 And we're back with our first major conversation right here on the breakfast. You're welcome. Natural Central Bank over the weekend responded to insinuations that it didn't carry members of the cabinet and indeed the federal government along in its decision to redesign the nation's currency the Naira. It insisted it followed the law and due process for the Naira redesign saying the exercises 12 years overdue. A statement by the apex bank set the management of the central bank of Nigeria in line with provisions of sections 2B, 18A and 19A and B of the CBN Act of 2007 had duly sought and obtained the permission and approval of President Mahmoud in writing to redesign, reproduce, release and circulate new series of 200, 500 and 1000 Naira bank notes. Central Bank in that statement further urged Nigerians to support the currency redesign project which is in the overall interest of every citizen of the country. The hoarding of significant sums of bank notes outside the vaults of commercial banks should be discouraged according to the central bank Nigeria's apex bank for anyone or by anyone who means well for the country. Now this comes amid reaction and speculation over the move to redesign the Naira following its unexpected announcement and also following a statement by Finance Minister Madame Zainab Ahmed who in reply to questions by members or from members of the Nigeria's National Assembly said she wasn't aware of the mover but heard about it in the media. Glad to say joining us this morning too through some light on this and give us expert analysis on this particular issue. We have an analyst joining us. I'd like to say good morning and welcome to development economist Mukhtar Mohamed. Good morning to you Mukhtar Mohamed. Thank you very much for your time. Thank you so much. Thank you. Always a pleasure to be on your program. Do you understand the, should I call it hula-baloo about CBN and this new decision as far as Zainab Ahmed's statement at the National Assembly last week goes? I think Zainab Ahmed instead of responding reacted maybe that's what the challenge we have with this government. I think it seems to be a different wavelength and that seems to know what the law said the CBN act does not permit the CBN to meet with the Central Bank with the Minister for Finance to tell her that is what we want to do. The act is so far that the CBN is independent. Initially the CBN was under the Ministry of Finance. Remember during the time of President Nusieh Gorbasonjor he came out with the act he wanted the CBN to be independent that that is the global best part is any part of the war. So the CBN is independent to take decision when it comes to monetary policies. You don't have to depend on this on the on the Ministry of Finance. The Minister of Finance have also coordinate physical policies with different arguments. Now and that does not mean that the CBN will not seek clarification but in that act it was made to the CBN that their clarification or over certain issue must come through their audience with Mr President. You can remember the time when Chikuman Soludu Professor Chikuman Soludu was a governor of Central Bank when he came out with the redenomination of the Naira and then President Musa Yadwa was not happy with it and his only reason even there is for the CBN independent was that even with the independence of the CBN the CBN still have to brief Mr President about their decision and Mr President have to look at it and say look how does this work how will it benefit the economy that way that decision was stand down. So the act permits them to do what they have done they have not like the CBN said it went through all due processes briefing Mr President and I think the President was satisfied with their briefing and then he's in the place of the President to have called the Minister of Finance to brief the Minister of Finance if he really has any objection to it. So it shouldn't be put on the door without the CBN. I think the President see themselves where they want to call the Minister of Finance because the President is in charge of physical policies not in charge of monetary policies. So I think they never meant need to look at the act very well and know that the CBN is independent. All right so I'd like to share your thoughts on the redesign and redistribution of the currency. What do you think about it looking at the timeline you know also juxtaposing that with all of the conspiracy theories that have been put out? Well when you look at the timeline there's no timeline when you want to take a monetary policy you have to take it at the time you think it's relevant sometimes you take it very fast sometimes you take it very very slow but it's always going to hit the nail on the head when it comes to taking monetary policy decision because economies these days move at a speed of light decision you took today could be relevant tomorrow but when you look at the current decision by the CBN it's not based it's not strictly a monetary policy decision. I can say that it's more or less you know we'll be complaining about the CBN going into other areas and I think this time the CBN have realized that they need to go into the security area because what we see is that the CBN takes a lot of decision monitoring while the physical side are not able to complement them and the physical side are in charge of security and while there's no security then the economy will not float those far no matter the kind of monetary decision that you are taking. So this policy for me is more of a security policy than a monetary policy. Now in security policy in the short term then a monetary policy in the long term and in the short term the monetary policy may suffer because of the decision they have taken but in the long term it will be beneficial to the monetary policy but for the security it brings almost a solution to some of the security challenges that we've been having because when you look at banditry you look at kidnapping you look at terrorism all these have been funded by people and some of these money that fall terrorism are not in the banking space so