The "Successful" Nigerian Currency Exchange - A Review
Eze Onyeka
An honest appraisal, however, will show that the only "successful" aspect of the currency exchange was the secrecy surrounding the exercise... the first false step came with the timing of the announcement.The recent currency exchange in Nigeria has been described by almost all the Nigerian papers as one of the best things that has happened to Nigeria since the announcement of the 31st December, 1983 coup which overthrew the Shagari regime.
The image of the Khaki boys has been boosted immensely by the fact that they took the decision to print a new currency, set the machinery in process without anybody in the country having had the slightest idea of what was happening until the evening of 23rd April 1984, when the Chief of Staff, Brigadier Tunde Idiagbon made the announcement.
An honest appraisal, however, will show that the only "successful" aspect of this change was the secrecy surrounding the exercise. Facts which emerged during and after the exercise have shown up the exchange to have been not only badly planned, but also, like almost everything Nigerian, badly executed.
The first false step came with the timing of the announcement.
The announcement was made in the evening of Easter Monday 23rd April and with it, the closure of the borders except the Murtala Airport in Lagos. Nigerians were on Easter holidays from Good Friday to Easter Monday - 4 clear days including the Saturday and Sunday. A lot of people, especially on the western border areas, had crossed the borders in cars and other vehicles to Togo and Benin to spend the holidays. They were stranded behind the borders for 12 days without money.
If the announcement had been made in the evening of Thursday 19th April, 1984 it would have saved a lot of people who travelled outside the country for holidays or for business from unnecessary hardships.
More important, it would have given the government 4 clear days to distribute the new currency to all corners of the Federation using the services of Nigerian Airways, the Nigerian Air Force, Navy as well as the Nigerian National Petroleum Company which has at least 4 new helicopters.
As it was, the new currency started leaving the Central Bank of Nigeria vaults very late in the afternoon of 24th unknown. April (the first working day after the Easter Holidays), and it was not until 1.30 p.m. when people began to see some of the new currency in Lagos.
Those of us in the rural areas like Ekwoulodia in Anambra State did not see the new currency until the sixth day of the exercise!
Meanwhile, the problems associated with even depositing the old currency in the Banks with all the rush and jumping of queues in spite of the "war against indiscipline, caning with 'koboko' by soldiers and mobile policemen drafted to ensure order, forced most shop-owners to refuse to accept the old currency. Those who were prepared to accept the old currency had either doubled their prices or tripled them with the explanation that they needed the extra cash to "hire" the unemployed to queue to deposit their moneys in the Banks for them.
All these could have been avoided, or at least minimised, if the new currency was available in all the banks by Day One throughout the Federation.
The problems associated with timing could also have been solved or mini- mised by making the announcement at the end of the month when salaries and wages were being paid with this being done in the new currency.
Now the currency exchange was supposed to achieve the multiple aims of reducing the amount of money in circulation and through that, reduce the spiraling inflation, discourage smuggling, restore some amount of respectability to the naira in the international economic world, and finally to undermine the work of Nigeria's numerous Naira-forgers.
The Finance Minister Dr. Ouaolapa Soleye announced that there was N9.94 billion in circulation by June 1983. The figure as at 23rd April 1984 when the currency exchange exercise started is unknown.
From all indications, it appears the government decided to reduce this figure to something around N3.5 billion, and the amount was printed accordingly
The government apparently had not taken into consideration the amount of money pumped into the system by the Shagari administration between June 1983 and January 1984 when the new military administration effectively took office.
It does not also seem to have taken into consideration the amount of "perfectly" forged naira which had joined the genuine ones into circulation. This is estimated at about N1 billion. Most of the people who are in the forgery business have their contacts in the banks who "launder" them into circulation through the banks.
It was obvious that the basis of calculating the amount to print was wrong from the word "go", very wrong. So during the exchange exercise, the amount deposited far exceeded the amount said to be in circulation.
Then again, the closure of the borders was expected to stop N2 billion outside the country from coming in. It appears that here too the government did not reckon adequately with the human problems attendant with such an exercise - corruption of Immigration Officers and even soldiers as well as the ingenuity of the Nigerian for circumventing all rules which do not benefit him.
People brought in the old currency in boats, in vehicles and in private planes. Immigration and other security officers at the borders were bribed to allow these in.
Even at the Murtala Airport it was possible for someone to bring in 35 suitcases believed to be full of old currency notes without being searched and escorted by a very senior military officer; up til now nothing has been heard of that "importation".
So during and after the exercise, there had been a serious scarcity of the new money, with the result that the banks were to "ration" the amount of money an individual could withdraw.
Even though the government asked the banks to pay amounts ranging from N2,000.00 to N1,000.00 in the first week after the exercise, this was impossible because the amount of money available was far short of demand.
The cries of the harassed, hungry, and tired public resulted in a blaming contest between the Central Bank and the banks over whether or not the banks had been given enough of the new money.
The admission later by the Finance Minister that the Nigerian Securities company had been given authority to print more of the new currency after "corrupt" officials there had been dismissed shows who was really telling the truth!
One outstanding problem which emerged during the exercise was the fact that the government does not seem also to have considered the plight of the rural illiterate poor who lived in areas without banks and who had no bank accounts into which they could deposit their old currency.
It was not until the last four days of the exercise that the banks were directed to receive the deposits, issue receipts for them and to pay them the new currency after the exercise. Until that time they were being forced to open accounts which caused a lot of delays. It was also not until the last four days that mobile banks and the local governments were used as channels for exchanging the new currency for old ones.
Right now, most banks are giving out a maximum of N100.00 to each customer, but the average is N50.00 a week because most of the time, there will be no money in banks to pay anyway!
Again, as soon as the new currency came out the forgers went into action. The number of people who have been arrested so far for printing the new currency and the amounts involved makes one wonder whether anything has been achieved at all by the exchange.
It is also clear that the value which the new currency has gained vis-a-vis other currencies on the black market is temporary. As soon as enough money comes into circulation to match the amounts deposited, the value will drop sharply. At the end of the day, the question is "did we go or did we come?"
