Economists and public policy experts have commented on the disagreement between the Governor of the Central Bank of Nigeria, Mr. Godwin Enefiele, and the Minister of Finance, Budget and National Planning, Zainab Ahmed, over the proposed overhaul of the currency, claiming that it was a reflection of fiscal policy and monetary policy dissonance.
Emefiele had announced on Wednesday that the bank would release redesigned 200, 500 and 1,000 naira notes by December 15, 2022.
But responding during a defense of the budget in the Senate on Friday, Ahmed said the CBN did not consult her or other ministers when developing the policy.
The Minister said: “As a Nigerian privileged to be at the pinnacle of Nigeria’s fiscal management, the policy as it is deployed at present portends serious consequences for the value of the naira against to other foreign currencies.
“I will, however, request this committee to invite the Governor of the CBN for the required explanations regarding the merits of the planned policy and whether or not it is right to implement it now.”
CBN denounces the minister
In response to the minister’s claims that she was not swept away, the CBN said it had followed law and due process in the naira overhaul project, which it said was due 12 years .
Speaking to a group of journalists in Abuja on Friday, CBN Spokesperson Mr. Osita Nwanisobi expressed surprise at the Minister’s assertion, pointing out that the apex bank remains a very rigorous institution that follows the due process in his political actions.
According to Nwanisobi, CBN management, in accordance with the provisions of Section 2(b), Section 18(a) and Section 19(a)(b) of the CBN Act 2007, duly requested and obtained the approval of the President, Major General Muhammadu Buhari (Retired), in writing to redesign, produce, issue and distribute new series of N200, N500 and N1,000 banknotes.
Nwanisiobi said the overhaul of the currency was in the general interest of Nigerians, reiterating that some people were hoarding significant amounts of naira outside the coffers of commercial banks.
This trend, he said, should not be encouraged by anyone who wishes good for the country, noting that the management of the currency has faced several challenges threatening the integrity of the naira, the CBN and the country. .
“Each first-rate central bank is committed to preserving the integrity of local legal tender, the efficiency of its supply, as well as its effectiveness in the conduct of monetary policy,” he said.
Regarding the timing of the overhaul, Nwanisobi explained that the CBN had even waited too long, given that it had taken 12 years to complete an overhaul when the common practice globally was for central banks to overhaul , produce and distribute a new local legal currency. every five to eight years.
While assuring Nigerians that the currency overhaul was purely a central banking project and not targeted at any group, the CBN spokesperson expressed optimism that the effort would, among other goals, deepening Nigeria’s efforts to entrench a cashless economy in the face of increasing eNaira minting.
This, he noted, is in addition to combating acts of terrorism and kidnapping due to people’s access to large volumes of money outside the banking system used as a source of funds for the payment of ransoms.
Nwanisobi urged Nigerians, regardless of status, to support the naira overhaul project, saying it was for the greater good of the economy.
Article 18 of the CBN law seen by one of our correspondents authorizes the apex bank to organize the printing of banknotes and the minting of coins. Section 18(b) authorizes the CBN to “issue, reissue and exchange banknotes and coins at the offices of the bank and at such agencies as it may, from time to time”.
Article 20 states that the currency issued by the bank “shall be lawful tender in Nigeria and face value for payment of any amount”.
It does not provide for exclusive consultation with the Minister of Finance.
However, experts believe the disagreement reflects poor coordination between monetary and fiscal policy managers, noting that the situation portends danger to the economy.
An economics professor and former central banker, Jonathan Aremu, said there was clearly no coordination between fiscal and monetary policy makers and called for the CBN Act to be amended to rectify what he described as “anomalies”.
“If the CBN can embark on such a huge project without the knowledge of the finance minister, it means there is no coordination between them,” he said.
Aremu agreed that the CBN Act gave autonomy to the apex bank to print currency, but noted that the bank was no longer independent due to the governor’s alleged involvement in politics.
“It does not appear that the Governor of the CBN needs to seek approval from another person in the area of money printing, but the autonomy of the Governor is questionable in the public eye due to his involvement in politics. . It is important to repeal the CBN Act to correct some of these anomalies,” he said.
