The Legal Rights Or Power Of The Central Bank Of Nigeria To Redesign The National Currency
By Jimoh AbdulGaniy ADISA
ABSTRACT
The Naira redesign is put in place with the main intent of desisting from naira forging, and a nice strategy in respect of fiscal policy. In a similar fashion, the impacts of this policy on the majority of Nigeria economy has been noticed and observed that government in most developed nations/countries have redesigned their money to match their economic circumstances. The Central Bank of Nigeria has put this in place, all in a bid to alleviate excess of money supply, and strengthening monetary policy effectuality, and reinforce exchange rate of CBN. Hence, this article attempts to justify the legality of CBN to redesign the national currency.
INTRODUCTION
Currency redesign is generally aimed at achieving specific objectives, including but not limited to: mitigating counterfeiting, preserving the collective national heritage, improving security of bank notes, reducing the overall cost of currency management,and controlling currency in circulation. On October 26, 2022, the CBN announced plans to redesign and distribute new 200-Naira, 500-Naira and 1000-Naira bank notes to replace the existing ones. To make it a reality, Godwin Emefiele, Governor of the CBN, informed the country that this exercise has been approved by President Muhammadu Buhari and that the CBN will begin the distribution of the new notes by December 15, 2022, and said notes will be available for withdrawal by the public from commercial banks. The old notes will be used for transactions until January 31, after which only new notes will be legally recognized and used for transactions. It is in this light that this work appraises the given topic.
MEANING AND PURPOSE OF CURRENCY REDESIGN
Currency redesign denotes the process of revising the appearance of something (such as coins, treasury notes and bank notes) that is in circulation as a medium of exchange. It is generally set aside with the aims of developing safety of banknotes, reduction of counterfeiting, decreasing the overall cost of currency management, regulating currency in circulation, and maintaining the collective national legacy.
BRIEF HISTORY OF CURRENCY
Written source avers that West African Currency Board was liable for issuing currency notes in Nigeria from 1912 to 1959.Then, on 1st July 1959, the WACB was replaced with CBN which initiated the issuance of coins and Nigerian currency. Prior to the establishment of the West African Currency Board, Nigeria had used various forms of money including cowry shell, manilas, copper wires, and brass rods.
BRIEF HISTORY OF CENTRAL BANK
Research establishes that, an enquiry by the then colonial administration to probe banking practice in Nigeria made them appoint G.D Paton to probe on the Nigerian banking ambience, all in a bid to know the conditions for healthy banking operation.Consquent upon this,GD Patent report was birthed, and it equally serves as the basis for the 1st Banking Ordinance of 1952;which was designed to ensure orderly commercial banking to avert the establishment of nonviable bank.Subsequently,a draft legislation for the establishment of Central Bank of Nigeria was presented to the House of Representatives in March 1958 and the Act was fully enacted on the 1st of July,1959, which serves as incipient stage of CBN in Nigeria.
RATIONALE BEHIND CURRENCY DESIGN
The CBN claims that about N2.73 trillion of the N3.23 trillion currency in circulation in Nigeria, is outside the bank vaults; which equates about 85% of total note in circulation.Moreso, the Naira note is not safe as it ought to be, it very easy to forge the N500 and N1000 naira notes. The policy of currency design has raised arguments among lawyers, and other intellectual individuals; they are of the view that this policy yields no vital economic growth for the populace and it a distraction in the present economic situation. In furtherance of this, a report in 2020,CBN averred that, an actual amount of 67,265 pieces of dud notes with a minimal worth of N56.83 million was seized in 2020, revealing a 20.80% decrease in volume and 12.18% decrease in worth compared with 84,934 pieces valued at 64.71 million in 2019.The Global standard for number of counterfeits per million, is 100. The ratio of counterfeit notes to volume of banknotes in circulation was 13 pieces per million in 2020, compared to 20 pieces per million banknotes in 2019.In short, the CBN Governor cited money hoarding, inflation, and counterfeiting as major reasons for its unusual decision. Along the same lines, the President stated on the 23rd of November, 2022 that: ‘‘the new Naira banknotes have been fortified with security features that make them difficult to counterfeit.’’
THE LEGAL RIGHTS OF THE CENTRAL BANK TO REDESIGN NATIONAL CURRENCY.
This has to do with the legal rights conferred on CBN to redesign the national currency. Therefore, the community reading of Section 18(a), 18(b) and 20(3) of the CBN Act 2007 will portrays a better justification to that effect. Be that as it may, Section 18 (a), and (b), establishes that: CBN shall “arrange for the printing of currency notes and the minting of coins; as well as issue, re-issue and exchange currency notes and coins at the Bank’s offices and at such agencies as it may, from time to time, establish or appoint”. Simply put, the CBN shall organize for printing of currency note, coins minting, and equally giving them out as and when due. Then, section 20(3) of the same Act establishes that: ‘notwithstanding sub-sections (1) and (2) of this section, the Bank shall have power, if directed to do so by the President and after giving reasonable notice on that behalf, to call in any of its notes or coins on payment of the face value there and any note or coin with respect to which a notice has been given under this subsection, shall, on the expiration of the notice, cease to be legal tender.” Succinctly put, section 20(3), endorsed the CBN to redesign currency, if authorized by the president to embark on it, in line with his cogent notice on such. As seen in the foregoing, the only requirement for reissuing/redesign currency is that the CBN intends to do so, arranges for the processes, and gives reasonable notice of its intention to do so.
CONCLUSION.
Currency redesign are actualized with the support of the public, and equally a fortification to the fiscal policy. All in all, currency redesign projects are systematically produced once every numerous years, and not executed on a caprice.
REFRENCES
https://businessday.ng/news/legal-business/article/naira-redesign-the-law-and-global-best-practices/
https://www.worldbank.org/en/country/nigeria/overview
https://businessday.ng/amp/business-economy/article/naira-redesign-only-6-of-n2-73trn-deposited-cbn/
ABOUT THE AUTHORS
Jimoh AbdulGaniy Adisa,is an LL.B 200 Student at Faculty of Law, Bayero University, Kano, a Writer and a legal researcher,He is a member of Al-Maslaha Chamber, Equity Chamber,and a Law Clinician, In a similar fashion,a legal intern at Primus Partners,Ikeja, Lagos,He is the Current Director of Media and Publicity, National Association of Kwara State Law Student,BUK chapter,and the 1st runner-up at the just-concluded Oratory Paper Presentation contest of an essay titled : ‘IP Rights for AI-Generated Inventions:Legal issues and Prospects’, organised by National Association of Kwara State Law Student, head at Headquarters Chapters, Ilorin, Kwara State, on 2nd of January, 2023.
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