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Currency Restructuring: Death Knell For N100, N50 Notes?
Not too long ago, the Central Bank of Nigeria (CBN) announced its intention to introduce a higher denomination of N5,000 note and coin, the lower denominations of the nation’s currency up to N100.
Though the planned currency restructuring exercise tagged Project Cure has generated a lot of controversies among stakeholders, the apex bank has insisted that the nation’s economy and its citizens should have no cause to fear, since the exercise would go a long way in enhancing the country’s economic fortunes.
One of the benefits the economy stands to derive from the exercise, according to the apex bank, is the fact that the nation would be saving over N7 billion annually, when the exercise eventually takes off.
The bank’s Head, Corporate Communications, Mr. Ugochukwu Okoroafor, had argued at a forum designed to educate the public on the exercise that the introduction of the N5,000 note would also help in checking currency counterfeiters, since it would have features that would readily check these unwholesome practices.
The apex bank had also argued that under the CBN Act of 2007, it has the overall control and administration of the monetary and financial sector policies of the federal government, adding that the planned project was in tune with the global best practice, which demands that countries re-restructure their currencies every five and eight years to be ahead of counterfeiters.
While allaying the fears of stakeholders of a possible inflation with the introduction of the note, the apex bank pointed out that the introduction would not increase the volume of money in circulation, adding that inflation is a product of many variables, such as over-dependence on imported goods.
But as soothing as these assurances may sound, not a few stakeholders are still very uncomfortable and sceptical of the desirability of the planned exercise.
“This is a direct invitation to financial suicide. I’m surprised that whenever policies such as this are about being introduced, the government resorts to citing instances of similar policies in foreign lands,” stated Bimbo Oni, an economist and a business man.
Oni believes it is wrong and foolhardy to compare the Nigerian environment to others in developed climes, because the economy here is quite peculiar.
“If the CBN is hinging its argument on the fact that such high denomination exists in the United States and no dusts are raised, it is making a grave mistake.
“Once such is introduced here, we are in trouble. That means people will begin to spray these notes at parties and before you know it, its values and even dignity would be eroded. We all know the abuse the nation’s currency is subjected to here,” he argued.
Another finance expert and banker, Mr. Biyi Adesuyi, is particularly worried about the fate that awaits the denominations about to be coined.
“For instance, it is obvious that this society is averse to the use of coins, at least going by what has happened to our coins in the past.
“Remember that frantic efforts of the apex bank at enforcing the use of coins in the past failed woefully, because the society does not attach much value to the coins. So, if a new set of coins is introduced, what it means is that the same fate awaits them.
“Those denominations that are going to become coins are not going to be acceptable in the market. Though coins being issued by CBN are legal tender, they are generally not being accepted in Nigeria.
“Besides, the policy is not desirable since it contradicts Sanusi’s cashless policy. Perhaps, somebody somewhere is out to make money from foreign contracts involved in printing notes, otherwise I see no need for this.
“Since cheques can take care of transactions from N5, 000 above, why create the denomination? How many denominations should the naira have? We have too many denominations already,” he argued.
He believes the introduction may tend to discourage people from accepting lower denominations, adding that large sums should be paid electronically or via cheques.
Corroborating the above view, Mrs. Bolaji Peters, a petty trader, who operates a savings account with one of the nation’s first generation banks, in a chat with Banking, believes the introduction of the currency restructuring might be a burden for majority of Nigerians.
“The only people that stand to benefit are our politicians, who go about with huge amount of cash. What it simply means is that there would no longer be the traditional Ghana Must Go bags to move money. It would be more handy now and the danger in that is, it makes us more vulnerable now,” he noted.
Peters believes that the priority of the apex bank for now should have been how to make the existing policies in the system work.
“For instance, the newly introduced cashless policy of the apex bank is yet to be fully imbibed, while even the performances of the ATM facilities in our bank premises are far from satisfactory. One would have thought the apex bank would have busied itself with making these things work, rather than introducing another policy,” he argued.
A banker, who works with one of the nation’s new generation banks in Lagos believes that though the policy may have its remote benefits, it will initially create a challenge for the nation’s financial institutions.
“What it simply means is that the banks would need to have a technology that would make the counting of coins easy. For now, such does not exist because we do not use the coins. But this time around, I think it would be too risky to leave out the new coins because they are rather high,” he argued.
Understandably, the planned introduction has continued to elicit fears and anxieties from stakeholders. But how founded are these fears? Would the currency re-structuring be able to change Nigerians’ attitude towards the coins or are the about-to- be-coined notes on their way to extinction, just like the ones before them? The eventual take-off of the exercise would, obviously, provide a clue to some of these puzzles.
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