5.7 C
Saturday, December 3, 2022

Nigeria issues new notes to help curb corruption business and economy news

The regulator has said that the deadline for using the old notes or depositing them in banks is January 31.

Nigeria has launched currency notes of a new design, a move the West African country’s central bank says will help curb inflation and money laundering.

Experts, however, are skeptical about such results in a country grappling with decades-old corruption, with government officials known to launder public funds, causing further hardship for many who live in poverty.

Launched on Wednesday, the new denominations of 200 ($0.46), 500 ($1.15) and 1,000 naira ($2.30) are the first time Nigeria’s currency has been redesigned in 19 years. Banknotes will come into circulation by the middle of December.

Nigerian President Muhammadu Buhari said at the launch, “Naira” is long overdue for a facelift. The new paper notes, designed in Nigeria and featuring enhanced security, “will help the central bank to better design and implement monetary policy objectives”.

More than 80 percent of the 3.2 trillion naira ($7.2bn) in circulation in Nigeria is outside the vaults of commercial banks and in private hands, said Godwin Emefele, governor of Nigeria’s central bank.

With inflation at a 17-year high of 21.09 per cent, driven by rising food prices, he said the new notes would “bring hoarded currency back into the banking system” and give the central bank control over the use of funds. will help to achieve. Country.

The regulator had last month announced a deadline of January 31 to use or deposit the old notes in banks.

“The currency redesign will also help in the fight against corruption as the exercise will rule out high denominations used for corruption and the movement of such money through the banking system can be easily tracked,” Emefile said.

However, analysts say that in the absence of institutional reforms, the new notes will do little or nothing to manage inflation or fight corruption.

“If you want to curb money laundering, your financial system needs to be improved; If you want to curb ransom payments, the security has to be better; If you want to curb inflation, the level at which the total money supply in the economy is growing has to slow down – so it is not about cash,” said Adedayo Bakare, an analyst at Lagos-based Money Africa.

The central bank chief said the newly designed denominations would also boost financial inclusion and economic growth.

But Bakare said the move by Nigeria’s central bank is a “costly process that will cause great pain to the public because of the short period” required to either access or deposit cash in circulation.

At least 133 million people, or 63 percent of Nigeria’s citizens, are multidimensionally poor, according to government figures.

“If people don’t have cash and people can’t exchange their cash for new notes at a faster rate, it could potentially slow down the economy,” he said. “You cannot phase out cash without fixing financial inclusion or electronic payments and that too.”

Latest news
Related news