My dear people of Kaduna State,

1. With just about 100 days before leaving office, and elections just round the corner, it was my intention to host another media chat to interact with the people of our state in the next few days. While I still hope to do so, I feel the need to address you all today due to the unprecedentedly cruel situation our people and their livelihoods have been thrown into, particularly in the last two to three weeks by the decisions, actions and inactions of the Federal Government of Nigeria.

2. On behalf of the government of Kaduna State, I wish to express my deepest regret at the needless suffering you are enduring as a result of the prolonged fuel shortage and the difficulties occasioned by the so-called “currency redesign” policy of the Central Bank of Nigeria. We understand your pain. I assure you that as your State Governor, I have been working with my other colleagues to do everything in our power to end these pains.

3. While publicly supporting what appeared to be a beneficial policy, we innocently engaged privately with the President and the leadership of the Central Bank of Nigeria to review the implementation of the policy so as to reduce its negative impact on the lives and livelihoods of our people, and end the pain being inflicted on citizens. In the absence of any progress to modify implementation on the part of the architects, we were forced to go public about two weeks ago, with our concerns and demand that this suffering must stop.

4. We take seriously our duty to protect ordinary people from the consequences of these policy fiascos. The sad fact is that the victims of these mindless policies are the people that elected us. It is their welfare that is being threatened. Many of our people have been left in a situation where the money they put in banks has literally been confiscated, depriving them of the ability to buy food and basic necessities. Our traders cannot sell as much as they used to because their customers have no access to their hard-earned money.

5. We have been officially informed that the currency redesign policy is to reduce money laundering and render useless stashes of high denomination Naira that many politicians and public officers have accumulated through corruption and other illicit activities. As earlier stated, we are fully in support of such a policy and we made this public from the beginning.

6. We had privately expressed concerns about the timing of the currency design policy and the unrealistic timeline for its implementation. We were assured that all steps have been taken to ensure that we avoid the recent experience of India, where implementation of a similar demonetisation policy targeted at politicians ended up hurting the poorest and small businesses the most.

7. In official briefings to the President, the Central Bank of Nigeria constantly alluded to the fact that the policy also targets politicians who have accumulated a huge war chest for vote buying during the elections. It is now clear that the President has been deceived by the Central Bank of Nigeria and some elements in his government into buying into this overarching narrative, in the name of ensuring free and fair elections in 2023.

8. It is important for the people of Kaduna State, and indeed Nigeria, to know that contrary to the public pronouncements and apparent good intentions, this policy was conceived and sold to the President by officials who completely lost out in the Gubernatorial and Presidential Primaries of the APC in June 2022.

9. Once Asiwaju Bola Tinubu emerged as the candidate in June 2022, and subsequently did not pick one of them as his running mate, this currency redesign policy was conceived to ensure that the APC presidential candidate is deprived of what they alleged is a humongous war chest. They also sought to achieve any one or more of following objectives:

a. Create a nationwide shortage of cash so that citizens are incited to vote against APC candidates across the board resulting in massive losses for the Party in all the elections;

b. Ensure that the cash crunch is so serious, along with the contrived and enduring fuel shortage existing since September 2022, that the 2023 Elections do not hold at all, leading to an Interim National Government to be led by a retired Army General;

c. Sustain the climate of shortage of fuel, food and other necessities, leading to mass protests, violence and breakdown of law and order that would provide a fertile foundation for a military take-over;

10 In the pursuit of these objectives, the Central Bank of Nigeria and these other disgruntled Federal officials have so far convinced the President that it is fine for ordinary citizens to be dispossessed of their hard-earned money, and starved if need be, while small and medium-sized businesses are deprived of access to their capital, thereby bringing trade and exchange to a grinding halt. All our efforts to modify implementation of the policy to avoid what we assumed were unintended consequences were unsuccessful. I chose to speak out first as one person that has been particularly close to the President, believing that his actions were motivated by innocence, and mindful of his legacy. I have no regrets for doing my duty in this regard. One day, the President will appreciate what some of us are being insulted for today.

