“Critical Challenge”: CBN Shares Plan to Tackle Commoditization of Naira

• The CBN has put up a comprehensive plan to address the ongoing commoditization of the currency
• The development is set to restore the naira's status as a valid national currency
• According to Cardoso, Nigerians' daily lives are in grave risk due to the naira's commoditization

Legit.ng journalist Zainab Iwayemi has 5-year-experience covering the Economy, Technology, and Capital Market.

Olayemi Cardoso, the governor of the Central Bank of Nigeria (CBN), has presented a thorough plan to address the ongoing commoditization of the naira with the aim of restoring its standing as a legitimate national currency.

This declaration was made during the first-ever Stakeholders Conference, with the topic "Commoditization of Naira: The Way Forward," which was held over the weekend in Lagos by the Committee of Heads of Banks Operations (CHBO).

Cardoso stated that the naira's commoditization is a serious danger to Nigerians' everyday life, as they depend on the currency for transactions, as well as the banking industry.

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He defined naira commoditization as the process by which the national currency is no longer viewed as a medium of exchange for goods and services of economic worth but rather as a tradeable asset whose inherent national value is subject to the laws of capitalism.

He asserts that the Naira represents our sense of national identity and is more than just a piece of money. For economic development and progress, its stability is essential.

Leadership reported that instead of serving as a primary medium of trade, the Naira has recently been considered more like a commodity.

“The commoditization of the naira, our national legal tender, has become a critical challenge for Nigeria’s financial ecosystem. It is a problem that not only affects the operations of the banking industry but also the lives of every Nigerian that relies on the currency for his day to day transactions.”

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In order to accomplish that, the governor stated that the CBN is dedicated to collaborating closely with all parties involved in the banking system as a regulator of the financial system and the integrity of the national currency.

How to combat commoditization

According to him, the apex bank's plans to combat the commoditization of the naira include raising public awareness of responsible naira usage, fortifying the cash management system to guarantee equitable distribution throughout the nation, working with law enforcement to enforce current regulations and hold offenders accountable, encouraging digital payment channels to cut down on cash transactions, and highlighting digital errors to the CBN and banks.

Professor Pius Olanrewaju, president of the Chartered Institute of Bankers of Nigeria (CIBN), outlined three important points to think about: raising public awareness; using technology more, such as the fintech revolution, to increase the value of the currency; and making sure that current laws are enforced.

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Abraham Aziegbe, the chairman of CHBO's Executive Committee, ascribed the Naira's commoditization to extreme scarcity, which prompted its monetization.

According to him, Nigerians have experienced severe hardships over the last two years as a result of cash shortages, which have led to situations where people have had to pay premiums for routine transactions. He said this raises questions over the availability of cash and possible bank hoarding activities.

Naira ends losing streak

Legit.ng reported that the naira ended its week-long losses against the US dollar on Thursday, January 16, 2025, gaining 0.17%.

The Nigerian currency has been plagued by under-performance in the forex market, losing against the dollar for almost half the second week of January.

The marginal losses saw the naira hover just above the N1,500 threshold, with analysts suggesting it may have stabilised following the devaluation.

Source: Legit.ng