PRESS RELEASE. The planned restructuring of the Nigerian currency: Our stand!

The Congress for Progressive Change (CPC) has noted, with cautious optimism, the planned restructuring of the Nigerian currency by the Central Bank of Nigeria (CBN). In the publicized announcement by the CBN governor, Mallam Sanusi Lamido Sanusi, the Apex Bank shall introduce 5,000 Naira note to the Nigerian polity from the beginning of 2013. In addition, N5, N10, and N20 that have hitherto been currency notes, shall thenceforth be converted to coins.

The CBN governor anchored his argument for a higher denomination on the need to complement the cashless economy policy, as it would drastically reduce the volume of currency in circulation. He opined that some countries, notably Japan, Singapore and Germany with higher denominations of currencies recorded 2.8, 1.1 and -0.7 inflation rates respectively in 2010.

We disagree with this position because, given Nigeria’s struggles with bribery and corruption, this new introduction of higher denomination is antithetical to the much-touted cashless economy. In fact, the era of ‘Ghana-must-go bags’ dwindled with the introduction of the N500 and N1000 notes in the past. It became easier to carry millions of Naira in moderately-sized brief cases and, inexorably, increasing the incidences of high-profile bribery scandals in the polity. Recently, we witnessed the allegations and counter-allegations of solicitation for and receipt of bribe money levied against certain highly influential politicians in the Country. It is axiomatic to infer that those transactions were opaque to the Banking system because of the facilitating ambience of high currency notes. We insist that the introduction of N5000 currency note shall further exacerbate the corruptive tendencies in the Nigerian polity.

Whilst we agree with the CBN that printing of notes is more expensive than minting coins, it is difficult to believe that the solution lies in converting the N5, N10 and N20 notes to coins. First, the cultural values of the Nigerian people do not favor use of coins. The question is: how did we fare with the previous conversion of 50k, N1 and N2 Naira notes to coins? In fact, those currencies tacitly went out of circulation as a result of disuse. Second, with an economy very susceptible to fragile macroeconomic distortions, the tendency is often for the price of goods and services to be at par with the currency notes in circulation. What will invariably happen is the spiraling inflation that may cause further macroeconomic distortions and unwittingly, bringing about political upheavals. Third, the existence of the foregoing scenarios may exacerbate the already polarized Nigerian polity of have’s and have-not’s, with the systematic break-down of the middle class.

The CBN governor was reported to have said that various segments of the Nigerian state shall be encouraged to create avenues for the usage of coins. As plausible as this may sound, the question is: what efforts have been made in the past to mobilize these segments of the State on the usage of coins and what has been the success rate? Furthermore, with the huge mobilization against the pasting of Naira notes on persons at get-together ceremonies, have we succeeded in stamping out this vice? Is it possible to extirpate deep seated cultural practices with hurriedly implemented policies as against allowing structured evolvement vis-à-vis modern realities?

As the enunciators of the Nation’s monetary policy, we are not unaware of the patriotic zeal of the CBN leadership in churning out this latest policy. However, we believe there is the sore need to consider different shades of opinion before making the final draft. In so doing, the matters of State shall not suffer insufficient perspicacity.

God bless Nigeria.

Rotimi Fashakin (Engr.)

National Publicity Secretary, CPC.