11 Yet, the politicians that the officials have convinced the President to regard as the real targets of the currency redesign policy have not been impeded in any way by it so far. Indeed, two of the presidential candidates, and a running mate of the opposition parties own or have preferred access to some of the licensed banks. For that reason and by various clandestine arrangements, these politicians have access to hundreds of millions of these new notes, while the traders, merchants, students and other citizens are queuing for days to withdraw a few thousand Naira just to buy food and necessaries.

12 Within two to three weeks of implementation, it was clear to everyone that the architects of this policy can see that it is our people that are being terribly affected, and not the politicians. It is quite unfortunate that many politicians who either own banks or have privileged access to money are so insulated from the pains of talakawa that they are recklessly endorsing a policy that is being badly implemented.

13 I am referring here to the comments by the candidate of one of the opposition parties who expressed opposition to the recommendation first of the APC state governors, and subsequently of all the governors under the auspices of the Nigeria Governors Forum that the implementation timeline be extended, to enable the old and new notes to be legal tender side by side until the cash shortage ends.

14 My dear people of Kaduna State. Let me explain how the architects of this policy intentionally designed it to fail. The total currency in circulation in Nigeria was estimated at N3.2 trillion at the end of 2022. According to the Central Bank of Nigeria, N2.1 trillion has been withdrawn as at early February. The CBN claimed that N700bn is the amount of cash needed for their functioning vision of a “cash-less” Nigerian economy. The Chief Economic Adviser to the President, Dr. Doyin Salami disagrees with this estimate, and believes at least N2 trillion of currency needs to be in circulation for our economic sustainability. Other experts variously estimate this to be between N1.2 trillion and above, so the CBN number of N700bn is not realistic.

15 The CBN informed the President at the very beginning that the Mint (NSPMC) has enough capacity to print the needed currency in circulation within the 6-week timeframe for the so-called ‘cash swap’. By its own admission, only N400bn worth of new notes had been printed for CBN as at early February. The current cash shortage was therefore designed from the beginning, the President was lied to about the domestic capacity of the Mint to print, and even if the announced N700bn was printed, it would have been grossly inadequate anyway. Imagine then printing only N400bn, and making most of it unavailable to the banks but passed to favoured entities through special arrangements. How can the CBN collect N2.1 trillion from citizens and print only N400bn? Is this not a clear case of economic sabotage?

16 It is bad economics to so curtail economic activity and the velocity of circulation of money. It is also insensitive to deliberately cause cash shortage and then seek to instigate the public against the mostly innocent commercial banks. Even the most honest and prudent action by banks cannot magically make N400bn to look like N2.1 trillion, or have the same spread and availability like the CBN should have ensured. As a regulator, the CBN should not be seen to be setting up the banking sector as the public enemy to cover up the glaring failure in its design and implementation of the cash swap policy.

17 We have repeatedly appealed to the Federal Government to allow whatever remains of the old notes to circulate concurrently with the new notes. We recommended that the Federal Government should also hasten to ensure that more of the new notes are printed and brought into circulation. We thought that if the Nigerian Mint is incapable of printing the volume of cash needed as it appears, then necessary steps must urgently be taken to get a reliable supply source.

18 There is no reason why the old notes and the new notes should not coexist until the old notes are gradually withdrawn over the years as is done in the United Kingdom, Saudi Arabia and other countries. It is unfortunate that in implementing this policy, Nigeria is departing from global best practice, without any compelling justification. The Kaduna State Government did all these, not in opposition to any person or authority, but because we stand with our people and their interests.

19 When it was clear that our recommendations will not be seriously considered, the Kaduna State Government decided, along with the governments of Kogi and Zamfara States to declare a dispute with the Federal Government. In line with the provisions of the Constitution, we approached the Supreme Court of Nigeria to invoke its original jurisdiction to hear us and the cries of our people. The Court did on February 8th, and ordered that the deadline of February 10th for all the ‘old’ notes ceasing to be legal tender be rescinded until the determination of the suit. This ruling applies to the Federal Government and its agencies like the CBN, and all commercial banks! We are grateful to the Court for this ruling, and we had hoped that compliance by the CBN and the banks would bring relief to our people. It is now clear that the architects of this policy are determined to continue to inflict maximum pain on the citizens to achieve their objectives outlined earlier.

