Opponents of the N5000 banknote may have lost the battle,
it emerged yesterday. Minister of Planning, Shamsudeen Usman, who spoke to
journalists at the meeting of the Economic Management Team on Tuesday said that
President Goodluck Jonathan had approved the proposal to print the N5000
denomination. He added that government would push ahead with the printing.
“The discussion today (Tuesday) was basically to
endorse(the introduction of N5000 note). Mr. President had already approved and
that is the only requirement by law. The CBN (Central Bank of Nigeria) is to
propose and Mr. President is to approve,” he said.
Jonathan presided over the EMT meeting which has Alhaji
Aliko Dangote, Mr. Femi Otedola, Mr. Atedo Peterside, Mr. Aigboje
Aig-Imoukhuede and other top government officials as members.
Denomination of
controversy
The CBN governor, Lamido Sanusi, penultimate Thursday
announced a proposed comprehensive review of the nation’s currency with the
highlight been the introduction of the N5000 note and conversion to coins the
present N5, N10 and N20 notes. But Nigerians, especially economists, have
argued that the introduction of the note would lead to inflation in the system.
Just on Tuesday, about 500 protesters led by a former
member of the House of Representatives, Dino Melaye, demonstrated in front of
the CBN office in Abuja against the N5000 note. Melaye, the leader of the
placard-carrying protesters, said the proposed N5000 note would send a wrong
signal about the worth of the Naira.
Lagos-based lawyer, Femi Falana, has also written to the
Attorney-General of the Federation, Mohammed Adoke, to use his office to stop
the CBN from introducing the N5000 note. But Usman said there was no
correlation between higher notes and corruption and that it did not contradict
the CBN’s cash-lite policy.
No inflation,
corruption
He said, “Clearly the N5000 notes, unlike some people
misrepresent it, is not going to lead to higher inflation. There is absolutely
no link. I am an economist, and I have been Deputy Governor, Operations of the
Central Bank.
“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.” On the contradiction between higher denominations and the CBN
cashless policy, the minister said “It is not in variance. The Euro has the
€500 note. If you go to the countries where the Euro is in use, you will not
get the €500 note in normal circulation. But it is used by the banks and a few
other heavy cash users to store higher value.
“I have been in parts of the United States where you draw
the $100 bill and give it to somebody and they start looking at it as if it is
something strange, they probably have not seen it. “So the higher denominations
are there to create higher value, they will not be in the widest of
circulation. And I think what is important is that there is no link between it
and inflation.”
“I think people alleged that corruption is being done in
dollars. A $100 bill is N16, 000; N5000 note will be $30, so which one is
bigger to carry if you are doing corruption? “So I don’t think it is
necessarily going to increase the level of corruption. Those doing corruption
will probably find that too small, the $100 bill is still bigger than the N5000
note,” he added. He said the current lower currency notes would run
concurrently with their coin versions when introduced.
Usman, however, faulted Sanusi’s handling of the message
to Nigerians on the currency review. “I think even that aspect didn’t come out
well. 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 utilised, only then will they take subsequent actions,”
he explained.
N10000 note?
While supporting the planned introduction of the N5000
notes, Peterside said if he was the CBN governor, he would have even gone ahead
to introduce a N10000 note. He argued that the country would save huge money
whenever it printed bigger denominations. He said, “If I were the CBN Governor,
I would prefer to print N10000 notes.
“Last year, Nigeria spent N47bn to print these small
notes. If we were printing bigger denominations, we will print a fewer number
and 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.
“So they need a higher denomination notes. Right now,
they are using the $100 notes all over Nigeria because they are the best store
of values for them.
“If you give them a better store of value in Nigeria,
they will move away from these dollars and reduce the demand for the $100 notes
and move into our own currency as opposed to the use of $100 notes to hide
their loots and so on.”
Peterside added that the country is currently losing in
two ways by importing US dollars to finance the activities of corrupt persons
and (by) squandering scarce resources printing large volumes of “worthless
notes.”
N5000 to protect
economy
Dangote also held the view that the introduction of the
N5000 notes would not cause inflation but would rather protect the economy. “People
are saying that Central Bank is going to spend N40bn on the new notes. Of
course, last year when you look at the budget, they spent N47bn to print
currencies, so it is not different at all,” he said.
Aig-Imoukhuede on his part said the negative reactions
that had trailed the planned introduction of the N5000 notes were unfortunate.He
said legal tender and restructuring of currency are normal parts of the CBN’s
functions. He said, “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 it is that the
introduction will cause 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 people have misled
Nigerians 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.
“As you are introducing N5,000 notes, you print less of
N1,000 and N500 notes. It is not going to add to the cost of printing, it is
going to basically fall into your normal annual budget for printing.”
Protest
The Melaye-led protesters complained that the currency
restructuring that would lead to the conversion of N20, N10 and N5 notes into
coins would eliminate the contributions of nationalists like Tafawa Balewa,
Alvan Ikoku and Murtala Muhammed, whose photographs grace the notes. Some of
the placards carried by them had inscriptions like, “Sanusi is wicked”, “Sanusi
must go”, “Nigerians say no to Sanusi’s crooked notes”, and “Nigerians reject
the wicked N5000 notes”, among others.
According to Melaye, the CBN’s action will send a wrong
signal to the world that the Naira value is so weak that more of it is needed
to transact businesses.
He said, “The implication of the N5000 notes on the
economy is serious. The policy is unnecessary and will serve no useful purpose.
We have more socioeconomic challenges than restructuring currency at the
moment.
“The United States, which is the strongest economy in the
world, has $100 as its highest denomination in circulation. The UK largest
denomination of the pound sterling ever printed for circulation was the £1000
note issued between 1725 and 1745. The £100 note was issued from 1725 to 1943
and was withdrawn in 1945. Since then the £50 note has remain the largest
denomination of the British pound in circulation. Saudi Arabia 500 Riyals is
its highest denomination.”
The CBN’s Deputy Governor (Operation), Mr. Tunde Lemo and
other officials of the apex bank, including its Director (Corporate
Communications), Mr. Ugochukwu Okoroafor, addressed the protesters.
Lemo said, “The most important task of CBN is to fight
inflation because inflation hurts the masses more than anybody else. I am yet
to read your paper but we will go through it. Let me tell you, for the
leadership of CBN led by Mallam Sanusi Lamido Sanusi and his colleagues, we are
interested in ensuring that the masses of this country are well taken care of.
“But let me debunk something that I have read in the
Newspapers, we are not spending N40bn to print N5000 note. Whether we introduce
N5000 note or not, every year, we print money and whatever we decide to do, it
is to make sure that we reduce cost of printing money.
“Anything we do, we make sure we reduce the cost of
printing money. I can assure you that we are sensitive to the masses and we are
sensitive to the people of the Federal Republic of Nigeria. We will look at all
the issues and respond.”
