The onset of a new high denomination bank note is often shattering psychologically, so you can imagine my anxiety when I heard last Thursday that the Central Bank of Nigeria is about to introduce a new N5000 bank note.
I thought of 2001, when the N500 note debuted. I had gone to the Standard Trust Bank in Kaduna to collect N50,000 that a friend sent, half for me and half for his family. I was slinging a large handbag. Although the N100 and N200 notes had debuted a year earlier, they were still relatively rare in 2001 and banks still mostly gave out N20 "Muri" notes. I was ready to collect 25 wads of them. Presently, the female cashier brought out a single wad of notes. She hesitated before handing it over to me, saying "This is N50,000 woh!" I nodded in some confusion. I was shaken as I left the bank and I felt physically short-changed.
The new currency denomination plan unveiled by CBN governor Sanusi Lamido Sanusi in Abuja last week has three important elements. 1] Introduction of the N5000 note. 2] Redesigning the current N50, N100, N200, N500 and N1000 notes with new security features and 3] converting the N5, N10 and N20 notes into coins. These plan elements are expected to be received respectively with 1] alarm 2] indifference and 3] cynicism.
Sanusi said the plan is aimed at enhancing the quality of banknotes, enhancing their recognition by the visually impaired as well as reducing the cost of their production, distribution and disposal. You see, the Nigerian public's grudge against the naira is not so much its printing quality as its scarcity. Even visually impaired persons in Nigeria had no difficulty recognising naira denominations; just give a N1000 note to a blind beggar and you can see from his reaction that he fully recognised it!
The last time that CBN attempted a major currency exercise, Professor Chukwuma Soludo's plan to shave two zeros off every naira note sailed into stormy waters. It fell flat because Soludo exceeded CBN's powers and did not seek the president's approval. When the Attorney General later discovered that the president's approval was needed, Malam Umaru Yar'adua promptly withheld it. Sanusi did not make a similar mistake this time. He said the CBN Board decided on this measure last November and obtained the president's approval in December. The surprise is that they are only announcing it now.
The opposition ACN immediately levelled several accusations at the new plan. Alhaji Lai Mohamed sensationally reeled out cases of hyper inflation in several Latin American, European and African countries and blamed it directly on higher currency notes. Most probably it was the other way round.
Of the many criticisms so far made of Sanusi's plan, one that rings true is that the creation of a new, higher denomination currency note always creates the impression that inflation has overtaken the present notes and you are playing catch-up. Nor is it a mere allegation. A situation where one must fill up his pocket with money just to fuel a car, or where a housewife has to fill up her handbag with naira notes in order to go to the market is certainly a logistic inconvenience. You can imagine the greater discomfort of the stores and the banks.
Some people are now alleging that the coming of the N5000 note will carry our national culture of profligacy, corruption and money laundering to new heights. Can it? Up until 1991 the highest denomination note in this country was the N20 "Muri," which CBN issued in 1977 to honour General Murtala Mohamed. Throughout the years of the oil boom, the Second Republic and the profligate years of military rule, this note served us very well. We did politics and all party spraying with it.
When the Muri first came along, it could fetch nearly 30 American dollars. By the late 1980s when the naira began its steep decline against the dollar following the introduction of the Second Tier Foreign Exchange Market [SFEM], the Muri still fetched $6 or more. It looks like with respect to the value of our highest denomination note, CBN has been playing catch up with the US dollar since the 1970s.
In 1991 the naira was trading for N24 on the first tier and about N40 on the second tier forex market, which means two Muri notes could still fetch a dollar. The N50 "Wazobia" note came along that year and it could fetch more than a dollar on the second tier market. By 1999 when the N100 "Awo" note came along, it barely fetched a dollar at the unified exchange market. These days however, the N1000 "two heads" note can fetch you more than $6, or about where the Muri stood in the late 1980s. Even its smaller brother the N500 "Zik" note could fetch more than 3 dollars on the black market today. Why then do you need the N5000 note which can fetch up to 31 dollars?
Actually our currency notes used to be much more valuable than that. Even the N5000 note will be a steep decline in value from 50 years ago. From what I could glean from Dan Kwairo's song [Suna kari da takardu...Daga mai hefwa ta fam guda sai hefwa ta fam biyar], the highest note in the First Republic was the 5 pound note. Now, in those days the huge two shilling coin was called "dala," i.e. dollar. Since 20 shillings made one pound, one pound note was worth $10 up until January 1, 1973 when the pound, shilling and pence were replaced by the naira and kobo. It means a kari of 5 pounds 50 years ago was worth $50.
I have still other concerns. Since the minimum wage today is N18,000 it means you can pay a worker with only three N5000 notes plus some change of 3 N1000 notes. Surely a Nigerian worker will feel short-changed with these! It is said today that most Nigerians live on less than a dollar a day. It means this new note represents the daily earnings of 31 people. If you give one note to 31 hard-pressed Nigerians to share, sure they could tear it to pieces?
Maybe that is why CBN wants the coins to come back, but will they? There is a tendency here to round up the prices of items. Unlike European and American supermarkets that fix prices with many fractions---the cost of a small clothing item could be $5.56, a bread loaf could be $0.99---prices are always rounded up here, hence the disappearance of the coins. A young girl selling groundnuts will wrap them in N50 and N100 small packets. Why not wrap up one for N12.33?
Even our supermarkets here round up everything. Nothing is rounded up to less than N500. These days it is only on my pay slip that I see some kobo coins. I have often wondered what will happen if I ask the bank to pay me those coins!
The conversion of N5, N10 and N50 into coins may also short change great old men Tafawa Balewa, Alvan Ikoku and Murtala Mohamed who may disappear from the faces of notes. Besides, controversy could trail the three women Mrs. Margaret Ekpo, Hajia Gambo Sawaba and Mrs Funmilayo Ransome-Kuti who are to feature on the N5000 note. I am not questioning the contribution of any of them in Nigeria's development, but at least two of them were not mainstream Establishment figures, a clear departure from CBN's tradition.
To give you a small tip of what could happen, in 1995 when the Kaduna State Government rehabilitated three general hospitals and renamed them after Malam Gwamna Awan, Alhaji Yusuf Dantsoho and Hajia Gambo Sawaba, the late Justice Bashir Sambo protested the renaming of Zaria's hospital after Hajia Gambo. What happened next, you could ask the then Kaduna State military administrator Brig Gen Lawal Ja'afaru Isa.
You see, Yogi Bera once said "Nobody goes to that restaurant anymore because it is too crowded." I fear that nobody wants this N5000 note. It will be too difficult to get.