Nigeria’s Cash Crunch and e-Naira’s ‘Emi Lokan’ Moment, By Abdulrahman Abdulraheem

Nigeria’s Cash Crunch and e-Naira’s ‘Emi Lokan’ Moment

By Abdulrahman Abdulraheem

“Nothing is more powerful than an idea whose time has come.”

– Victor Hugo

When the Presidential candidate of the All Progressives Congress (APC), Asiwaju Bola Ahmed Tinubu, made the famous ‘Emi Lokan’ (It is my turn) statement in Abeokuta, Ogun state capital, days before the party’s primaries last year, to underscore the fact that 2023 is his turn to serve in the highest office in the land, Nigerians reacted on the basis of their individual sentiments, bias, and emotions at that time. While the neutrals saw the statement as mere politicking, his critics found his sense of entitlement as needless and unpatriotic. His supporters however affirmed his rights to so declare.

The overwhelming majority of Nigerians however did not see beyond that day in the sense that his words would contribute to the country’s future vocabulary. A former president, Chief Olusegun Obasanjo, was however an exception because months later, when he met Tinubu he told him that with the iconic address he made to Ogun state delegates that day, he had added three crucial words to the country’s political lexicon. And those words will continue to be deployed in official and unofficial quarters via written and verbal communications. Aside Emi Lokan, the two other words according to Obasanjo were Olule (he crashed) and Eleyi (this one).

The ongoing chaos across Nigeria about naira scarcity and the fact that Nigerians have a viable option they are not using is another opportunity to deploy Tinubu’s ‘Emi Lokan’ (intellectual) property and say ‘e-Naira Lokan.’

e-Naira is not the first and may not be the last. But as I type this, it is the best, the safest, the fastest, the cheapest and most convenient option, most importantly, it is available at the click of a finger. Therefore, suffering for long hours in banking halls and ATMs, paying exorbitant charges to collect cash from the few Point of Sale (POS) operators willing to dispense is like going hungry while working and living on a food plantation with plenty options.

Evolution of the Nigerian Medium of Exchange/Currency

Like every other aspect of her national life, the Nigerian currency has evolved over time, moving from one stage of development to another. After the era of trade by barter, cowry shells were widely used as a medium of exchange until 1907 when the British West African pound was introduced. This was in use until 1958 when the Nigerian pound was introduced.

Manilas, beads, bottles and salt were the other items that were used as medium of exchange aside cowry shells before the coming of the Pounds.

The first major currency issue in Nigeria was undertaken sequel to the colonial ordinance of 1880 which introduced the Shillings and Pence as the legal tender currency in British West Africa. The units of coins managed by the Bank of England were one shilling, one penny, 1/2 penny and 1/10 penny and were distributed by a private bank, the Bank for British West Africa till 1912.

From 1912 to 1959, the West African Currency Board (WACB) issued the first set of banknotes and coins in Nigeria, Ghana, Sierra Leone and the Gambia. The highest banknote denomination was one pound, while the one shilling coin was the highest coin denomination.

On 1st July, 1959 the Central Bank of Nigeria (CBN) issued Nigerian currency banknotes, while the WACB-issued banknotes and coins were withdrawn. It was not until 1st July, 1962 that the currency was changed to reflect the country’s republican status. The banknotes which bore the inscription, ’Federation of Nigeria‘, now had, ‘Federal Republic of Nigeria,’ inscribed at the top. The notes were again changed in 1968 following the reported misuse of the currency banknotes during the civil war between 1967 and 1970.

Sequel to the decision by the government to change from the metric to decimal, the name of the Nigerian currency was changed in January, 1973. The major unit of currency which used to be £1 ceased to exist and the one naira which was equivalent to ten shillings became the major unit, while the minor unit was called the kobo, hundred of which made one naira.

On the 11th of February 1977, a new banknote with the value of twenty naira (₦20) was issued. It was the highest denomination introduced at the time as a result of the growth of the economy, the preference for cash transactions and the need for convenience.

The banknote was the first in Nigeria to bear the portrait of a prominent Nigerian citizen, the late Head of State, General Murtala Ramat Muhammed (1938-1976). The note was issued on the 1st anniversary of his assassination which was February 13, 1977 . He was declared a national hero on the 1st of October, 1978.

On the 2nd of July, 1979, new currency banknotes of three denominations, namely ₦1, ₦5 and ₦10 were introduced. These notes were of the same size i.e. 151 X 78 mm as the ₦20 note issued on the 11th of February, 1977. In order to facilitate identification, distinctive colours were used for the various denominations.

The notes bore the portraits of three eminent Nigerians, who were declared national heroes on the 1st of October, 1978. The engravings at the back of the notes reflected various cultural aspects of the country.

In April 1984, the colours of all the banknotes in circulation were changed with the exception of the 50 Kobo banknote to arrest the currency trafficking prevalent at the time. In 1991, the 50K and ₦1 were both coined.

In response to the expansion in economic activities and to facilitate an efficient payment system, the ₦100, ₦200, ₦500 and ₦1000 banknotes were introduced in December 1999, November 2000, April 2001 and October 2005 respectively.

On 28th February, 2007, as part of further economic reforms, ₦20 was issued for the first time in polymer substrate, while the ₦50, ₦10 and ₦5 banknotes; as well as ₦1 and 50K coins were reissued in new designs, and the ₦2 coin was introduced.

On the 30th of September, 2009 the redesigned ₦50, ₦10 and ₦5 banknotes were converted to polymer substrate following the successful performance of the ₦20 (polymer) banknote. Thus, all lower denomination banknotes were now printed in the polymer substrate.