20 It was our hope that the Federal Government of Nigeria would welcome this injunction as an opportunity to mitigate the needless human suffering being experienced and correct its course on this matter. There is no emergency situation that justifies the rushed and seemingly deliberate incompetent execution of this policy. We suggested that compliance with the ruling would include adopting a whole-of-government approach, that involves the agencies of the federal and state governments in modifying the design, execution the implementation of the currency redesign policy.

21 Even when confronted with the facts above, the CBN and its masters remain determined to implement their agenda no matter how much human suffering, death and destruction results. It is clear that the architects of this policy always had objectives that are totally in conflict with public interest, peace and the unity of Nigeria. They neither considered our suggestions in line with the Court order, nor respected the unanimous resolution of the Council of State.

22 It is also quite revealing that the Federal Government and its agencies not only disobeyed the February 8th ruling by continuing to say the February 10th deadline stands. It is shocking to see the blatant violation of the subsisting and continuing order of the Supreme Court that ALL the old and new notes should continue to be legal tender until it gives judgment in the case filed by the Kaduna State Government along with several others.

23 The address by the President earlier this morning limiting the legal tender status of old notes to only N200 amounts to total disregard and disobedience of the ruling of February 8th which was extended further yesterday by the Supreme Court. The misguided action of the Attorney-General to mislead the President into engaging in this public violation of the order of the highest court of the land shows how desperate the policy architects are to cause national chaos, by showing open contempt for the judiciary.

24 The decision to recognize only N200 as legal tender till April that the President announced this morning was offered to the state governments as part of proposals for an out-of-court settlement three days ago. The Federal Government asserted that this was offered because all the ‘old’ N1,000 and N500 notes had been destroyed. We rejected the offer and proved to the officials that not a single higher denomination note had been destroyed. We also believe that circulating N200 only to be inadequate in alleviating the suffering that we see every day. We insisted that all the components of the Supreme Court order should be complied with.

25 But back home, what do we do in Kaduna State? My dear of people of Kaduna State, with the foregoing revelations, it is clear that our peaceful coexistence as a state, and a nation, is being placed under deliberate danger using the intentional combination of fuel and cash supply disruptions. These evil people using the instrumentality of the Federal Government and the President as convenient covers are willing to truncate our democracy because they have personally lost out. They are massively deploying resources and tools to defeat the political party that gave us the platform to serve the country just because they could not impose the candidates of their choice. Let us not help them

26 Let us stay calm and peaceful, and support the lawful means being utilized to solve our problems. On behalf of the Kaduna State Government, I wish to assure you that none of you would lose the money you have in old notes. Let no artificial and illegal deadline frighten you. Whether you live in towns, villages or in our isolated rural communities, do not feel stampeded to deposit your old notes in the banks. Hold on to them. Continue to use them as legal tender as ordered by the Supreme Court of Nigeria. No deadline can render them worthless, ever. The law is on your side. The Central Bank of Nigeria Act, 2007 and the Bills of Exchange Act, both oblige the CBN to recognize your old notes and give you value in new notes whenever you bring them to the CBN, even in the next 100 years.

27 Therefore, as your governor, I wish to assure you that the Kaduna State Government, in collaboration with elected legislators, traditional institution, elected local government councils, markets, and traders associations will help you collect, record, document, collate and deliver all your old notes to the Kaduna branch of the Central Bank on your behalf into the new ones immediately after the elections. We will also ensure the delivery of your new notes to your various locations without any hardship or expense on your part. We shall save you any panic and the stress of a long journey from your community to the CBN office in our state capital, from March until December 2023 if need be.

28 For the avoidance of doubt, all the old and new notes shall remain in use as legal tender in Kaduna State until the Supreme Court of Nigeria decides otherwise. I therefore appeal to all residents of Kaduna State to continue to use the old and new notes side by side without any fear. The Kaduna State Government and its agencies shall seal any facility that refuses to accept the old notes as legal tender and prosecute the owners. If need be, we shall take further consequential actions according to the law.