definitely a CBN cannot be printing about 3.7 trillion 3.7 trillion and you only have about 1.7 of that trillion in the banking space they will not be able to control inflation by using one of the two which is to reduce to reduce liquidity in the system. So if they don't come up with this policy it will technically affect them in the long term and especially now that we are dealing with inflation in double-digit inflation it's not just only other dealing with this inflation global inflation and trade so all CBN are doing every monetary policy decisions they are looking at the physical side and complimenting the monetary side but you know you know outside now there's no physical side so the CBN have to act out of their own realization into the physical side so definitely in the short term you've seen this repercussion in the parallel market the exchange rate has gone as high as 800 definitely you'll see that because now those people that keep this money at home will not want to take it to the bank because some of this money are not the other money that come from terrorism kidnapping or money that are a result of corruption so they want to take it to the blue the change so what we see now a lot of Naira portion few dollars and so what will happen the exchange rate will go up because demand and supply comes to play so definitely in the short term it will look like that but in the long term I can assure you that if we don't everything we need to do and that is in getting the security agency the EFCC then we might see a solution to some of our exchange with volatility all right you've talked about the the economic implications of this swast macroeconomic or macroeconomic policy is concerned we look at the effect of a man on the street especially the man in the rural area and the effect on his own economy we look at the microeconomy islamic cleric Sheikh Gumi has said that people in the villages in the rural areas will bear the brunt of this move it's one of the many people who have reacted to that will take some of their reactions but let's start with him put up a post on his Facebook page on Saturday saying that Nigerians living in rural areas would bear the brunt of the move and is slamming the federal government over the move to redesign the Naira you know he says that quote changing the Naira this is no time for economic kamikaze is what he calls it no matter how ingenious the hatches may romanticize he says the benefits will remain phantom since the reality on the ground is incogorous and it spells doom for the escapade he says quote 80% of Nigerians especially rural people depend on cash transactions a sudden change to a cashless or cash starved society will mean a proper rising them what are your thoughts on on this and the effect on the the role dwellers and they have in Nigerian who is struggling to eke out living in hard economic times well that is where they have the money agents you remember that the cbm have licensed a lot of money agent that are able to do transaction in the ton of three million yeah i mean so definitely they have the money agent so cbm have acted on that already and you also have the pios terminals all over all the rural area there are also money agents so i and i mean we have it we also have a etm machines they've been located in the rural area but when you come to the exchange definitely they may have to come with it they have to go through the pios agent at the money agent and i know that the cbm is already doing something about that we know that the rural area does their transaction by cash definitely i i wonder that from what he said about 80 percent of them but of this of recent you realize that most of them are even part of the pios agents than doing their cash transaction because it's becoming more risky security words for them to move from cash with cash from point a to b especially with the recent security challenges that they have been experiencing so definitely in the short term like i said it could looks like it's policy but i don't think that i agree totally with them um gumi because again he is he is just looking at them the the shorter the shorter side of it the short term um challenges every decision economy decision comes with his own short term challenges and so definitely i know that the cbm work on way to get the the rural people to begin to not so far so much knowing that this decision is not that he say you will not have cash in your hands he says that you have to exchange what you have to what i mean to the new currency note and how many people in that role it always did one thousand or five hundred or two hundred most of them are dealing the load denomination of a hundred and fifty so i i i don't get why he's saying that because i'm again he more or less saying things that makes you feel that he's a part of the conspiracy theory to make sure that terrorism and kidnapping and keeps keeps keeps keeps striving because we are looking at it and he's been a ex-military man should have looked at the security the implication of this all right so well uh you have talked about you know short term implication and long term let's begin to talk about it's just the decision of the cbn at this time to redesign the currency you have said that i mean it's better late than never it's something that they have to do uh if they have to you know control the money that's in circulation so quickly what would you say would be or what should Nigerians look out for in terms of you know the negative implication and maybe the positive implication the negative implication like i said we're very filling in we're going to see exchange rates and like i said it's for the short term because a lot of these people that have stolen this money are keeping this money in their houses and also muslim forget that also this also would also help us also in fighting food buying come 2023 election we are not looking at that yet so the but in the short term like i said you saw the price i mean the exchange rate has come up that means that the price of goods and services will go up we see that in the inflation figure that will roll out very