ABUJA, Nigeria –
Nigeria launched newly designed banknotes on Wednesday, a move the West African nation’s central bank says will help curb inflation and money laundering.
The newly developed denominations of 200 (45 US cents), 500 ($1.10) and 1,000 naira ($2.20) would also foster financial inclusion and economic growth, said Godwin Emefiele, governor of the Bank central Nigeria.
Experts, however, are skeptical of such results in a country that has battled chronic corruption for decades, with government officials known for looting public funds causing greater hardship for many struggling with poverty.
Nigeria’s currency hasn’t been redrawn in 19 years and the new initiative is the latest ushered in by policymakers in Africa’s largest economy in their quest for a cashless and more inclusive economy.
The naira is “long overdue for a new look,” Nigerian President Muhammadu Buhari said at the launch. The new banknotes designed in Nigeria and featuring enhanced security “will help the central bank design and implement better monetary policy objectives”.
More than 80 percent of the 3.2 trillion naira ($7.2 billion) in circulation in Nigeria is outside commercial bank vaults and in private hands, Emefiele said. Last month, regulators announced a January 31 deadline for old banknotes to be used or deposited in banks.
With inflation at a 17-year high of 21.09%, driven by rising food prices, Emefiele said the new banknotes would “bring the accumulated currencies back into the banking system” and help the central bank regain control of the money used in the country.
“The redesign of the currency will also help in the fight against corruption as the exercise will reign in the highest denomination used for corruption and the movement of such funds out of the banking system could be easily monitored,” the central bank chief said.
Analysts, however, say the newly designed banknotes would yield little or no results in managing inflation or fighting corruption in the absence of institutional reforms.
“If you want to curb money laundering, your financial system must be better; if you want to curb ransom payments, your security must be better; if you want to curb inflation, the level at which the total money supply in the economy is growth has to slow down, so it’s not about cash,” said Adedayo Bakare, an analyst at Money Africa based in Lagos.
Bakare said the move by the Nigerian central bank is at best an “expensive process that will cost the public a lot of pain due to the short period” it takes to use or deposit cash in circulation.
At least 133 million people, or 63% of Nigerian citizens, are multidimensionally poor, according to government statistics.
“It could potentially slow down the economy if people don’t have cash and people can’t exchange their money for new banknotes at a fast rate,” he said. “You can’t phase out cash without fixing financial inclusion or electronic payment and that too.”