Finally, the CBN, as part of its contribution towards the celebration of the nation’s 50th anniversary of Nigeria’s Independence and 100 years of its existence as a nation, issued the ₦50 Commemorative polymer banknote on the 29th of September, 2010; and the N100 Commemorative banknote on the 19th of December, 2014 respectively.

Naira Redesign Policy and Cash Crunch

Aside the introduction of e-Naira notes and cash withdrawal limit, the major masterstroke in the justifiable drive to move Nigeria into full cashless economy and drive down inflation has been the laudable naira redesign policy which is however recording certain unintended consequences.

As part of efforts to clean up the economy and save the Naira from the free fall it has experienced in recent years, the CBN announced the introduction of new N200, N500 and N1000 notes late last year. While the new notes were launched by President Muhammadu Buhari on November 22, 2022, customers were supposed to take advantage of about a four-month window to return their old naira notes to the bank.

But the last few weeks have been about sorrow, tears and blood for Nigerians owing to the scarcity of both the old and the new naira notes. Banking halls, ATMs and POS centres have become an eye sore because of the rush and desperation to access cash that is now very short in supply. People now go to bed hungry because they have money in their accounts but can’t access it and too many Nigerians are still obsessed with carrying cash in this jet age!

To make matters worse, internet banking has been a disaster recently. Probably due to too many people trying to use it at the same time, bank networks are no longer reliable and more often than not, transfers fail to deliver and people are stranded.

e-Naira Says “Emi Lokan”

In the face of this chaos, the CBN had since October 2021 introduced the e-Naira to the Nigerian public. It was launched with fanfare by President Buhari. While it was greeted with skepticism and doubt at the initial stage, Nigerians are beginning to embrace it more now. But rather than being obsessed with cash that is not there and internet banking that is neither consistent nor reliable, this is the best time to fully embrace the e-Naira and live in peace and comfort. This is because e-Naira eliminates all the routine challenges associated with regular banking. And the ongoing pandemonium would have been easily averted if Nigerians had listened to CBN governor, Godwin Emefiele, immediately he made the clarion call in October, 2021.

Talking about what Nigerians who are not yet on the e-Naira platform are missing, the CBN’s Director of Information Technology, Mrs Rakiya Muhammad, in a chat with the Eonomic Confidential said: “The e-Naira is a technology that eliminates or try to minimise intermediaries between two people conducting transaction. So, it is easier, faster and cheaper and all that.”

She continued: “Now, I have been talking about people who are privileged and who have internet connectivity, they have smart phones. In Nigeria, even though we are celebrating the uptake of mobile technology, mobile phones and all that but we do know that only about 20 to 30% of our people, according to statistics, have smart phones which means the rest of the people cannot download the speed wallet even though we do have a web wallet, if you go to www.mywallet.enaira.com you will be able to create wallet, you will be able to do everything like an internet enabled computer.

“So, we now realised that Nigerians who lack smart phones have other kind of phones, so we partner with the telecom companies. For now if you have MTN or 9mobile you can actually dial *997 and you will be able to create your e-Naira wallet, you will be able to transfer money, buy data or airtime on any kind of phone.
And we are working to onboard Airtel and Glo. So, as soon as they come onboard any kind of line you use, you can be able to access e-Naira without having a smart phone or being connected to the internet.

“We launched that in Kano sometimes in July last year because we realised that they have large population of people who are largely unbanked, they don’t have BVN.”

Most importantly, she concurred that the currency scarcity and the noise around it would have been averted if majority of Nigerians had seen the light and enrolled on e-Naira platform long before now.

Among other benefits, she said e-Naira provides secure and cheaper diaspora remittance option and makes such transactions are faster to ensure that individuals get more value for every Naira they earn. As regards local payments, she also said people can boycott the queues and pay taxes and bills from the comfort of their homes in an easier and dependable fashion.

The Director also have words for those worried about the safety and security of banking details, assuring that the transparency in the system makes everything traceable.

She noted that individuals can monitor their e-Naira wallet, check balances and view transaction history with ease and the platform allows users to send money to one another through a linked bank account or card.

She therefore encouraged Nigerians to stop the craze for cash and download e-Naira or use any of the codes to join and start buying, selling, paying bills and all that.

Also speaking on the naira scarcity and how e-Naira can help, the Permanent Secretary in the Ministry of Humanitarian Affairs, Disaster Management and Social Development, Dr Nasir Sani-Gwarzo, told PRNigeria that on the recommendation of the CBN, his ministry had enrolled about 1.6 million beneficiaries of its social intervention schemes into the e-Naira platform. To underscore how easy and efficient the e-Naira is, he added that the entire number was registered in less than one month!

On the cash crunch in the system, he said: “Nigerians are only complaining about the cashless system because they have not fully embraced the e-Naira but the time will come that everyone will be on it and we will start asking ourselves why didn’t we do this decades earlier?”

According to him, the e-Naira has a lot of advantages for which Nigerians will be grateful to the CBN when they fully embrace the idea.

Listing some of the advantages, he said it is easier and cheaper to operate, no bank charges, bottlenecks and intermediaries and unlike commercial banks no chance of depositors losing their monies since the CBN cannot fold up.

Indeed, there is time for everything in life. A time to wake up and a time to sleep. A time to be born and a time to die.

Cowries have had their time just after trade by barter. Even manilas, beads, bottles, naira notes, and polymer notes have had their time… But this time, e-Naira Lokan…

Abdulrahman Abdulraheem is Managing Editor Economic Confidential