E-Financial
CBN Made Critical Mistakes that Doomed its Currency Redesign
By Stephen Onyeiwu
Nigeria has successfully introduced new banknotes on about 10 occasions since independence in 1960. So why has the latest attempt been so controversial and traumatic? And what measures need to be taken to avoid a future debacle?
Godwin Emefiele
Nigeria’s central bank announced the introduction of new banknotes last November, with the changeover to new notes scheduled for mid-December.
The rollout of the policy disintegrated into chaos, amid mounting anger among ordinary Nigerians.
The rollout of the currency change was disastrous. The fallout included:
- Severe shortages of the new banknotes.
- Precipitous declines in business transactions (especially in the informal sector).
- Long queues at bank premises and overcrowded banking halls
- Attacks on bank staff and destruction of bank property, including ATMs that failed to dispense cash.
The policy also led to lawsuits by some state governors against the Central Bank of Nigeria and the Federal Government.
I have identified five factors that marred the redesign policy, most of which could have been avoided by the Central Bank of Nigeria.
Litany of errors
Cost-benefit: An egregious error committed by the central bank was its violation of the principle of cost-benefit analysis. This is a simple rule in economics that implores policy makers to undertake an initiative only when the benefits exceed the costs. One should ask: What were the benefits of introducing the policy? What were the potential costs at the time of implementation?
The central bank justified the redesign policy as follows: to rein in counterfeiting, promote a cashless economy by limiting the amount of the new banknotes that can be withdrawn, reduce the large quantity of dirty notes circulating in the economy, discourage hoarding, curb crimes like kidnapping and terrorism, and head off illicit financial transactions.
It also saw the policy as a way of addressing the huge amount of currency outside the formal financial sector; 85% of banknotes circulate outside the banking system, largely because of hoarding and illicit financial transactions.
And the cost? If indeed the central bank considered the cost, it obviously underestimated it. How would anyone ignore the large-scale disruptions in the economy and loss of productivity that the policy caused, not to speak of the stress and anxiety inflicted on Nigerians?
Communication: Of all the pitfalls that doomed the currency redesign policy, at least as conceived originally, the lack of effective communication about the overarching goals and modus operandi of the exercise was the most devastating.
Nigeria’s central bank threw a basic element of strategic planning and communication to the winds when it failed woefully to communicate and educate the public about expectations, prior to launching the policy. According to strategic planners, a major policy initiative that is not well communicated, from the top of the strategy planning pyramid to the bottom, is bound to fail.
The central bank should have sought the buy-in of major stakeholders, especially the National Economic Council and the National Assembly. The central bank would have had a better chance of avoiding the ferocious push-back it got.
The central bank finally began rolling out a communication plan by late December 2022. But this was too little too late. By then Nigerians had already characterised the policy as decidedly punitive. The narrative that had gained ground was that the change was designed to curtail the ability of politicians to buy votes during the 2023 elections.
This inevitably raised the question of why millions of Nigerians should suffer because of politicians?
The central bank’s mishandling of communication was also manifested in the fact that it failed to issue policy guidelines to commercial banks and the public days after the Supreme Court nullified the bank’s earlier deadline. This has exacerbated the confusion associated with the policy, as merchants and businesses continue to reject the old notes, despite the court’s rulings.
Inappropriate timeframe: The timeframe for implementation was unrealistic and impracticable. By setting a very short timeframe for phasing out the old notes, the Central Bank of Nigeria appeared to have adopted textbook assumptions about how the Nigerian banking system works.
Anyone who has been to a typical commercial bank in Nigeria would know it would have been impossible for the banks to undertake the monumental task of collecting old notes and dispensing the new ones within the one-and-a-half month window originally allowed by the central bank. Overcrowding, chaos, excruciatingly slow service and unnecessary bureaucratic red tape are quite common during normal banking hours. It is not uncommon to observe people with “connection” circumvent queues and obtain preferential access to bank staff. Although Nigerian banks pride themselves as being digitised, a lot of paper-pushing still goes on within the banking system.
The central bank should have considered this fact and allowed for a longer timeframe for implementation.
There was also no persuasive rationale for the rushed implementation of the policy. Neither was the central bank able to explain why the old and new notes could not coexist, a measure the Supreme Court has now mandated the bank to implement.
Conflicting goals and lack of prioritisation: Policy targeting is a major precondition for success. The focus on one unambiguous objective in past redesign policies enabled the central bank to conduct a seamless and less dramatic exercise.
The current redesign policy had too many goals, and it was unclear which one was the target goal.
Identifying target goals enables policy makers to select appropriate instruments for achieving those goals. But when there are too many goals, the danger is that an instrument designed for one goal may undermine another goal.