29 While urging you all not to fall for these antics of the enemies of Nigeria, please be patient and continue to exercise resilience in the face of open provocation and deliberate disinformation. We encourage you to be ready with your PVC to vote in the February 25 Presidential and National Assembly elections. We are doing all we can to ensure that it is peaceful, orderly and hitch-free. I appeal to you to understand the shenanigans of these unpatriotic elements in Abuja and ensure you vote massively for the intended victims of these last-minute policies of needless hardship and incitement of the citizens – our party, the APC and its candidates in all the elections.

30 The Kaduna State Government is making this appeal, and taking all these measures to shield our people from the terrible consequences of the currency redesign policy. We seek to protect our people’s hard-earned money, their ability to engage in trade and exchange and buy what they need. We also seek to protect their civic rights, liberties and freedoms under a democratic dispensation. I call on the people of Kaduna State to remain peaceful and vigilant in the face of brazen attempts to engineer crisis in order to get a pretext for unconstitutional or undemocratic actions.

31 In conclusion, our Presidential Candidate, Asiwaju Bola Ahmed Tinubu has asked me to convey his greetings, empathy and words of encouragement to the good people of Kaduna State. He urges us to remain patient, pray for our country and remain vigilant in our pursuit of Renewed Hope.

Thank you all for listening. God Bless Kaduna State. God Bless the Federal Republic of Nigeria.

Nasir Ahmad El-Rufai, CON

Kaduna, 16th February 2023

Amid scarcity of naira notes, orchestrated by the newly-introduced currency redesign policy of the Central Bank of Nigeria (CBN), Fitch Ratings, a global credit ratings agency, has warned that the situation may aggravate Nigeria’s forex crisis.

Fitch, in its report titled: ‘Nigeria’s Economic Challenges Highlight Importance of Post-Election Policies’, said the cash scarcity emanating from the naira redesign policy may trigger frugal reaction from Nigerians that will impact the economy. The organization said the policy may reduce consumer spending and boost demand for foreign currency.

The CBN said the naira redesign policy initiative is aimed at boosting its cashless policy among others. But Fitch said it was not yet clear whether there would be long-term economic benefits of the policy, such as greater use of the formal banking system or enhanced use of digital payment systems.

“The Nigerian Supreme Court’s suspension of a 10 February deadline for exchanging old banknotes into new eases, at least temporarily, the risk of intensifying cash shortages,” the agency said, adding the demonetization drive is still likely to be disruptive in the near term.

“Associated cash shortages may hit consumer spending and boost demand for foreign currency, aggravating foreign-exchange shortages,” it added.

The CBN’s move to replace the old N200, N500 and N1,000 notes with the redesigned notes within a short period of few months, unleashed unprecedented currency scarcity that has heavily impacted many sectors of the economy, especially the informal sector. This came along as Nigeria grapples with insufficient forex liquidity that has seen international organizations operating in the country struggle with repatriation of funds.

The forex crisis which is largely tied to fuel subsidy payments and insufficient oil output has significantly weakened the naira, compounding inflation as Nigeria takes to borrowing to fill revenue shortfalls. With inflation at over 21%, declining consumer spending was expected to see a boost during the election period.

Given its current economic situation, Fitch said that Nigeria is faced with major economic challenges ahead of elections due on 25 February, and policy choices by the incoming administration could have a significant impact on the country’s credit profile.

Nigeria’s growing public debt profile has scuttled its debt-service to revenue ratio, put at 80.7% by the Minister Finance Zainab Ahmed in January. Fitch said it downgraded Nigeria’s rating to ‘B-’ from ‘B’ in November 2022, with a stable outlook, as a reflection of the country’s continued deterioration in debt servicing costs and external liquidity.

The agency added that Nigeria’s fiscal profile is expected to remain weak in the medium term due to poor revenue growth and rising debt.

“General government interest/revenue is extremely high (47 percent in 2022 by Fitch’s estimate) and we expect it will remain so given constraints on revenue mobilization, increasing debt and high interest rates,” the agency said.

