The latest move of the Central Bank of Nigeria, CBN to convert the current N5, N10 and N20 notes to coins and also step the currency note to N5,000 denomination by 2013 which has already gotten the nod of the President amidst mountainous agitations by Nigerians has become one controversial issue in the life of the nation at the moment.
Will the ruling class have its way as against the wish of most Nigerians? That seems to be the question Saturday Vanguard’sJOHN BULUS tries to find answers to in this special report.
“I will continue to fight for your future, because I am one of you. I will continue to fight, for improved medical care for all our citizens. I will continue to fight for all citizens to have access to first class education. I will continue to fight for electricity to be available to all our citizens.
I will continue to fight for an efficient and affordable public transport system for all our people. I will continue to fight for jobs to be created through productive partnerships. You have trusted me with your mandate and I will never, never let you down.
I know your pain, because I have been there. Look beyond the hardship you have endured. See a new beginning; a new direction; a new spirit. Nigerians, I want you to start to dream again. What you see in your dreams, we can achieve together.”
With these words, President Goodluck Jonathan on his inauguration as the new Nigeria’s President on May 29, 2011 sealed a pact with Nigerians promising to turn their dreams into reality while declaring that the years of locusts and cankerworms are over.
Even prior to the time, he had during the campaigns, as he crissed-crossed the length and breath of the country drew up similar words that may have prompted Nigerians who massively voted for him during the Presidential election. But when finally he settled in office, President Jonathan appears to be pursuing programmes and polices that obviously don’t receive the endorsement of many Nigerians whose future he promised to secure. More so, they become much more controversial than expected.
Consequently, every step he takes meets stiff resistance from the people.
And so, one wonders if the President is actually serving the interests of Nigerians that voted him into power or that the people themselves have suddenly not seen good the policies of the man they voted into power.
Some past issues since the inception of the present administration in May, 2011 may have indicated that most moves taken by the Federal government are rather making the regime unpopular. Barely 7 months in office and at a time Nigerians expected a quick fix of the economy, President Jonathan thought it necessary to delve into heavy political matters.
Thus, he canvassed for a single seven- year term for President and Governors. The issue generated unusual dusts from several quarters that when the bill finally got to the National Assembly, it was already dead on arrival. Yet, in May this year, the President also came up with the change of name of the University of Lagos to Mushood Abiola University.Till date, the controversy surrounding the development still persists in some sections of the society .
President Goodluck Jonathan
Then came the removal of oil subsidy, the biggest of all policies that attracted almost zero applause from the people. For nine days in early January, 2012, Nigerians closed shop and went on aggressive strike to protest the removal of oil subsidy that suddenly sky-rocketed the pump price of petrol from N65 to N141.
To some analysts, it was not actually the call by the Nigerian Labour Congress, NLC that gave vent to the strike but the pangs of poverty fuelled by anger and the time upon which the subsidy removal came.
And so, there was a spontaneous rash condemnation of the decision from the people who insisted that it must be reversed. Obviously, when it appeared that the showdown could totally cripple the economy, it then became very necessary for the Federal Government to shift grounds and peg the pump price on N97 Naira, per liter of petrol.
Similarly, President Jonathan’s advise to Nigerians to start thinking in the direction of controlling birth rate as a way of circumventing the harsh economic realities of the present age recently was yet another issue that would have stirred up another round of controversy had it been allowed to thrive.
Penultimate week, the Governor of the Central Bank of Nigeria, CBN, Alhaji Sanusi Lamido Sanusi audaciously dropped a bombshell. He said that the apex bank has concluded plans to convert the existing N5, N10 and N20 notes to coins and introduce into the Nigerian market, N5,000 currency note next year. In swift response, organizations, groups, professional associations and Nigerians in their numbers condemned the plan by the CBN, citing several reasons why it must not scale through.