For instance, the goal of reining in money laundering and illicit financial transactions meant that the Central Bank of Nigeria needed to deliberately restrict access to the new banknotes. But this inflicted unintended hardships on innocent Nigerians who simply wanted to access their hard-earned money.
The central bank should have focused on one major goal. If the goal was to phase out old notes, as the bank is statutorily mandated to do, then the old and new notes could have circulated alongside each other until the old notes were phased out.
A casual announcement that new notes would be circulating from a given date would have been all that was needed. People would not have panicked and rushed to the banks to withdraw money.
Economic headwinds: It is very difficult to implement a major policy initiative that negatively affects people during a period of macroeconomic instability. The central bank policy came at a bad time. Nigeria’s economy is in a shambles, with a 22% inflation rate, 33% unemployment rate – 43% among young Nigerians – and a growth rate of 3%.
These economic challenges have been compounded by a 17.5% interest rate, steep declines in the value of the Naira, and widespread poverty.
Nigerians’ tolerance for economic shocks was already at its limit when the redesign policy was launched. The policy and the confusion that accompanied it tipped them over the edge.
The challenge of credibility
The central bank needs to reestablish its credibility as the “people’s bank,” to reverse a self-inflicted image of an organisation that’s partisan.
The bank has a fiduciary responsibility of catering to the interests of its main “shareholder,” the Nigerian people. But the perception is that the bank lacks independence. To effectively discharge its statutory duties, the Central Bank of Nigeria should initiate a process of re-asserting its independence and regaining the people’s trust and confidence.
Stephen Onyeiwu is professor of Economics & Business, Allegheny College
This article is republished from The Conversation Read the original article.
Bank Customers Association of Nigeria (BCAN) has written to the Central Bank of Nigeria (CBN) seeking urgent intervention over what it describes as persistent and unauthorized charges being deducted from customer accounts across the country.
This was revealed by Uju Ogubunka, president, BCAN, during the 2025 Artificial Intelligence Conference hosted by SuperNews in Lagos.
Themed “Power of AI: Enhancing Efficiency and Customer Satisfaction for Better Financial Services Experience”, the event brought together stakeholders in the banking and fintech sectors.
Ogubunka expressed concern that many of the charges deducted from customer accounts particularly under the end-user billing model for Unstructured Supplementary Service Data (USSD) do not fall within the framework of fees approved by the CBN.
“On the issue of excess charges, we have formally written to the Central Bank of Nigeria seeking a permanent solution. If that doesn’t happen soon, Nigerian bank customers may have no option but to publicly demand accountability,” he warned.
The BCAN President painted a grim picture of banking satisfaction levels in the country, arguing that many customers remain deeply frustrated by poor service delivery, even as banks boast of adopting digital and AI-driven tools.
“Let’s be honest customer satisfaction in Nigeria’s banking sector today is practically non-existent. The number of complaints, petitions, and legal disputes being filed daily at the Bankers’ House, CBN, NDIC, and mediation centres tells the real story,” Ogubunka said.
He noted that if artificial intelligence had truly taken root within financial services as advertised, many of the recurring issues such as transaction failures, poor response times, and vague charges would already be resolved.
Johnson Chukwu, the conference keynote speaker and a respected financial expert, spotlighted the immense potential AI holds for transforming Nigeria’s financial landscape especially in areas like consumer lending, customer experience, and fraud detection.
Chukwu said AI now enables instant consumer credit scoring, making it possible for financial institutions to offer small personal loans with minimal human involvement.
“Today, consumer credit is expanding because AI tools can assess your income and spending habits. Telcos know your payment patterns, your locations, even where you smoked last night. That data enables quick credit decisions you apply, and within minutes, the loan is disbursed,” he explained.
Chukwu also emphasized how AI can drive hyper-personalisation in service delivery.
“With AI, one million customers can be treated as one million unique individuals. The system recognises your face, fingerprint, and transaction behaviour. It tailors services that suit your lifestyle and financial goals.”
He added that the technology can also drastically reduce the time it takes to resolve complaints, citing AI’s ability to mine customer data and instantly identify root causes.
Chukwu concluded his remarks with a framework for AI adoption in financial services, listing seven essential “C’s”: Capacity, Capability, Collaboration, Creativity, Cognition, Continuity, and Control.
“Artificial Intelligence will shape the future of customer experience and service delivery. Financial institutions that fail to embrace it risk becoming irrelevant. The time to act is now,” he said.
By Austin Kwesi Okere
On June 4, 2025, Bloomberg.com drew global attention with the headline: “World-Beating Cedi Slows Ghana Inflation to Three-Year Low.” Defying expectations, the cedi has appreciated over 42% against the U.S. dollar since January, making it the world’s best-performing currency this year. This rally has not only boosted investor confidence but also helped reduce inflation and restore economic momentum.