It added structurally low non-oil revenue; spending pressures and weak economic growth imply substantial fiscal financing needs as other factors contributing to Nigeria’s poor credit rating.

“The government faces external debt amortizations of $2.5 billion in both 2023 and 2024, an increase on recent years, although the majority is bilateral and multilateral debt service,” it said.

Fitch lays emphasis on Investor and Exporter window, Nigeria’s official exchange rate as key to the country’s positive credit rating. It said the prospects for the “overvalued” exchange rate reform would be influenced by the outcome of the presidential election, and could increase under a new central bank governor.

“The incumbent’s term ends in 2024, but an incoming administration could push for earlier change,” the agency said.

“A more flexible exchange-rate regime would likely be a long-term positive for Nigeria’s credit profile, although the initial economic adjustment could present macro-fiscal risks.”

However, President Muhammadu Buhari, in his broadcast on Thursday, directed the CBN to allow old N200 note to co-circulate with the new one until April 10. The move is expected to cushion the shortage of the new naira notes and ameliorate its impact on the economy.

President Muhammadu Buhari has directed the Central Bank of Nigeria (CBN) to extend the use of old N200 notes beyond the earlier February 10 deadline issued for the phasing out of the old N200, N500 and N1,000 notes.

The CBN had late last year, announced the redesign of the above naira notes as part of its monetary policies geared toward the fight against inflation, corruption, terrorism financing and as the general elections draw near – vote-buying.

Buhari gave the directive during his national address on the challenges of implementing the policy on Thursday morning.

“To further ease the supply pressures particularly to our citizens, I have given approval to the CBN that the old N200 bank notes be released back into circulation and that it should also be allowed to circulate as legal tender with the new N200, N500, and N1000 banknotes for 60 days from February 10, 2023 to April 10 2023 when the old N200 notes ceases to be legal tender,” Buhari said.

The central bank fumbled the implementation of the naira redesign policy as scarcity of the new notes stalled circulation, forcing Nigerians to rely largely on the old notes for transactions. The situation, which has significantly affected economic activities, resulted in lawsuits, protests and attacks on commercial banks as cash-strapped Nigerians besieged banks for money.

About 10 states have dragged the federal government to the Supreme Court in a bid to have the policy reversed. Although the apex court had in an ex parte order last week, asked the federal government to allow both the old and new notes to coexist pending the determination of the matter, which has now been adjourned to February 22, the CBN insists that the old notes are no longer a legal tender.

While acknowledging the suffering the policy has brought upon Nigerians, Buhari appealed for their “understanding and patience during this transient phase of implementation.” He said the evaluation and feedback mechanism set up has revealed that gains have emerged from the policy initiative.

“I have been reliably informed that since the commencement of this program, about N2.1 trillion out of the banknotes previously held outside the banking system, had been successfully retrieved,” he said.

Buhari had pointed at excess money in circulation as part of critical points underpinning the naira redesign policy decision. He noted that in 2015, when his administration commenced its first term, Currency-in-Circulation was only N1.4 trillion, but has grown to about 100%, distorting the government’s effort to tame inflation.

“The proportion of currency outside banks grew from 78% in 2015 to 85% in 2022. As of October 2022, therefore, currency in circulation had risen to N3.23 trillion; out of which only N500 billion was within the Banking System while N2.7 trillion remained permanently outside the system; thereby distorting the financial policy and efficient management of inflation,” he said.

The president added that the huge volume of Bank Notes outside the banking system has proven to be practically unavailable for economic activities and by implication, retard the attainment of potential economic growth, an assertion that PwC Nigeria chief economist, Andrew Nevin, described as “absolute economic nonsense.”

Buhari further stated that in addition to assisting the CBN in mopping up excess money in circulation, the new policy has also contributed immensely to the minimization of the influence of money in politics. He urged Nigerians who still have old naira notes to redeem them at the CBN and designated points.

“Considering the health of our economy and the legacy we must bequeath to the next administration and future generations of Nigerians, I admonish every citizen to strive harder to make their deposits by taking advantage of the platforms and windows being provided by the CBN,” he said.