Envisaging the concomitant effects of the policy largely on Nigerians, the Senate asked the Central Bank to stay action on the planned move to introduce the note. The Chairman, Senate Committee on Banking, Currency and other Financial Institutions, Senator Bassey outrightly asked the CBN governor to put brakes on the move.
He said: “I believe that a project of this nature requires parliamentary approval because there are numerous and fiscal implications on the entire economy.
“This type of action is only taken where there is a major crisis and the CBN must be very careful in order not to send a wrong signal or message to households, domestic sector and even the external ones that the Nigerian currency is valueless, which I believe is definitely not, and that for every unit of value, they need to carry a large quantity of cash.
“The CBN in 2008 and 2009 came up with a proposal to re-denominate the currency; that was even to take off the zeroes. This was just 2008 and 2009 and here we are in 2012 seeing a kind of policy somersault even though we understand the dynamics of the sector very well. I believe that we have to be well briefed on this.
“Also in 2005, the CBN undertook a major currency restructuring which ran into billions of naira. Till date, a proper value has not been done to know its cost to the Nigerian taxpayers and the extent of the benefits in that 2005 coinage. I think it did not work at all because goldsmiths and blacksmiths converted the coins to molding bangles, earrings and so on. So, we believe that the coinage works very well where there is infrastructure to take it like a half, probably like parking where you go and put it.
“We have not developed that real basic infrastructure and those coins, most of them are nowhere to be found. So, the CBN will have to prove that the policy is not a clear contradiction or at variance with its cashless society, which they are even yet to justify and whether this is the popular economic way to go.”
Mallam Lamido Sanusi
He further stated, “Actually, we are not really going to rely on laws perse. What we are trying to do here is what is best for the Nigerian people. The Senate is not really against the independence of the CBN, but what we want in place is proper check and that there should be checks and balances in all these things that we do. So, I believe that at some point, we will be able to sit down together and look at the merits and demerits, but till now, we do not know anything about it and we do not know what the people stand to gain and until that is properly put through, we say everything about it must stop.”
Similarly, the House of Representatives through its Banking Committee Chairman, Chukwudi Jones said: “Unfortunately, we are on vacation and we can’t take any legislative action now. But when we are able to get a few members of the committee, we can do something based on the urgency of the matter”.
The lawmaker also stressed that “Our primary concern is that the measure will not hurt the economy and will not affect the daily lives of the average Nigerian”.
Governors’ Forum not aware
The Nigerian Governors Forum is astonished that such a decision has not come up in the National Economic Council which has the Governors of the 36 states of the federation as members.
Hear Governor Gabriel Susuwan of Benue State who is a member of both Groups: “Let me tell you that economically, I don’t support that. I am not an economist, I don’t know what informed that but quite frankly, it means that our naira would be devalued. I don’t know how it would address the economic issues that are confronting us by printing N5, 000 notes, but like I said, I am not an economist. So, I don’t know the nuances of printing N5, 000 notes. If we are saying that we would promote a cashless society and in the same vein printing N5,000 that can make it possible for somebody to carry N10 million in his pocket, I am a bit confused about that. But I expect that this should have been addressed at the National Economic Council meeting. We have never discussed it at any point in time. I am as confused as the man in the street”.
Nigerian Medical Association, NMA, reacts:
The Nigerian Medical Association, said that the decision was borne out of sheer insensitivity by Nigeria’s leaders.
The President of the Association, Dr. Osahon Enabulele, told journalists in Abuja, that the insistence of the CBN governor to carry on with the widely condemned policy was among several critical national issues discussed at the just-concluded National Executive Council (NEC) meeting of the NMA, which held in Owerri, the Imo State capital.
Enabulele also told journalists that the NEC expressed great worry over the proposed introduction of the single N5,000 note, N20 and N50 coins into circulation, on account of the naira devaluation and rise in inflation, which many Nigerians and economists have continued to point out since the policy was first contemplated by Sanusi. He further charged Nigerians to join their voices in the condemnation of the decision.