What’s Driving the Rally and Can It Be Sustained?
Early signs suggest the rally is rooted in more than market forces. Under President John Dramani Mahama, Ghana appears to be undergoing a significant shift in governance, with an emphasis on real economic growth and social development rather than short-term optics.
At the heart of this shift is Mahama’s eight-pillar economic strategy, which includes:
- Completing the IMF program with fiscal discipline,
- Reopening capital markets,
- Strengthening sovereign wealth and local government financing,
- Clearing arrears and improving public investment,
- Reforming public financial management,
- Boosting exports via the Ghana Exim Bank,
- Positioning Ghana as a regional trade hub, and
- Reviving infrastructure development.
These efforts are beginning to pay off. Ghana has indicated it will exit the IMF program as scheduled in May 2026. At a press briefing in Washington, IMF Communications Director Julie Kozack noted that Ghana had achieved its debt-to-GDP target of 55% three years early and surpassed its international reserves goal, reaching GH¢10.6 billion by April 2025. The cedi’s strength has also helped slash Ghana’s debt stock by about GH¢150 billion.
President Mahama, speaking to the Ghana National Association of Teachers, reaffirmed his focus on stability and inclusive prosperity. GDP growth reached 5.4% in the first quarter, reinforcing the view that the economy is back on a growth path.
Monetary Policy and Inflation Management
The Bank of Ghana has played a key role in managing inflation and currency stability. In March, it raised the benchmark interest rate by 100 basis points to 28%, a reduction from its 30% peak in 2023. From January to April 2025, it absorbed GH¢79.8 billion in liquidity – up 76.6% from the same period the previous year, demonstrating its commitment to macroeconomic stability.
These measures have had visible results: inflation fell to 18.4% in May, its lowest level in three years, down from 21.2% in April.
Everyday Impact: The Cedi’s Gains in Real Terms
The appreciation of the cedi is beginning to improve everyday life for Ghanaians. Industrial importers, for instance, are now able to buy machinery at significantly lower prices. One contractor, who paid GHS25,000 for a block molding machine last year, paid just GHS13,000 for the same model in June—a 48% price drop.
Fuel prices have dropped by about 15%, with some Oil Marketing Companies (OMCs) selling petrol for under GH¢12 per litre. This has led to a 15% reduction in transport fares, as announced by the Road Transport Operators Association in May.
Food and commodity prices are also falling.
The Food and Beverage Association of Ghana reports that the price of a bag of “Dubai” rice has dropped from GH¢460 to GH¢370, and a 50kg bag of imported rice that once sold for GH¢950 is now GH¢750. Cooking oil has fallen from GH¢1,000 to GH¢680 per gallon, and cement prices from GH¢120 to GH¢82 per bag.
In short, the stronger cedi is improving purchasing power, easing cost pressures, and lowering the cost of doing business.
What’s the Ideal Currency Level?
Despite the positive momentum, policymakers stress the need for balance. President John Dramani Mahama has underscored the importance of balance, cautioning that an overly strong cedi could harm exports. He suggests an optimal exchange rate range of 10 to 12 cedis per U.S. dollar – a level that supports both importers and exporters while preserving competitiveness.
Beyond interest rate adjustments, the sustained performance of the currency depends on broader structural and governance-related factors.
Three critical elements driving the cedi’s performance include:
- A government focused on real, inclusive growth;
- Reforms grounded in substance, not optics;
- Trustworthy, transparent governance.
This combination fosters domestic investment, reduces capital flight, and boosts economic confidence, setting off a cycle of growth and social cohesion.
Is the Cedi’s Rise a Temporary Spike or a Structural Shift?
Some analysts argue that Ghana’s currency rally reflects deeper structural improvements rather than a short-lived spike. Prof. Eric Oteng-Abayie of the Kwame Nkrumah University of Science and Technology points to several domestic drivers behind the rally.
The Bank of Ghana’s Gold4Oil and GoldBod programs have increased Ghana’s gold reserves by 40.6% between May 2024 and April 2025. A requirement that 20% of gold export proceeds be converted to cedis before accessing dollars has stabilized forex supply and bolstered reserves.
Meanwhile, the removal of distortionary taxes such as the E-levy and the planned phase-out of the COVID-19 levy, combined with prudent public spending, have strengthened fiscal credibility.
Ghana’s debt restructuring has also offered relief. With the next major external repayment not due until July 2025, foreign exchange pressure has eased. Complementing this, the central bank injected $490 million into the forex market in April 2025 to support the cedi.
