PLC produced the redesigned currency. At the launch before the Federal Executive Council (FEC) meeting in the State House, the President explained the basis for his approval to the Central Bank of Nigeria (CBN) to redesign the ₦‎200, ₦‎500, and ₦‎1000 banknotes. According to the President, the government fortified the new Naira banknotes with security features that make them difficult to counterfeit. He added that the new banknotes would help the Central Bank design and implement better monetary policy objectives and enrich the collective memory of Nigerian heritage. While acknowledging that international practice requires central banks and national authorities to issue new or redesigned currency notes every 5 to 8 years, the President noted that it is now almost 20 years since the government redesigned the local currency. Hence, the money was long overdue to wear a new look. But since the invention of money, criminals have tried to counterfeit it. The phenomenon of counterfeiting predates the ancient idea of a currency that we have today, namely coins and banknotes. However, while counterfeiting is a practice with ancient roots, it also has a modern impact. In addition, counterfeiting techniques have become increasingly sophisticated over time, with duplications becoming almost indistinguishable from the official notes. The rate at which criminals have continued to innovate to combat the measures taken by legitimate institutions to stop them from producing counterfeit money has been truly astounding. New security features and banknotes developed to make counterfeiting harder include counterfeiting techniques to mimic real currency better. A cycle of banknote redesign is aimed at achieving specific objectives, including but not limited to improving the security of banknotes, mitigating counterfeiting, preserving the collective national heritage, controlling currency in circulation, and reducing the cost of currency management. Under the new CBN guidelines on currency mutilation and counterfeiting, it authorized branch controllers of Deposit Money Banks to work with security agencies to ensure they addressed cases of currency mutilation. Ensuring the circulation of clean banknotes requires the collaborative effort of all stakeholders – the CBN, banknote suppliers, Deposit Money Banks, manufacturers of currency management, processing companies, security agents, and the general public. We need to improve the quality and durability of the naira notes. Though the Central Bank of Nigeria (CBN) has campaigned against mutilating and counterfeiting money, with penalties for anyone found wanting of this offense, it has never convicted anyone of this crime. While we commend the Central Bank for redesigning the naira notes, the task before them will reduce if Nigerians decently handle the national currency.

The political history of Nigeria after the First Republic is marred by vote-buying politics. During the First Republic, political parties were regionally based. Their weapons to ensure victories were to appeal to ethnic and religious sentiments during electioneering campaigns. This era was possible because the popularity, acceptability, and strength of the major political parties and their allies were enhanced essentially by the primordial ties with the people in their regions. The parliamentary system also made the parties exercise considerable control over the candidates fielded for an election. Between 1960-1966, the influence of money was minimal. Though politicians usually distributed items such as T-Shirts, caps, and badges with party emblems to supporters during political rallies and campaigns, there was no enormous spending by individual candidates to win elections as we currently have in politics and electioneering of candidates. The phenomena of money politics, vote buying, and selling took other dimensions during the second republic, which started around 1979. The emergence of money politics began with the participation of some wealthy Nigerians and retired army generals who made their money through corrupt practices and embezzlement. Rigging devices such as ballot box stuffing and snatching, outright manipulation of election results, and electoral violence became a major nuisance in the electoral process. After 1979, money politics, vote buying, and selling have become the center stage in our political and electoral activities. The situation of money politics, vote buying, and selling was even worse in 1993 as the phenomenon took firm roots in the political activities of contestants. The campaign for the 1993 general elections demonstrated excessive use of money during the party primaries and Presidential elections, even when the government conducted the election under the supervision of the military.

In the same vein, money politics and vote buying and selling reached their pinnacles in the election that ushered in the 1999 democratically elected government. It later extends to the Civilian-Civilian transition elections of 2003, 2007, 2011, and 2015. In 2019, money politics, vote buying, and selling assumed a frightening dimension at the Presidential Primaries, where some Presidential aspirants bribed many of the delegates with dollars. According to Sahara reporters, more than 3,000 delegates received thousands of dollars as bribes from some presidential aspirants ranging from $2,500 to $9,000 each in exchange for votes. Now, this ugly trend has become a national embarrassment due to the inability of political parties to organize their political activities decently, especially during political electioneering campaigns. Parties and their candidates have demonstrated that campaigns based on manifestoes, acceptability, and integrity of those vying for public offices are no longer enough to guarantee electoral victory resulting in vote-buying. Besides, the willingness of the voters to sell their votes to the highest bidder is another emerging face of the commercialization of electoral processes in Nigeria. This disturbing trend or practice is detrimental to the electoral process in Nigeria. To overcome money politics, vote buying, and selling, we need joint efforts from the government, CBN, and EFCC. Nigeria also needs a new value system and re-orientation that safeguard our commitment and confidence in the government. Hence, if power and money determine electoral choices, constitutional guarantees of democratic freedom and equality will no longer be productive. Thus, the new currency options suggested by CBN can help to reduce the threat of money politics, vote buying, and selling our democracy. If CBN fails to monitor and implement the new currency policy, it will ruin the chances of strengthening our democratization process. In turn, it will collapse and prevent electorates from reaping the dividend of democracy.

Buying and selling votes is electoral fraud. It is electoral malpractice and unlawful interference with the process of our election. There is no doubt that money politics and vote-buying threaten democratic governance in Nigeria. It is very doubtful that we can eradicate money politics, vote buying, and selling in Nigeria. However, there should be at least some mechanisms by which we can minimize its negative consequences on Nigeria’s democracy.

We call on the Enforcement Committee of the CBN, with the support of EFCC, security agencies, and the Nigeria Police, to halt the abuse of the national currency before it is too late. Wedding venues and social engagement spots should be the prime targets of the enforcement campaign. There is a need for a change in public attitudes toward money. And we should sustain such attitudes using different connections and social media platforms, print and electronic, as well as the opinion of our social media influencers. The National Orientation Agency (NOA) at the federal and state levels should play a significant role in the campaign against the abuse of money. There is a need to restore confidence in our national currency. The effort by the CBN should go along with restoring the value of money and bringing down the inflation rate.

Rev. Ma, S.J, is a Jesuit Catholic priest and doctoral student in public and social policy at St. Louis University in the state of Missouri, USA.