similarly Nigerian period of statistic that is what we will see in the in the in the short term only the long term we will see whereby those people that have collected this money are that keep discussion their homes those people that are involved in a lot of corrupt tendencies they will at the end of the day we don't take this money to the banks that mean they are also you are going to to to to lost lost the value of this money they may not be able to have this money again and those are the money that are bringing volatility in the exchange rate because most of the money that are bringing the exchange rate volatility are not in the banking space they are in the hands of individuals and most of these individuals are corrupt individuals so definitely you will see that play out so in the long term we might just begin to see the exchange rate comes down it may not be drastically but we see this thing we come down we begin to get a lot of dollars pushing if you have naira and then the love demand and supply will come into play and then security wise we might see even if we give it to a security agent that they have been doing a good job in regard of telling the the the bandit and the terrorists and the kidnappers we could see a reduction in that especially in the demand of ramsom even if gumi said that they will be beginning to demand ramsom in dollars and it's not easy to get dollars anywhere when you demand ramsom in dollars so definitely I think it that will be the long-term benefit and and then inflation cbn will be able to use their monetary policy to which is reduction in terms of reducing the liquidity in the system to contrainflation that is part of their tool so I think in the short term like I said that those challenges will come in you may get the banking or being crowded with a lot of people trying to exchange they will be hit upon that I am not even so confident that the cbn will meet the January 30th date if you look at the nigerian factor unless they are so determined to do that because the nigerian factor is after sometime you see people craving for extension to their legislators through the various uh organ of government but I I believe and I strongly think this is banshee to keep to their to their decision that will help the economy but if by chance they decide to change about the pressure to extend this decision it might weaken the nirah and it might weaken the economy in the long term and even in the short term but um why do we have I mean you you talked about the fact that there will be uh demand for the dollar especially when you have kidnappers asking that are we not you know already suggesting this i just did them on how you know to do this that that's the question the official currency for us is the nirah so um you see you see you see unfortunately that's what I was saying that I don't expect somebody that is so close to the kidnappers or somebody that is so close to the bandit or somebody that's so close to the cell the teller is he has been one of their negotiator he has been the one that have gone to meet them in the forest to be making such statement that said they will start demanding in dollars so definitely you see he's the one telling them now if I was the security engineer that me he's the one telling them now you need to start demanding around some in dollars that's it you know how economies have been delirious that's the challenge we look even look at what we're putting on is all foreign so we have dollar rise in our economy these days you see banks you see investment we have group asking people to begin to invest in dollar to be needed investment because that's the way to age against inflation and the only thing is that you cannot even age against inflation by by by by investing in dollar at the end of the day what gives value for your money is when you change it back to nirah not even when you keep it to dollar because when you leave it in the dollar inflation in in in most developed economy in the world which is america it's about 10 percent so if you're not ending up to 10 percent of that money then that money is losing value so the later they get value for that money is to change it back to the nirah and i think the cbn are aware of that so any of them that have this currency in dollars will not be able to travel with it in dollars they will still have to come back and change it to nirah so definitely that is where the value comes so it's going to be a win-win situation for the cbn in the long term but we have dollarized our economy we see the dollars in which is the most is the most part dollar is the most powerful currency in the world but in when we are dealing with consumables we need to begin to put value in the currency and which is supposed to be the nirah even the cbn even some some some establishment sometime when people apply for even visa to go out of the shortest country some of these visa agents are not asking people to pay in dollar so those are part of the things that the cbn also need to begin to address why do you ask us to pay in dollar when we are in a when we are in when the major currency is nirah so those are part of the loophole that i think the cbn will have to look at and begin to see what they can do about it but i can tell you for the short term it's looking good you may see those there's exchange rate goes up but don't worry it's just what they will see and sometimes they will see corruption is fighting back definitely that's what we see in the short term but like i said it all depends on how the cbn goes about it how prepared they are to meet the demand remember the cbn is already saying that we will want a cashless society so some people may especially in the urban area you will exchange that you go to the bank you put in that 500 they will credit it electronically for you you will not get back the new note unless you want to do a transaction then you have to go to keep for the new note and remember that the cbn now wants to reduce cash in the system so most of our transaction may be done electronically and that is why they are planning to improve they say they will improve the app of