The position of the Nigerian Bar Association, NBA, is no less of its NMA counter-part.
In a speech in Abuja at the Annual General Conference of the association which held recently, Mr. Joseph Daudu, the immediate past national Chairman of the bar said that the proposal would further
devalue the naira.
“The CBN’s introduction of the N5,000 notes would devalue the naira and it is against the cashless policy being currently promoted by the bank. The proposal by the CBN is shallow and should not be allowed to further damage the already fragile economic system”, he said.
Reacting to the development, Lagos State erstwhile governor, Senator Ahmed Bola Tinubu said the plan is insensitive: “The economy is on reverse, it’s a yoyo economy. This government is not serious; they don’t know
what they are doing.”
In his own reaction, Ita Enang, Chairman of the Senate Committee on Business and Rules,foresees a situation where the present controversy stirred by Sanusi will truncate President Jonathan second term bid. Said he: “I pray Mr. President should be sensitive to this and take action against the move because I am certain the plan is intended to embarrass the President of the Federal Republic of Nigeria and to make the government of Goodluck Jonathan unpopular in years to come so that people will not like to vote for him in the next election.
“I think what Sanusi is aiming at with the introduction of the plan against Nigerians is to ensure that the people will be so unhappy with the President that in the next election they would not like to vote for him. Mr. President should therefore call the CBN governor to order with immediate effect”.
The Nigerian Labour Congress, NLC has vowed to stop the process.
It said: “Psychologically, for the working people, it means they work so much for little notes with introduction of N5000. This may fuel crisis of expectation for more wage increase as bigger banknotes will be chasing fewer goods. Nigeria is better with smaller banknotes that can deliver goods and services rather than higher bills without any value”.
Comrade Abdulwaheed Omar said in Lagos: “Comrades, the recent proposal by the Central Bank of Nigeria is
President ,Nigerian Labour Congress (NLC),Omar Abdulwaheed (middle) Photo by Gbemiga Olamikan.
one of those policies we must be prepared to vigorously oppose. We see in the proposal a policy contradiction that completely exposes our policy makers as playing the devil’s advocate. Most of these policies are clearly not designed by them but obviously by institutions outside our shores. Comrades, we must collectively oppose this and we must not allow the CBN continue with this clearly unnecessary project. We believe the CBN should not supervise the total collapse of our economy with the introduction of a policy that has historically led to the total collapse or subjugation of the economies of some countries in Africa, Europe and South America”.
He added: “There is no genuine reason for the introduction of N5000 note in a country that is dwindling in production and suffocating under high inflation. While our government complains about lack of funds to reactivate infrastructures critical to economic development, the CBN is planning to spend over N40 billion to produce new denominations of our currency”.
General Secretary of the labour union Comrade Issa Aremu told newsmen in Kaduna recently that the bank should rather be more concerned about improving the value of the Nigerian currency as against others in the international market.
“The current highest bank note of N1000 was introduced in 2005. We had currency review in 2007 and 2009. It should not be customary for every CBN governor to change the nation’s bank notes. Incessant turning out of higher bank notes is an attempt to legitimize the devaluation of the Nigerian currency.
There is a direct relationship between higher bank notes and devaluation of the currency. The CBN should concentrate on stabilizing the value of the Naira rather than legitimizing the devaluation of the currency. CBN under Sanusi Lamido Sanusi should continue with the good work they are doing with respect to revival of manufacturing sector and management of inflation and interest rates.
The double digit inflation rate as we currently have cannot take us out of the economic crisis”, Aremu said.
The Conference of Nigerian Political Parties, CNPP, in a statement signed by its General Secretary, Willy Ezeugwu, accused Sanusi and the economic team of hiding under the new currency to further devalue the naira.
The statement reads: “The decision of the CBN, as endorsed by the so-called economic team, flies in the face of reason, especially when all the explanations and analysis that these clueless officials have so far given are reminiscent of the sing song they engaged in January during the ill-conceived removal of petrol subsidy.
