The Central Bank of Nigeria (CBN) has raised the Monetary Policy Rate (MPR), which measures interest rate, from 16.5 percent to 17.5 percent to tame inflation. Godwin Emefiele, the apex bank chief, stated this at the end of the bank’s Monetary Policy Committee (MPC) meeting in Abuja on Tuesday.

The monetary policy rate was raised by 100 basis point to 17.5 percent and kept the asymmetric corridor at +100/-700 basis points around the MPR. The MPC retained Cash Reserve Ratio (CRR) by 32.5 percent while liquidity ratio is kept at 30 percent.

Mr. Emefiele said MPC “members welcome the recent deceleration of the year-on-year headline inflation, noting that the persistence in policy rate hike over the last few meetings of the committee have started to yield the expected decline in inflation.” Scarcity of Premium Motor Spirit, the 2023 general elections, continuous rise in energy prices, exchange rate pressure as well as widespread insecurity were some of the underlying factors that led to the hike, stated the CBN governor.

Announcing the committee’s decision, Emefiele said: “MPC was of the view that although inflation rate moderated marginally in December, the economy remained confronted with the risk of high inflation with adverse consequences on the general standards of living. Committee, therefore, decided to sustain the current stance of policy at this point in time to further rein in inflation aggressively. MPC voted to raise the MPR to 17.5%, retain the asymmetric at +100/-700 basis points around the corridor.”

In spite of the clamour for extending the validity of the higher denominated naira notes, the CBN said its January 31, 2023 deadline remains sacrosanct. “I must say here that, unfortunately, I don’t have good news for those who feel that we should shift the deadline. My apologies. The reason is because just like the President has said more than two occasions and even to people privately, that for us, 90 days, in fact, we feel it is 100 days, that it is enough for anyone who has money or the old currency to deposit it in the bank. And we took every measure to ensure all the banks remain open to receive all old currencies,” said the CBN helmsman.

Continuing he said: “One hundred days we believe is more than adequate. We called on the banks, not only are we requesting you to extend your banking hours so that you can receive old currencies, but we are also asking you to keep your doors open on Saturdays, ladies and gentlemen, the banks did not even have any reasons to even keep their banking halls open on Saturdays neither did they see the kind of rush that they anticipated. We do not see any reason to begin to talk about a shift because people could not deposit their old monies into their banks.”

He said the CBN has 1.4 million super agents nationwide to collect old naira notes in exchange for new notes in riverine and upland areas, saying “money is going down and is circulating to the lower rung of the community. We have 1.4 million points of our super agents; those agents are going to be available to conduct cash exchanges. The super agents are like kiosks, shops in your community, whether it is a riverine or upland area, they are there, selling sweets, selling kola nuts but they have been appointed as agents that will do cash exchange and cash swap for you. This, we have put in place.”

The CBN late last year announced its plan to redesign the three banknotes. President Muhammadu Buhari subsequently unveiled the redesigned ₦200, ₦500 and ₦1,000 notes on November 23, 2022, while the apex bank fixed January 31 deadline for the validity of the old notes. The CBN also pegged its weekly cash withdrawal limits to ₦500,000 for individuals and ₦5million for corporate entities. The CBN also recently directed commercial banks to halt over-the-counter payment of the new notes and load their Automated Teller Machines (ATMs) with the redesigned naira notes to boost circulation.

The actions or the apex bank in making the currency swap seamless have been deemed at best to be inadequate, the policy rushed and the peculiarities of Nigerians particularly the unbanked, were not taken into consideration in the three-month window provided by the bank for the swap. Members of the national Assembly, Nigeria Governors’ Forum and many others have asked the CBN to extend the date to enable more Nigerians swap their old naira notes.

Ayodele Johnson

Ayodelé is a Lagos-based journalist and the Content and Editorial Coordinator at Meiza. All around the megacity, I am steering diverse lifestyle magazine audiences with ingenious hacks and insights that spur fast, informed decisions in their busy lives.