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THE plan by the Central Bank of Nigeria (CBN) to introduce a N5,000 note as part of a major restructuring of the country’s currency, has been a subject of extensive controversy. Under the plan announced by the Governor of the CBN, Mallam Lamido Sanusi, on Thursday, August 23, 2012, the present N5, N10 and N20 will be converted to coins while the existing N500, N200, N100 and N50 will be redesigned with new security features. This, according to Sanusi, is in consonance with international best practices which require monetary authorities to review their nations’ currencies at intervals of between five and eight years to address weaknesses and other challenges. The production of the new note and coins are scheduled to be put into circulation early next year.
THE outstanding and contentious component of the restructuring is the introduction of a N5,000 note to which there have been different reactions predicated on different premises. The argument has been advanced that since N5,000 is only $30, there should be nothing wrong in Nigeria having it in circulation. There has, on the other hand, been a preponderance of views that the issuance of N5,000 note will aggravate the problem of inflation in the economy. The endorsement of the project by the Economic Management Team (EMT) and the approval of the President since last year December constitute ample evidence that the printing and circulation of N5,000 note is already a fait accompli. Sanusi has thus only brought a concluded matter to the notice of the Nigerian public.
THE two chambers of the National Assembly, the labour movement, groups, associations and individuals have faulted the plan to introduce N5,000 into the economy. While we do not subscribe to the view that a currency note of that denomination will fuel inflation, we equally find untenable the arguments of the CBN to justify the introduction of the new note. It has become a way of life for Nigerian public officials to take refuge under “international best practices” when they cannot cudgel their brains to find cogent reasons for their self-serving actions.
WHAT are the features or elements of these “international best practices” that necessitate the introduction of a N5,000 note in a country in which the vast majority of the population live on less than two dollars a day? What are the defects in the existing currency notes which the issuance of a N5,000 will correct? What positive changes will the N5,000 note bring to the country’s economy? It is already being suggested that the CBN should embark on an enlightenment campaign to allay the fears of Nigerians on the bank’s questionable project. A similar campaign that was carried out to convince Nigerians to accept the withdrawal of the so-called subsidy cost hundreds of millions of naira only to be followed by the revelation of the truth that a substantial percentage of the much-hyped subsidy ended up in private pockets.
ONE oft-recurring question to which the CBN has not offered a convincing answer is on the compatibility of a cashless economy with the introduction of a N5,000 note. To ensure a drastic reduction in the volume of cash transactions, the CBN has placed a ceiling on the amount of money both individuals and corporate bodies can withdraw per day. Any amount in excess of the withdrawable sum will attract a punitive interest. This is to discourage the movement of huge amounts of cash and reduce the associated incidence of armed robbery. The question that now arises is: how reconciliable is such a policy with the printing of a N5,000 note that will make it possible and easy for any individual to carry millions of naira on his person? With N5,000 notes in circulation, it should not be lost on the CBN that armed robbery attacks on prime targets will become more ruthless and the felons will be getting away with bewildering hauls of cash from any successful operation.
NIGERIANS are also being told that the N5,000 note will not be widely circulated. What this means is that the new note will be produced for the exclusive use of a special class – the mandarins and the politicians together with their minions and acolytes. There can be no doubt that the new note, when put into circulation, will facilitate the despicable practice of money politics as politicians will be able to carry money about with greater ease than ever. Is this the CBN’s definition of public interest on which a whopping amount of public funds will be expended?
THE National Assembly should see the N5,000 note issue as a serious challenge. The CBN has been operating as a law unto itself because the lawmakers have not been able to muster the will to rein it in. They succumbed to cheap sentiments in their bid to effect an amendment in the CBN Act. The time has come for them to reopen the debate on the proposed amendment which they have put in abeyance. The absolute freedom being enjoyed by the CBN is unconscionable and should be curtailed. Its budget should be subject to legislative approval. Its board should be reconstituted with an outsider and not the Governor as the chairman as in other government establishments. The number of CBN officials on the board should be reduced to check manipulations and abuses. For as long as its Act remains as it is, the CBN will remain ungovernable. The apex bank should have the freedom to take professional decisions on purely monetary issues but its present powers should be drastically curtailed.Share