The assurances given at that time turned out to be false as Nigerians feared because today, we all know that the quality of life has worsened since the partial removal of subsidy while most of the supposed palliative buses have vanished into thin air.”
Also, Founder and President of Oodua Peoples Congress (OPC), Dr. Fredrick Fasehun has described the insistence of the government to introduce the N5, 000 note despite people’s opposition as autocratic
The Medical Doctor said: “Government is in place for the people and not people in place for the government. We will resist the unpalatable morsel they are trying to force down our throat. We will not allow those in power at our instance to dictate undemocratic policy to us and expect us to swallow it hook, line and sinker”.
Apart from the unanimous agitations against the proposal by the associations, some Nigerians have physically staged protests to register their feelings on the issue. For instance, former Federal Lawmaker in the House of Representatives, Honourable Dino Melaye on Thursday led a group of protesters to CBN headquarters in Abuja against the issues.
Under the aegis of Anti Corruption Network, Melaye reiterated the opposition of Nigerians to the currency restructuring policy of CBN. He told Tunde Lemo, Deputy Governor of CBN who received the protesters that the introduction of a single N5000 note will result in inflation and that Nigerians are opposed to it and asked the CBN Governor, Alhaji Sanusi to listen to the views of the people on the matter.
FG’s Meal of Surprise/Defense
Nigerians who had waited to get a good deal from the Federal Government upon whose approval, the CBN carries out the plan were rather flabbergasted when the federal government during the week, arising from the National Economic Management Team (NEMT) threw its weight behind the CBN governor on the action, conspicuously ignoring the cries and submissions of the Nigerian people.
The NEMT, which is headed by the President, comprises the Minister of Finance and coordinating Minister for the Economy, Dr. Ngozi Okonjo-Iweala; Sanusi Lamido Sanusi, the CBN Governor; Minister of National Planning Dr. Shamsudeen Usman; Director General of the Security and Exchange Commission (SEC); Director General of the Bureau for Public Enterprises (BPE); one representative each of governors of the South and the North as well as key private sector players.
Dr. Shamsheen Usman, the Economic and National Planning Minister said of t6he plan:
“Clearly, the N5,000 note will not lead to higher inflation. There is absolutely no link. I am an economist; I have been deputy governor(Operations) of the Central Bank. During the last review of the introduction of N1000 note and the various coins, I was deeply involved; it was my responsibility at the Central Bank.
There is absolutely no link between inflation and the currency denomination. So, obviously, the discussion today was basically to endorse. Mr. President had already approved; that is the only requirement by law. The CBN is to propose and Mr. President is to approve. And since Mr. President has approved, really, what is important is to just explain.
I personally had some concerns about the coins but since some
discussion with the CBN governor, he has actually clarified that even the media didn’t understand.
“The coins are being introduced on an introductory basis so that if people accept them and are using them,
then gradually they will withdraw the other notes but they will run concurrently with the notes.
Those were my concerns, initially, because you remember during my time in the CBN, we introduced the one naira and two naira coins. Unfortunately, they were not utilized at all. Part of that is really the value of one naira and two naira today; what can you buy?
So because they are higher denomination, they may be accepted. I think even that aspect didn’t come out well in the communication and so the CBN is going to communicate to Nigerians that the coins will run concurrently with the note.
“They are like testing the waters; if they get accepted and are being utilized, only then will they take subsequent actions.”
Dr. Usman has lieutenants and supporters who see no wrong in the act. One of them is Mr. Atedo Peterside, a banker and NEMT member who argued that besides the fact that it does not add to increase in cost of printing of currency, money, being a store of value, the higher the denomination, the better it is for the economy as those who made money legally and illegally will want to keep their loot in naira rather than hard currency.