External Factors Working in Ghana’s Favor
Global trends have also benefited Ghana. The U.S. dollar has weakened—dropping 10% on the DXY index—amid global trade tensions and fears of a slowdown. This shift has favored emerging market currencies like the cedi.
Record-high prices for Ghana’s key exports – gold at $3,400 per ounce and cocoa at $10,000 per ton – have significantly boosted foreign exchange inflows. The formalization of small-scale mining has further increased legal gold exports, strengthening Ghana’s external position.
Relations with Commercial Creditors Normalised:
Fitch Ratings has upgraded Ghana’s Long-Term Foreign-Currency Issuer Default Rating (IDR) to ‘B-‘ from ‘Restricted Default’ (RD), with Stable Outlook.
This was announced on their website on June 16, 2025. The upgrade of Ghana’s Long-Term Foreign-Currency IDR to ‘B-‘ from ‘RD’ reflects Fitch’s assessment that Ghana has normalised relations with a significant majority of external commercial creditors.
Ghana restructured its USD13.1 billon Eurobonds in October 2024. About USD2.6 billion of non-performing external debt still needs to be restructured. Of this, Fitch considers USD700 million to be commercial debt, representing 5% of total external commercial debt initially included in the restructuring perimeter. According to Fitch, “Ghana is negotiating with these outstanding commercial creditors, and we assess holdout risks as small.”
Can Ghana Sustain the Momentum?
While the outlook appears promising, the sustainability of this recovery will depend on disciplined policymaking, focused execution and the ability to maintain public trust. The early signs are encouraging, but in my view, “the jury is still out.”
Ghana’s case may well become a model for how transparent governance, strategic reforms, and global tailwinds can come together to drive economic revival – if the momentum can be maintained.
Austin Kwesi Okere is the Founder of CWG Plc and the Ausso Leadership Academy. In recognition of his contributions to business education and knowledge transfer across the continent, Austin was appointed to the Advisory Board of the Global Business School Network.
First Bank HoldCo Plc has disclosed that it spent over ₦15 billion to protect its banking systems from cyberattacks between January and June this year, as digital threats to financial institutions continue to rise across Nigeria.
Mr. Olusegun Alebiosu, CEO, First Bank
Mr. Olusegun Alebiosu, chief executive officer of the bank, revealed this on Wednesday while speaking on the sidelines of a two-day National Seminar on Banking and Allied Matters for Judges, held in Abuja.
Alebiosu said the bank invested ₦3 billion in cybersecurity measures in June alone, part of a broader commitment to safeguarding customer assets and maintaining trust in Nigeria’s banking system.
The News Agency of Nigeria reports that the CEO said the bank had the most robust cybersecurity framework in the country, which justified the substantial investment.
Speaking on the rising wave of cyberattacks targeting banking systems, Alebiosu assured First Bank customers that their funds remained secure.
He also expressed concern over the growing involvement of some Nigerians in cybercrime, stressing the urgent need for the country to tackle the menace decisively.
He said, “No customer would lose their money in First Bank unjustly. If their money is missing from First Bank, First Bank will pay it back. Before I joined First Bank, I had an account with First Bank. One of the reasons why I had an account with First Bank was that I said to myself, if my money is missing, it is the only bank I know I will collect my money back without any excuses.”
Responding to customers’ complaints about delays in addressing cases of fraudulent transactions, Alebiosu explained that the bank must carry out thorough investigations involving multiple stakeholders.
He said the delays often stem from the need for collaboration between security agencies and the recipient banks to ascertain the facts surrounding each case thoroughly.
Alebiosu also advised customers to be cautious when handling and sharing their financial information.
“Customers themselves, most times, also compromise their own security details; I have seen a lot of people that give their cards to somebody to help them withdraw money from their ATM. They compromised their password, so when something happens and you say, my money disappeared, you forget the day you gave your card to someone else and they can use that to transfer your money,” he said.
“Some people even compromise their own ID on the system carelessly; some give their Bank Verification Number (BVN), and they use it against them.”
“Now, why does it take time for the bank to react? everything you give to the bank, the bank has to investigate it. The money might have gone to other banks, so you start tracking from other banks, but sometimes customers are impatient,” he said.
Regarding alleged fraud committed by staff, he stated that the bank uses internal employee fraud detection software to monitor staff activities on its systems.
He added. “If you knew how many of our staff we sack on a monthly basis, you wouldn’t believe it. So if there are triggers, people will be involved. It is for us to run faster than them and see how we can help to stop these kinds of things in our system but wherever we see it, we deal with it decisively.”
He stated that curbing cybercrimes requires the active involvement of various stakeholders, including banks, law enforcement agencies, and the judiciary.
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