Need to Know

December 02, 2022

New Money, Old Problems

Nigeria

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Nigeria recently launched newly designed currency notes in denominations of 200, 500, and 1,000 naira that are worth, respectively, 45 cents, $1.13, and $2.25. Leaders in the West African nation, the most populous and with the largest economy on the continent, said the move would reduce inflation and help authorities crack down on corruption and money laundering.

Private individuals and entities, rather than banks, now hold more than 80 percent of Nigeria’s cash, the Associated Press reported. Changing the currency forces those holders to remit their old bills, especially high denominations, for new ones or else the money will lose its value. Compelling an inflow of cash into the banking system could also help with inflation by bringing hoarded currencies back into the banks if not open circulation, officials say.

Still, critics questioned whether different notes would change the culture of government corruption or bring down food prices that have been soaring due to increased energy costs worldwide. They claimed the new notes were only different in color. “It doesn’t change anything,” Nigerian economist Bismarck Rewane told CNN. “It doesn’t increase the value. There was no redesign. The color of the currency changed, that’s all. The change is not significant enough to stop counterfeiting.”

Meanwhile, a Nigerian Senate report also recently concluded that the country lost more than $2 billion to oil theft this year through August, a testament to the corruption that riddles the state-owned oil company NNPC, Sahara Reporters wrote.

As officials and pundits in the capital of Abuja and the metropolis of Lagos debate money and corruption, militants in the country’s northern regions are kidnapping and murdering. Gunmen took more than 100 people, including women and children, in a recent raid, for example, reported Reuters. It’s just the latest one. At the same time, Islamic State-affiliated Boko Haram is also still active in northern Nigeria, nearly a decade since the kidnapping of more than 270 schoolgirls in Chibok. Recently, the militants killed and wounded at least 10 Chadian soldiers at a post near the Nigerian border, Africanews added.

The confluence of these events hasn’t been good for democracy. Many Nigerians feel as if their country’s elites are making cosmetic changes and giving lip service to improving the economy while also ignoring the real threats and making off with some cash on the side, political scientist Kenneth Arung explained in an interview in Business Day, a Nigerian newspaper.

The former president of the Nigerian Bar Association, Olisa Agbakoba, agreed with Arung. In Punch, a Nigerian news magazine, he said democracy could collapse at any time in Nigeria. The Financial Times echoed that warning.

Nigerians need to stand together against their challenges. Less democracy won’t help them do that.

This story originally appeared in the December 02, 2022 newsletter, New Money, Old Problems.