He said: “If I were the CBN governor, I will prefer to print N10, 000 notes. Last year, Nigeria spent N47billion to print these small, small notes. If we were printing bigger denominations, we will print fewer number and you make phenomenal savings. Secondly, money is a store of value, all these thieves, rogues and vagabonds running around in various states and all over the country, when they steal money, they will want to keep it outside the banking system.”
Lending his voice in support, the Access Bank Managing Director Aigboje Aig-Imoukuede described the reactions trailing the N5000 note as unfortunate.
He said: “It is very rare for you to have a central bank that does not look at the issue of currency management and issue new notes from time to time based on the reality of the economy. In the case of Nigeria, our economy is such that a N5000 note which is in effect a $30note is not strange.
The greatest argument I have heard about is causing of inflation; the other argument is that it will cost money to introduce the new note.
There is no relationship between the issuance of higher legal tender and inflation. It is unfortunate that some have misled people into thinking that it will lead into higher inflation. Every central bank by the nature of currency management will issue new notes all the time. So, printing of notes is an ongoing operation that every central bank engages in”.
Of course, the big African business mogul and a member of the Economic Team of the President Jonathan, Alhaji Aliko Dangote would have said otherwise just as his counter-part in the oil business, Femi Otedola would as well.
Dangote said: “The introduction of the N5,000 note has nothing to do with inflation. I think it is even to protect the economy. The cost of printing is not anything different from the amount they are using in printing any other note. It is the same cost”.
Meanwhile, CBN’s Director of Corporate Affairs, Mr Ugochukwu Okoroafor said CBN would instead sensitize the public on the introduction of N5,000 note into the economy.
He said: “We are about to carry out sensitization campaign on the introduction of N5000 note and the restructuring of the nation’s other currencies.
Everything will not take off at the first quarter of next year. We are starting with a particular currency in the first quarter of next year; there will still be currency and coins for the denominations that will be coined like N5, N10 and N20 so that both will be operational side by side.”
He added: “We want to be among the top 20 largest economy in 2020; we believe in it. What we should do is pray for Nigeria to have a financial system that can support one of the world’s largest economies. We cannot do it, if we don’t have the right framework. We want to ensure that life is made a lot easier for Nigerians and will continue to improve the system.”
Okoroafor said the report that N40 billion would be spent to print the N5000 note is false, saying the cost is in the CBN annual report.
Analysts have submitted that some other reasons why the decision can’t be allowed to fly at this time included the inability of the government to better the lots of the citizenry.
They asserted that coming at a time the country’s leadership has incessantly pooh-pooed in its promise to restore the security of lives and property, improve on the welfare of the ordinary Nigerians and provide basic social infrastructures, the government not expect that the Nigerian people will gladly accept what is clearly going to be the reserve of the rich.
Again, in the light of CBN’s cashless society campaign, keen observers queried why a society that does not carry physical cash but makes transfers should suddenly concern itself with the introduction of a higher denomination.
Apart from eclipsing the opportunity posterity would have in knowing Alvan Ikoku and Murtala Mohammed, Nigerian fallen patriots whose faces appear on the N10 and N20 Naira notes respectively, another argument against the CBN’s move is that it will completely obliterate the N5, N10 and N20 notes when converted to coins and ostentatiously give rise to high cost of common goods.
For instance, they said that a sachet of (pure) water will automatically become N50 which will certainly make
mockery of the Naira.
In a similar move by the same CBN under Professor Charles Soludo during ex-President Olusegun Obasanjo regime, the government assured the people that N1.00 note when converted to coins will be a tool for figure counting for infants and posterity. But today, suffice it to say, N1.00 is neither seen in circulation as such nor carried by anybody even traders.
Indeed, with this array of threats and condemnation, most analysts posit that a little less, if not more of what Nigerians experienced during the oil subsidy strike in January this year, might be in the offing should the Federal Government and CBN forge ahead with the currency devaluation exercise. But until then, Nigerians are watching with keen interests.