In March 2023, the currency in circulation in Nigeria rose by N701.4bn to reach N1.6tn, a month after the Central Bank of Nigeria (CBN) reversed its policy on the naira redesign. Currency-in-circulation refers to all legal tender currencies in the hands of the public and in the vaults of the Deposit Money Banks, but outside the vaults of the central bank. The currency in circulation had dropped by 235.03% to N982.09bn in February 2023 from N3.29tn in October 2022 due to the naira redesign policy, during which N2.3tn was mopped up from circulation.
The policy, which aimed to redesign the N200, N500, and N1,000 notes, encountered severe backlash from the public, leading to violent protests and incidents of vandalism of bank facilities and PoS outlets. The poorest and most vulnerable members of the population were the hardest hit by the policy, according to a report by research firm Augusto&Co titled ‘Redesign gone wrong? – Costly cashless’. The report also criticized the CBN’s execution of the redesign project, stating that its performance appraisal would range from grossly unprepared to poorly perceived.
In October 2022, CBN Governor Godwin Emefiele had announced plans to redesign the old N200, N500, and N1,000 notes, citing challenges associated with currency management and the hoarding of banknotes by members of the public. However, due to the hardships the policy caused, some state governments sued the Federal Government over the naira redesign policy. The Supreme Court extended the legal tender status of the old notes until December 31, 2023, and ten days after the ruling, the CBN officially ordered commercial banks to comply with the verdict.
The surge in currency in circulation in March 2023 following the CBN’s reversal of the naira redesign policy highlights the importance of stakeholder engagement and careful execution of policies that impact the economy and citizens. It also underscores the need for policymakers to consider the implications of their decisions on the most vulnerable segments of society.
