Naira Redesign, Policy Design and Execution Flaws Postscript by Waziri Adio The cash crunch and the attendant economic and social dislocations created by the currency redesign policy of the Central
The cash crunch and the attendant economic and social dislocations created by the currency redesign policy of the Central Bank of Nigeria have surfaced many design and implementation flaws that typically undermine the effectiveness of public policies. Having good intentions or securing necessary authorisation or demonstrating the stamina to stay the course is never enough or necessarily optimal.
The president’s position as the approving authority on currency change in enshrined in 20 of the CBN Act, 2007. So, even when the CBN is the adviser, the designer and the implementer of the policy, the onus is squarely on the president. President Buhari should step in to eliminate the needless suffering inflicted on Nigerians by the implementation of the policy. He should be bothered less about ego and more about legacy.
To start with, is there anything that has happened that the CBN couldn’t have anticipated and shouldn’t have planned for or against? Hardly. Policy makers are usually advised to take Murphy’s Law as an iron law and to always factor it into policy design and implementation. Murphy’s Law roughly translates to assume that: ‘anything that can go wrong will go wrong’.
Nigerians easily picked up the signal that CBN was rationing the new notes. Those who have access to the new notes assign a margin. Those who get or buy the new notes are not letting go of them, so the notes are not getting back into the banks or are not going into circulation. The initial scarcity created a second order scarcity: most people are scampering to join the ever-growing queues, increasing the sense of scarcity.
“Almost all available information pointed to cash being ubiquitous in the daily life of Nigerians,” the article states. “The failure by the CBN to foresee this necessary cash demand means that it probably underestimated how much demand there would be for the new currency notes.” . This underestimation and other faulty assumptions are design errors, and they fall squarely on the CBN.
It is this dogmatism about deadline and the small issue of timing that have fuelled all sorts of insinuations that the CBN might have other intentions, including those clearly beyond its remit. Right from the time the policy was announced, a spin emerged that the Naira redesign is intended to stop vote-buying in the forthcoming general election. The CBN has neither confirmed nor denied this. It is conceivable that this spin enjoys CBN’s endorsement.
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