The chief executive of the Center for Promoting Private Enterprise, Dr Muda Yusuf, said the minister should have known about the design of the currency, regardless of what the CBN law said.
He said: “It means the two work in silos, always in parallel, which is not good for the economy.”
“The Ministry of Finance is closest to the CBN, and I don’t think there is absolute independence even in the CBN law. As things stand, the National Assembly may need to review the CBN law.
He explained that one or the other should inform the other of their policies as they were closely related.
“Some of the monetary policies are already affecting fiscal policies. Go to ports and see how they affect fiscal issues. So I don’t think what the CBN is doing is within the spirit of the law,” Yusuf noted.
Agbakoba and Moghalu disagree
A maritime lawyer, Olisa Agbakoba, however, supported the CBN, insisting that the minister and Emefiele were responsible for two separate important functions.
He said: “The minister is responsible for fiscal policy on how the federal government spends money, and the main tool used by the finance minister is the budget. The minister does two things: increase or decrease spending.
“The CBN Governor, on the other hand, does something different called monetary policy regulation. The central bank regulates, which is very important, inflation. Thus, the central bank is independent of the Minister of Finance. He does not appear and is not under his orders.
Agbakoba also expressed concern over the minister’s comment, saying he found it rather shocking that she made such a statement knowing full well that they were leading two different portfolios.
He added: “The finance minister’s comment is quite surprising as the central bank governor is not required to consult her under the CBN Act.
“It’s like telling the Chief Justice of Nigeria to consult the Minister of Justice before he makes a decision; it does not make sense. It is good that the tax and monetary authorities speak, but the CBN is not required to consult the minister. This is just how the finance minister will not consult the CBN when planning his budget.
“The Minister of Finance and the Governor of the CBN serve two different functions, so I was shocked when I saw her say that she had not been consulted.
“She was trying to score a point as the country tried to settle a challenge. Politics is not even just for finances; it is also a matter of national security. There’s a lot of money out of CBN’s control, stolen money, money in the hands of kidnappers and the rest.
“This may be the most important monetary policy decision the government has ever made. Anyone who understands monetary policy would applaud the governor, he wants to weed out bad money.
“He wants people who have acquired money illegally not to be able to use the money with them. The Economic and Financial Crimes Commission also issued a warning that they were monitoring. The CBN Governor also waived the sanction for people who want to deposit money in banks. He asked them to bring the money back into the system, and then they can now ask questions about where the money came from.
A former CBN Deputy Governor, Professor Kingsley Moghalu, for his part said that Ahmed’s comment “should not mislead anyone into thinking that the CBN owes him this kind of information”.
He said the apex bank only needed the president’s approval for the project.
“This is why the Minister of Finance mistakenly considers himself entitled to be informed or consulted. The CBN should now focus on the implementation of this policy. This will impose enormous pressures on the banking system,” he added.
AGF on diversion
Meanwhile, the Federation’s Acting Accountant General, Okolieboh Sylva, has come under fire for an alleged “unremitted” fee deducted from payment platform Remita on the Federation’s account.
Sylva came under intense scrutiny when he appeared before the Senate Finance Committee to defend the office’s budget on Friday.
Unable to provide satisfactory answers to questions raised by lawmakers about the disbursements and use of the billions of naira allegedly collected through the payment platform over the past 10 years, Senate Finance Committee Chairman Solomon Olamilekan said ordered a full-scale investigation to unravel the mystery surrounding the unreturned funds.
Sylva explained that although his office was in charge of the Remita payment platform, he had not received any amount from the service fee, which he said was shared between CBN, commercial banks and the service provider, SystemSpec.
The explanation did not sit well with the senators, who said they found it “strange” that the accountant general’s office received nothing from the billions of naira deducted through its own platform.
The senatorial formation then ordered a full investigation into the file and summoned Emefiele, the AGF office and the service provider to appear before it inevitably on November 16, 2022, to give explanations.