2 September 2012

Nigeria: License to Print Money


If you go out into the real world, you cannot miss seeing that the poor are poor not because they are untrained or illiterate but because they cannot retain the returns of their labour. They have no control over capital, and it is the ability to control capital that gives people the power to rise out of poverty- Muhammad Yunus

Please mind the double entardre. It is necessary to be that verbally combative from the get go. So the Central Bank of Nigeria plans to introduce a N5, 000 notes into the system? And the Central Bank of Nigeria (CBN) on Monday announced the devaluation of the naira, setting the new official exchange rate at N155.00 to the US dollar from its previous rate of N150 and maintaining the band of +/-3 per cent.

The proposed note will be highest denomination and in its defence, they argue, that it is high time there was a review of the nation's currencies. Judging from the subsequent furore that followed the announcements people are not happy .Well, the social network sites bore the brunt of the response and it was indicative of people's fears, scepticism and apathy.

It was apparent was that most people did not see this coming. Like a conjurer, CBN Governor, Mallam Lamido Sanusi, pull this rabbit out of the bag while briefing journalists in Abuja. But more was to come from the esteemed Governor, much more, that changes included in the review that the notes of the N5, N10 and N20 notes converted to coins.

As a piece meal notable women social reformers will grace the new currency. Well that will appease the womenfolk !They miscalculated, as most working women will not have the means to handle or exchange the notes to notice. So, Mrs Margaret Ekpo, Mrs Funmilayo Ransome-Kuti and Hajiya Gambo Sawaba and yes, for good measure, the senate complex will form the backdrop. It seem that the new note was meant to be representative but no one is buying it.

So perhaps , the rich will carry on them N5,000 notes and the rest contend to jiggle and jangle down the streets and attract the attention of hoodlums with N5,N10 and N20 coins in their reinforced pockets. This reminds one of the Russian Rouble (pre-Perestroika) and the Zimbabwean Dollars Mugabe (pro-Mugabe Association).

The Zimbabwean dollars money was so devalued that in order to pay for small items you will need a wheel barrow to cart away your money and those using the ATM needing bother, as the queue will be waiting round the block waiting for the machine to dispense money.

In its defence, The Director, Corporate Communications Affairs of the Central Bank of Nigeria (CBN), Mr Ugochukwu Okoroafor has affirmed that the apex bank's decision to introduce the N5, 000 notes is to strengthen the cashless policy of the bank.

Mr Okoroafor was on a breakfast show, Sunrise; he stated that the N1, 000 has been in existence in the last seven years. N500 has been around for 11 years, N200 for 12 years and the N100 for 13years; hence the need for this overall review of the currency, which according to him is 'over-due'.

The main reservations for some people are ; that the new denomination will herald a spike in inflation, more crimes, spates of ritual killings, pricing staple food out of the reach of the middle class and the poor . It may also mean that the Naira becomes so devalued and worthless.

It could mean that some services and product providers may fail to do business with others or resort to use of multiple currencies alongside the Naira. The corporate affairs manager also argued that it is essential to rejuvenate the currency, "to make it new", "for an economy that is just coming out a global recession". So have we really come out of recession and has the common man been notified?

The Action Congress of Nigeria has advised the Central Bank of Nigeria to have a rethink about its widely publicised intention to introduce the N5, 000 notes as the highest denominated legal tender in Nigeria by 2013. They warned that the new currency may help the nation raise revenues, but the benefits may outweigh the cost of transactions and induced inflation.

The Senate Committee on Banking, Insurance and other Financial Institutions on Monday has directed the Central Bank of Nigeria to suspend the introduction of N5, 000 notes until the Senate was properly briefed. The House of Representatives Committee on Banking and Currency says it will invite the Central Bank of Nigeria (CBN) to clarify its position on cashless policy and, in specific the planned introduction of the N5, 000 notes.

"We believe that Nigerians deserve to know whether there is a short, mid-term and long-term strategy that will bring any benefits to the system as a result of this introduction. "The intervention of the house is to ensure that due process is followed and the rule of law adhered to" on the cashless and wireless payment system policy of the CBN, which we understand is designed to reduce the actual cash in circulation."

The house has an oversight responsibility over the banking industry, would set up the processes to immediately address the matter. This is quite disconcerting, as there are parts of business and commerce where Naira is not used to do business in cashless transactions.

On the other hand, in the affluent camp some of the schools that their children attend, they pay school fees in American dollars or Pounds sterling. So the rich need not change their life styles but the middle and working class will bear the brunt of this development.

Of course, this type of services and life choices are beyond the reach of ordinary Nigerians. So, imagine if you will, what would happen to the price of food, fuel, health and transportation?

This is not the time for fiscal experiment. People are skeptical, cynical and are convinced with reasons, that the rich will get richer and the poor, poorer. You cannot get poorer than poor can you?

Copyright © 2012 Vanguard. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.

AllAfrica publishes around 2,000 reports a day from more than 130 news organizations and over 200 other institutions and individuals, representing a diversity of positions on every topic. We publish news and views ranging from vigorous opponents of governments to government publications and spokespersons. Publishers named above each report are responsible for their own content, which AllAfrica does not have the legal right to edit or correct.

Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica. To address comments or complaints, please Contact us.