When Godwin Emefiele was appointed the substantive Central Bank Governor in June 2014 to replace Mrs. Sarah Alade, many people were not too enthused about it. For Goodluck Jonathan, Emefiele was a safe pair of hands who wasn’t likely to rock the boat like Sanusi Lamido Sanusi.
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Nobody needed to inform Emefiele that his brief as head of the Central Bank did not include policy statements that painted the government in bad light. Alhaji Sanusi had to be sacked because he was behaving like a politician, or so the government of the day wanted us to believe.
Godwin Emefiele had lots of experience in the banking sector. He had reached the very top at Zenith Bank. So the position of Nigeria’s number 1 banker felt like putting a round peg in a similarly shaped hole. He fitted perfectly.
There are lots of things one could say about his performance as governor of the Central Bank in the last 4 years. He has gone about his job without frills. This is exactly what Nigerians expect from bankers.
But if I have to score him, I would be hard-pressed to score him above average. Soon Nigeria News would take a good look at his stewardship. For now, though, the vexing issue is the absence of new 100 Naira notes in the country.
There is this sight that welcomes me each time I open my wardrobe. On the edge of the top shelf are piles of mutilated 100 Naira notes. I can’t spend them because they are so ugly they make an old witch look like a beauty queen. I feel I would be cheating somebody by giving them those notes as payment. Don’t ask me how I managed to get so many bad notes.
At first, I thought I was just unlucky. But as it turned out, the problem is endemic across the country. Traders and other businesses that depend on cash for everyday transactions are not finding the situation funny.
Many times, simple transactions are canceled due to the absence of these notes to give others as change. The ones available are unrecognizable as legal tender that even some banks reject them. But somehow, they are still in circulation.
Replacing old notes
The Central Bank is charged with replacing notes with new ones. Everybody knows that. In the case of the
N100 notes, nobody can remember when new notes were printed and released to the public. Ask those people who love spraying money at weddings and other occasions. They now have to do their thing with other denominations. 100 notes are the most popular for spraying; in case you are wondering.
So the question is, why has the Central Bank refused to introduce new notes? And for that matter, why are these ugly notes still in circulation.
The process of replacing old notes is rather simple. The commercial banks are supposed to collect these notes, sort and send them to the Central Bank. When the apex bank receives these bad notes, they are destroyed and an equal amount of new ones introduced into the economy through the commercial banks.
That is straightforward, right? But this is Nigeria where even the most mundane of tasks are made to look like some complex trick by an accomplished magician. Somebody somewhere is not doing their job.
Passing the buck
Cheerleaders for the Central Bank are quick to blame the commercial banks for not bringing these notes to the Central bank to be replaced. Some say it is one of the cut-saving measures by the banks to increase profits. The gist is that these banks are charged a fee by the Central Bank anytime they take these mutilated notes to the CBN to be replaced. The banks would rather not pay that fee.
Apart from that, there is the issue of having to employ people to do the job of collecting and sorting the bad notes for onward transmission. The commercial banks would rather keep the money they would’ve had to pay the people employed to do that job. Protecting the bottom line, profits, is the important thing here.
If this is true, then this goes to the core of one of the problems I have with appointing people like Godwin Emefiele to such jobs. One of the functions of the Central Bank is to ensure banks follow laid down rules. If there is a breach, stiff sanctions are applied.
But somebody like Emefiele would be reluctant to impose any stiff sanctions on the banks. The heads of these banks and directors are all his friends. They have fraternized together for so long they are practically family. It requires a stern, principled man to sanction close friends. At best, Godwin Emefiele can only appeal to them and if they don’t obey, the worse they get is an extension.
A principled, no-nonsense Central Bank Governor would have no problem punishing erring banks.
That is what Sanusi was very good at. He didn’t care whose feelings were hurt. Sanusi didn’t waste time cancelling some spurious bank charges when he was in charge. Guess what Emefiele did when he was appointed? He reverted those charges.
He must have seethed with fury as CEO of Zenith Bank when Sanusi’s policies were cutting out the easy money he and his peers were making for their shareholders.
The blame for the absence of new
N100 notes should be placed firmly at the doorstep of the Central Bank. They can compel the banks to mop up those old notes from circulation if they weren’t so gutless.
Having so many bad notes in circulation is not good for the image of the country.
Imagine a foreigner seeing these notes and the conclusion they’d draw! Of course, they’d conclude that the country is in such a bad shape that in addition to the poor power supply, bad roads, run down airports and sub-standard schools, we cannot even print ordinary bank notes.
Wasn’t the Nigeria Security Printing and Minting Plc established to print new currency notes for the country? What the heck is it meant for now? To give appointments to political jobbers? By the way, Godwin Emefiele is the chairman of the board of that glorified printing press.