Kano — The Central Bank of Nigeria's [CBN] recently unveiled policy to redenominate the naira so that the current N100 becomes one naira is a path to economic destruction, prominent economist and former chairman of the National Economic Intelligence Agency [NEIA] Professor Ibrahim Ayagi said in Kano yesterday.

He said the new policy is ridiculous, senseless and capable of taking the nation to economic doom. Ayagi said the policy must be reversed in the interest of the nation, warning that unless this is done, the nation will be exposed to serious economic hardship that will not augur well for its people. Professor Ayagi said policies of such magnitude should not be left in the hands of the Central Bank.

"This is not an issue that an ordinary head of an institution should come out and tell Nigerians with such finality that as from next year, the Naira denominations will be reversed", he said

Ayagi also said an issue of such magnitude is beyond hasty decisions and should be exposed to serious scrutiny, adding that the President should have been the one to inform Nigerians of such a decision, not the Central Bank.

He said, "This is a complex issue that affects the entire livelihood of Nigerians, including the economy, social fabric of the society and everything about the nation, and for someone to just wake up and say with such feeling of finality is ridiculous", Ayagi said.

He also criticised the CBN Governor for citing examples of Germany and some Latin American countries, saying that Germany experimented with such policies in 1923 and 1948 when its economy was devastated by war.

"And to even cite these countries is even ridiculous. Did he know that even in the Latin America he was citing, they had to experiment four, five times because they were not succeeding?" he asked

The economics professor also frowned at what he called the seeming lack of understanding of monetary and fiscal policies, which he said the CBN manifested by unilaterally taking such a huge decision without considering its negative consequences.

He said, "This is a serious issue. The National assembly, Council of State and Nigerians should be given a chance to say their mind, and not to wake up and say that from next year the country will reverse its currency by two digits."

Ayagi advised that if the administration is keen on carrying out the new policy, it is necessary for the president to meet the National Assembly and other stakeholders so that the new policy will be implemented in phases to enable its monitoring and ensure workability.

"I am really angry, confused and do not even know why these people will just wake up without understanding what is happening to issue this type of policy statement", he added. He advised President Yar'adua to as a matter of urgency revisit the policy, reverse it and discard it in the interest of the nation.

'And if he insists on going on with the policy, I hope a mechanism will be taken to ensure it is properly monitored, and on the way study the possible pitfalls, or else this very policy will back-fire,' he warned.

He also described the argument of the CBN Governor Professor Charles Soludo as unserious, saying that for the CBN Governor to compare Nigeria of today with that of 1980 shows a lot of misunderstanding about the complexities of the nation.

Also yesterday, former two-time Finance Minister Dr. Kalu Idika Kalu flayed the decision of the Central Bank of Nigeria to re-denominate the naira by removing two zeros.

Speaking to Daily Trust on telephone, Dr. Kalu said there was no sense in re-denominating the naira all in a bid to make it more valuable, since a currency only gains more value when the country increases it economic production.

He said since the apex bank issued new notes and coins in February this year, it would be a waste of resources to reverse the decision and redenominate the naira by producing new sets of notes and coins. "It will have an impact on the economy because we have just issued new notes and coins and these cost quite a fortune to produce. Now, a few months later, we are saying that we want to re-denominate the naira. You don't just wake up and say you want to revalue the currency. This only happens when it is backed by economic output," he said.

He also said, "I think we have some more pressing problems to attend to than re-denominating the naira and this is just an exercise that doesn't add any value to the currency, yet it will cost quite a fortune to do this."

Kalu added, "I would think that since pensions are not being paid, infrastructure like power, roads and railways are all bad, that we would channel these resources to these areas so that we can in turn enhance productivity in the country and in the process improve the lives of the people." He also said that "To predict that next year the naira will be equal to the dollar is an idea that has no solid grounds. From what I have seen in the papers, I think it is the uninformed view that one day, one naira will be at par with a dollar. It is when we increase productivity, especially in the non- oil sector, that the naira will truly appreciate in value, not when a bank, whether Central or otherwise, decides to re-denominate the currency. This doesn't revaluate the naira."

But Dr Ibrahim Sheka, Head of Economics Department of Bayero University, Kano believes that the advantages of the policy are more than its disadvantages. According to him, re-denominating the naira will make exchange of currency easy and the government would have to print fewer denominations which would cost less. "It reduces the cumbersome nature of handling currency and it will encourage sophisticated means of payment as Nigerians would now be encouraged to use payment systems like Visa and MasterCard instead of cash. It also reduces dangers of moving cash around as you only need a few notes," he said.

On its disadvantages, Dr. Sheka said, "It is a sure disincentive to foreign investors and it will scare them. People coming to invest do not want to come and get very little exchange. A businessman coming with one million dollars would realise that he would no longer get several millions of naira as before."

He added that: "It will cause internal problems, as many ordinary people will be confused, but a lot of enlightenment needs to be done to sensitize people on the change. However, this is not expected to be a very serious problem."

Senator Walid Jibrin, Northern branch chairman of Manufacturers Association of Nigeria (MAN) said the association was currently studying the development with a view to coming out with a position on the policy.

Mr. Emeka Okoro, who deals in cement in Suleja, Niger state, believes the new policy will reduce the cases of people carrying bulky sums of money around. But he warned that "If no sound macro economic policy is put in place to support it, this will not make any positive impact on the economy."

He also suggested that the government needs to develop infrastructure to boost economic activities so that the country's productivity would grow significantly enough to sustain the new value of the naira. He said "The CBN gave examples of other countries where redenomination has been done or is being done, like Ghana. For me I haven't seen any positive impact that re-denomination has brought about in the Ghanaian economy".

Speaking on the issue after yesterday's meeting of the Federal Executive Council, Minister of Information and Communication Chief John Odey said the council directed the economic team to critically look at the CBN plan and advise council accordingly.

He said, "The Central Bank governor briefed council on the strategic agenda for the naira, including redenomination of the naira. Council directed the economic team to critically look at the CBN plan and advise council accordingly. What the CBN is doing is sensitizing all the stakeholders in this regard. We raised the observation, and they are sensitizing all the stakeholders."

Odey said "the CBN plan for the redenomination is not something that will come up today. All these will get professional advice from the economic team. They will come up with a position for Council's approval. They will brief the National Assembly and other stakeholders. The Ministry of Finance is a member of the board of the CBN. There are benefits in terms of consolidation of Naira and microeconomic stability".