It seems that Nigeria is once again implementing a series of questionable monetary policies with its new Naira plan. This country believes that by manipulating its monetary policies and abandoning its old currency, it can somehow clean up its underlying mess. The announcement of the ‘Strategic Agenda for the Naira’ by the Central Bank of Nigeria has generated a healthy national debate, but it is important to examine the potential consequences and implications of this new policy.
The four-point agenda aims to better anchor inflation expectations, strengthen public confidence in the Naira, make conversion to other major currencies easier, and eliminate the tendency for currency substitution. While these goals may seem promising on the surface, it is important to question how effective they will be in reality.
Currency redenomination, which involves removing zeros from a currency or moving decimal points, is being utilized to correct perceived misalignment in the currency and pricing structure. This process will result in a new unit of money called the “New Naira,” while the old currency will be referred to as the “Old Naira.” However, the reliability and credibility of this new currency is yet to be seen.
During the transition period, both the “Old Naira” and the “New Naira” will be accepted, allowing individuals to choose which currency they prefer to use. The intention behind this dual system is to allow people to become familiar with the conversion and understand the advantages of transacting in the “New Naira.” However, the success of this conversion heavily relies on the people’s trust in the new currency, which may be difficult to achieve.
Furthermore, the introduction of the “New Naira” coins and notes raises questions about their design, appearance, and security features. Will the new currency be readily accepted and trusted by the public? Will it truly promote efficiency in pricing and payments systems, or will it simply create confusion and inconvenience?
While the Central Bank of Nigeria claims that these measures will reduce the cost of production, distribution, and processing of currency, it is important to wonder if the potential benefits outweigh the potential risks. A key concern is the impact on the population’s purchasing power. By eliminating higher denomination notes with lower purchasing power, there is a possibility that the value of people’s money will decrease, leading to a decline in their standard of living.
Nigeria, Nigeria, Nigeria! Oh, how you always manage to surprise us with your bizarre and mind-boggling monetary policies. Just when we thought you couldn’t get any more outrageous, you hit us with your latest Naira plan. And let me tell you, it’s far from impressive.
It’s like watching a clown juggling fire while riding a unicycle on a tightrope, only to fall flat on their face and set the whole circus on fire. Your monetary policies are the definition of a disaster waiting to happen.
You see, dear Nigeria, a mess is still a mess, no matter how much you try to dress it up. Your attempts to revamp your monetary system are nothing but a desperate cry for attention. But guess what? Attention is not what you need right now. You require serious, rational, and effective solutions – something you seem to be lacking.
Your new Naira plan aims to streamline your multiple exchange rates, eliminate restrictions on the use of foreign currencies, and encourage foreign direct investments. On paper, it sounds like a dream come true. But in reality, it’s just a ticking time bomb.
Why? Well, let’s start with your multiple exchange rates. Why on earth would anyone think that having multiple rates is a good idea? It’s like opening the floodgates and letting chaos reign. Your lack of consistency creates confusion, encourages corruption, and suffocates any hope of economic stability.
Do you really believe that foreign direct investment will save you from your self-inflicted wounds? Newsflash, my dear Nigeria, real investors seek stability and predictability. They want assurance that their investments won’t crumble at the slightest breeze. But how can you promise stability when your own monetary policies are as unpredictable as a tornado?
I can’t help but think that this Naira plan is just another attempt to distract the masses from your deeper issues. It’s like putting a flashy band-aid on a festering wound. It might distract for a moment, but the underlying problem remains untouched.
Nigeria, it’s time to wake up and smell the coffee. Your monetary policies are not just bizarre; they are a recipe for disaster. You need to address the root causes of your economic woes, tackle corruption head-on, and promote transparency and accountability. Only then will you have a fighting chance to get back on your feet.
So, please, stop wasting your time with these cosmetic changes and focus on what truly matters. You owe it to your citizens, your future generations, and the world at large. Nigeria, it’s time to step up and face the music. The stage is set, the spotlight is on you – now show us what you’re made of.
Old Naira (I.E Existing Naira as at today)
New Naira (as from January 2024 policy would be fully implemented by CBN)
50 kobo Half kobo**
N 1 = 1 kobo coin
N 2 = 2 kobo coin
N 5 = 5 kobo coin
N 10 = 10 kobo coin
N 20 = 20 kobo coin
N 50 = 50 kobo coin or note***
N 100 = N 1 note
N 200 N 2 note**
N 500 = N 5 note
N 1000 = N 10 note
N 2000* = N 20 note
How will it work?
The ‘new Naira’ coins and notes will be different from the existing ones i.e. in design, appearance, security features, etc.
All Naira assets and liabilities (including bank deposits), prices, fees, rents, and contracts (including salaries and wages) will be re-denominated by dropping two zeroes or moving two decimal points to the left.
During the ‘transition period’ prices will be quoted in both the ‘new Naira’ and the ‘Old Naira’ and everyone will choose whether to pay in the new or old Naira.
These five months will be allowed so that everyone will get familiar with the conversion, and it will become self-evident to everyone why he/she would prefer to transact in the ‘new Naira’ rather than the ‘old Naira’.
For example, if a bag of garri sells for N2,000 (old Naira), the price in ‘new Naira’ will automatically be N20. The customer will choose to pay either N2000 in old Naira or N20 in the ‘new Naira’.
In the supermarkets and formal markets, prices will be displayed in both ‘old’ and ‘new’ Naira.
In the informal markets where prices are negotiated, the negotiation could be done in the ‘old Naira’ as usual and converted into the ‘new Naira’ if the customer wishes to pay with the ‘new Naira’. This will ensure that prices do not rise due to rounding-up.
The five months are also needed for everyone (formal and informal sectors) to become fully familiar with the conversion. It will become obvious to everyone that N50,000 of the ‘old Naira’ has the same purchasing power as N500 of the ‘new Naira’.
The question then would be: why carry N50,000 of old Naira when N500 of the new Naira will buy you the same thing?
Consequently, if you have N50,000 in your bank account, it will automatically become N500 in the ‘new Naira’ i.e. if you want to withdraw in the ‘new Naira’ or you can still withdraw N50,000 in ‘old Naira’ during the transition period (January 2024).
Similarly, someone whose monthly salary is N50,000 can choose (during the transition period) whether to withdraw and spend the N50,000 in ‘old Naira’ or N500 in the ‘new Naira’. Both would buy him/her the same value of goods and services.
Examples of price equivalents in the new and old Naira could be:
Here are the changes that will take effect by January 2024 As planned by the Administration Of Bola Ahmed Tinubu
House rent (e.g. a flat in some parts of Nigeria) N5000 per month N50 per month
Stock price of a company Assume it is, say:
N20 or N80
20 kobo or 80 kobo
Airline ticket for domestic flight N12,500 = N125
Fuel Price N500 = N5
Exchange rate: N to US$ Assume it is say:
N125
Or N130
Or N100 to US$1.
N1.25 = US$1
Or N1.30 = US$1
Or N1 = US$1
This decision has been taken by the CBN by the directive of President Bola Ahmed Tinubu to reduce the suffering of Nigerians and also slow down inflation. If you have the old Naira start getting ready to switch to the new Naira, this message is meant to prepare Nigeria for the changes ahead.
It needs to be shared to ensure everyone is well prepared for the new Naira notes.
*Please share it to most platforms…*