By Emmanuel Edukugho
When a swarthy man beckons you into a dimly lit alley, you would do well to walk briskly away. But in reality, you might be losing an opportunity to discover a delightful but out-of-the-way small restaurant. Fear and uncertainty about what would happen next, good or bad could be unpredictable.
When a swarthy man beckons you into a dimly lit alley, you would do well to walk briskly away. But in reality, you might be losing an opportunity to discover a delightful but out-of-the-way small restaurant. Fear and uncertainty about what would happen next, good or bad could be unpredictable.
This, to a considerable extent, captures the recent announcement by Mallam Lamido Sanusi, Governor of the Central Bank of Nigeria (CBN) on his plan to introduce N5,000 banknotes and conversion of existing currency notes of N20, N10, and N5 to coins. Sanusi said the N5,000 note will have the features of three women nationalists – Margaret Ekpo, Funmilayo Kuti and Gambo Sawaba on it while the other side has the National Assembly complex depicting our democracy.
At the same time, existing N500, N200 and N50 will be redesigned with new security features.
The CBN governor recalled that the last review of Nigeria’s currencies was in 2005 when the N20 polymer banknotes were introduced, followed by withdrawal of the N50, N10, and N5 notes in 2007 which were converted into Polymer banknotes in 2009.
According to him, several stakeholders fora were conducted in 2011 on currency restructuring to gauge public and independent perspectives on the existing banknotes and coin series. That President Goodluck Jonathan gave approval to the plan in December 2011.
Sanusi assured that the initiative will not lead to inflation because countries like Singapore and Germany with higher bills of 10,000 have not been weighed down by inflation, adding, “the plan is in line with international best practices which require monetary authorities to review their nations’ currencies at intervals of five and eight years to address weaknesses and other challenges.”
In the first place, many Nigerians have described the initiative as putting the cart before the horse much as the currency restructuring plan was not taken to the public domain for debate or hearing and consequent parliamentary approval.
Dr. Godwin Owoh, Executive Chairman, Society for Analytical Economics in an AIT discussion, said the N5,000 note will actually lead to inflation. There will be statutory inflation considering initially the cost of retrieving the currencies being withdrawn apart from the cost of printing the new notes estimated at N40.3 billion.
Also, the cost of copper and other metals had risen in the international market used for making coins.
“It’s strange to say there won’t be inflation as the cost of over N40 billion for printing the currency is not productive to the economy, views of Nigerians not considered, public hearing overlooked, CBN didn’t open up nor had interactive session with the National Assembly.”
Owoh said reference by the CBN governor to Singapore, Germany and Japan with bills of 10,000 was wrong because these countries have the highest cost of living in the world.
On the other hand, Nigeria has one of the lowest standard of living in the world, 7th with the highest death rate, 41st out of 53 in Africa and 13th out of 16 ECOWAS states in terms of welfare.
“Public institutions like CBN belongs to all Nigerians and should not make decisions that will take Nigeria and the economy by surprise. CBN had already completed the steps for currency restructuring, so what it has done is giving notice of withdrawal while the CBN Board and President Jonathan have approved the plan.”
“The CBN is not fair to the people. The value of any currency is determined by 60% of goods produced, 30% services and 10% credibility of the institution (CBN).
He warned of the social effects that the high currency denomination will likely cause such as increase in kidnapping and ritual killings for money.
“The restructuring and introduction of N5,000 are totally unpopular among the people.”
In defending the plan, CBN’s Director of Media, Mr. Ugochukwu Okoroafor in an interview with Channels TV, said it is easier and cheaper to carry high denominations of naira.
If you load one billion van with N5,000 notes, you will need five bullion vans to load N1,000 notes. If you load one ATM with N5,000 notes, you will have to load five ATMs with N1,000 notes, he said.
On the life span of the N5,000, Okoroafor claimed it will last for a long time as people may not want to spray it at parties, and will be treated with respect, a symbol and thing of pride.
Another is that removing currencies with pictures of General Murtala Mohammed, Alvan Ikoku and Tafawa Balewa will hurt many people who regard them as heroes.
Reintroducing coins will give goldsmiths raw materials to melt and make trinkets, necklaces.
He said if Nigeria is to go ahead with the plan, the CBN governor must give an undertaking that it won’t lead to inflation.
“Our only hope is the National Assembly who can stop the CBN. It’s a bogus programme.”
It is time that we get our priorities right as a developing country. There is no international law or convention stipulating that a country must review its currencies every five years. Nigeria can do so whenever necessary and desirable in the national interest. We should not deplete our resources to support restructuring of the naira.
This lack of adequate consultation and public debate might have informed the senate committee on banking, insurance and financial institutions chaired by Senator Bassey Edet Otu to stop the proposed introduction of the N5,000 banknote as a matter of urgency because they were not briefed – as it involves parliamentary approval.
Sanusi introduced a cashless policy which is yet to gain ground in Lagos as a pilot scheme before spreading to other cities whose successful implementation is highly doubtful. But the cashless policy now seemed a clear contradiction to the introduction of N5,000 note. How can the two be reconciled, which points to the confused mind of the CBN governor. After taking one step forward, he takes two steps backward. Cashless policy has completely defeated the objectives of the new N5,000 note.
There is no compelling reason for this because the country is not experiencing hyperinflation.
Use of coins should be allowed to evolve naturally and not be forced down the throats of Nigerians more so when there are no goods and services for which coins can be used,” a money market expert Mr. Tunji Aremu told Saturday Vanguard.
“The restructuring and introduction of N5,000 are totally unpopular among the people.”
In defending the plan, CBN’s Director of Media, Mr. Ugochukwu Okoroafor in an interview with Channels TV, said it is easier and cheaper to carry high denominations of naira.
If you load one billion van with N5,000 notes, you will need five bullion vans to load N1,000 notes. If you load one ATM with N5,000 notes, you will have to load five ATMs with N1,000 notes, he said.
On the life span of the N5,000, Okoroafor claimed it will last for a long time as people may not want to spray it at parties, and will be treated with respect, a symbol and thing of pride.
