Former finance minister slams CBN over new naira crisis

A former Minister of Finance, Dr. Idika Kalu, has criticized the logistics of the Central Bank of Nigeria (CBN) regarding the distribution of the new N1000, N500, and N200 notes.

He noted that the new naira scarcity was a result of a huge logistic mistake by the CBN, which did not do its preliminary assessment of how long and what it would take to ensure the efficient distribution of the new notes.

“It is obvious that what we are dealing with is huge logistic mistakes that have been made,” he said during an interview on Channels Television on Friday. “You have to assess the timing, which is predicated on how long it will take to do the exercise that you want to do. So, that is where it is really up to the central bank and its advisers to come up to the government to say, you have agreed we will do this. This is how much time we need, every aspect of it, procuring the papers for printing, whether it is imported or locally made, the printing process itself, the logistics of identifying the various constituencies, the banks, the communities, the rural areas and all segments of this country.”

He further explained that the reason the new notes were not in banks when people needed them was due to poor logistics. “The logistics have to be very carefully put together. It is very apparent that we did not do that. I think the logistics are really the problem, not the question of jurisdiction,” Kalu added.

The former minister also faulted the CBN’s reasons for redesigning the old notes, stating that countries don’t change their currencies because they want to improve the effectiveness of monetary policies. According to him, there were other policies that the CBN and the Federal Government could have introduced if they wanted to tackle corruption and the high amount of currency in circulation.

Furthermore, Kalu stated that the naira redesign plan of the CBN would likely lead to a contraction in the economy, and he questioned the metrics of inflation used to measure the effectiveness of the naira redesign policy. “If you curtail the money supply, it will bring down inflation. But they will have to check on what it does to production and employment. So, it is not a one-dimensional measure of success,” he said.

Kalu also described the naira redesign policy of the CBN as draconian, and noted that there was something wrong with what the CBN was trying to do. He stated that the CBN needed to revisit its policies to improve the economy, noting that the current economic situation was worrisome.

In conclusion, Kalu advised that the CBN should come up with an effective distribution plan and review its current policies to stimulate the economy. “We need a policy framework that is well laid out, well-documented, and in the public domain so that it can be subjected to intellectual rigor and public debate,” he said.