Finance Minister Dissociates Herself From Central Bank's Proposed Naira Redesign

On Friday, Zainab Ahmed, Nigeria's Minister of Finance, Budget, and National Planning, voiced her disapproval of the Central Bank of Nigeria's redesigned naira banknotes (CBN).

On Wednesday, the CBN stated that beginning on December 15, newly redesigned N100, N200, N500, and N1000 naira notes would be entering circulation.

Godwin Emefiele, governor of the Central Bank of Nigeria, claimed the move was made to combat terrorism financing and the hoarding of banknotes by members of the public, with statistics revealing that more than 85% of cash in circulation were outside the vaults of commercial banks.

Ahmed, however, stated that her department was not briefed on the CBN's decision and that the new policy could have severe effects on the naira's value relative to other currencies.

During the 2023 budget defence session, the minister made these remarks in response to inquiries from senators serving on the finance committee.

Just two days after the CBN announced the policy, its impacts on the value of the Naira relative to the US dollar were already being felt, according to Senator Michael Opeyemi Bamidele (APC, Ekiti).

He stated, "Due to the rush to exchange starched naira notes for other currencies, mainly the US dollar, the value of the Naira has climbed from N740 to N788 just two days following announcement of the programme."

"The strategy may be well-conceived, but the timing is terribly inappropriate, going by facts on the ground," he said, "since the naira may collapse to as low as N1,000 to a US dollar by January 31, 2023, slated for full implementation of the scheme."

The minister replied that she had only learned about the idea from the news.

"Members of the Senate, we at the Ministry of Finance were not consulted by the Central Bank of Nigeria (CBN) about the proposed revamping of the naira and so cannot remark on its merits or lack thereof.

However, as a Nigerian in a position of privilege within Nigeria's fiscal management, I can say with confidence that the policy as it has been implemented at this moment will have lasting and negative effects on the exchange rate of the naira against major world currencies.

"I shall, however, request to this committee to invite the CBN governor for appropriate answers as regards merits of the intended policy and the rightness or otherwise of its implementation today," she said.