their every bank need to improve their app also to make sure that things goes on very well another aspect of this before we go i wish we had more time to talk about the demonetization and how it works but another aspect of this happens to be the the inscriptions on the narrow notes quite controversial you would agree Ajami is said to be what's inscribed apart from the narrow the the house of irrational the arabic writing which has been in use in northern nigeria since the 17th century some have called for it to be removed from the newly designed narrow notes not to be included rather the newly desired designed narrow notes what are your thoughts on this is this a religious issue is it a cultural issue what's the etymology of the the genesis of this how did this find its way there um is there any issue here at all some people say this is simply an issue of inclusivity trying to ensure that the the writing and the language you know it had used in use in northern nigeria at the time the narrow was created just to help people understand and know what is 500 naira what is 1000 naira what is 200 naira in their language and that this is going to help so it should this be an issue at all this Ajami Arabic inscriptions on the narrow it shouldn't be an issue let me give you an example the musical note container in the wall is america and they put in their chorus saying god we trust and then it's in their in their schools they are not even allowed to talk about the same god it's an individual thing but in their major means of esteem which they use all over they put in god we trust so i don't think that that or not that's not what brings the the value of naira it's not been the name you put in it it's not in the in the in the how you put it whether arabic english no the value of the naira has to deal with what you are able to produce what am i have value how valuable is your naira in the tense of your own policy decision in terms of your physical decision that's what give them naira value not in the currency name whether you write it in arabic whether i write it in greek whether i write it in hebrew whether i write it in jewish language it doesn't change anything it's the it's a means of esteem it's like no matter how dirty the naira is if you pick it it still gives you the same value it's only in nigeria that you see people just look at the naira and say no i won't i won't collect it because it's dirty because that is right i'm not raising the cbm what's giving for that is that look we need to guide against counterfeaking we need to guide against making the naira look neat that is the problem of the cbm about counterfeaking there kind of the security has improved in every currency and but you must understand also global best practices is that every five to eight years you redesign your currency so i don't think this issue of arabic or not arabic community so are you saying are you saying muktak are you saying that we should actually nigeria should actually ignore that especially when we know that uh the issue of tribe the issue of ethnicity seem to be big for us right one english-speaking nation what business do we have with arab being on the notes uh if we're talking about arab which some people would say represent a certain religion should we begin to have you know all of the languages reflected on the note so what are you really saying we know that we cannot ignore the issue of ethnicity and religion out of our development as a nation we will not we should not ignore it then also we should not forget that those small population that also have a right to their own and this thing in the currency when i talk about the arabic you should know that the arabic language is also still being being being being used as means of communication in some part of nigeria so i don't think we should let me tell you something about it when the politicians wants to get things out of nigeria they bring us to religion they bring us to tribalistic they bring tribal into it they bring religions into it they bring ethnicity into it that's when they want to divide us but when it comes to the common good of them it corrupting and reaching themselves with our common wealth none of this look at whether they are Muslim whether they are christian whether they are hindus whether they are they are they are they are they are different you can look corruption does not have a tribal name does not have a religious name or every by every of them practice corruption they they're involving corrupt practices so i don't think it should be a major issue in in the fact that since the it seems the the the the the the painting of our currency we've always had that and that has not reduced the value or that has what has added the value i just give an example of america that they put in god we trust and not everybody in america believe that even in their public schools is you are not even allowed to come up publicly to talk anything about god but in their currency which is a medium rest and they put there in god we trust so definitely i don't think that should be an issue economically when you are looking at a currency you are not looking at at the the way what is used to you looking at what is the value of that currency what is the value what can that currency purchase the purchasing power of that currency does not come by the arabic or by the english it comes basically by by the monetary policy and the physical policy that is what gives value to that currency and that's what we should we should be thinking of we shouldn't be bringing religions and tribalism into our economy that has not helped our economy that will not help our economy going forward that is where i stand thank you very much mokhtar for your time we appreciate you you know emphasizing the point mokhtar muhammad is a development economist and is joining us live on our first discussion right here on the breakfast mokhtar thank you very much for your time thank you so much you're welcome to play something thank you all right we'll take a break now and when we come back we have more discussions ahead of the breakfast please stay with us