By Goddie Ofose / Lagos
Sanusi Lamido Sanusi, CBN governor.
The Central Bank of Nigeria's (CBN) position on the introduction of N5,000 note, a pet project of the current governor of the apex bank, Sanusi Lamido Sanusi, had attracted condemnation than praise from stakeholders and Nigerians alike.
The governor's recent media statement that he has printed the much maligned N5,000 note has, however, set the stage for another debate among stakeholders on whether or not the economy is ripe or ready for such huge monetary policy implementation.
While some stakeholders have questioned the CBN's position on the rush to introduce the controversial naira note before the CBN governor leaves office on May 2014, others have actually said it was the right time to embark on such project to complement the apex bank's cashless policy, which is gradually spreading to several states and cities.
Sanusi recently declared that "I'd have printed the N5,000 note, if you like, don't use it" while speaking with newsmen on the sidelines of the 2013 World Bank/International Monetary Fund (IMF) annual general meeting in Washington DC recently. Mr. Sanusi argued that if he was to decide, the N5,000 notes would have been printed long ago, saying it made good economic sense for the country to print higher denominations because it would curb spending on minting currency notes.
"If it was my decision, you would have 5,000 notes. If you like, don't take it," Sanusi said.
Nonetheless, he said the idea, which was proposed last year has been rested after the Federal Government bowed to pressure from Nigerians and a National Assembly resolution.
"I have heard people say (the N5,000 note) will encourage corruption. Well, you are having corruption in dollars but you do not want to have it in naira. I have heard all sorts of silly arguments (that) it will cause inflation, which I have never seen, any kind of economic basis for that kind of argument," he said.
"People got up, made statements, professional, institutions, accountants (that) this is inflationary. I don't know when accountants became economists; I don't know when changing denomination became the same as increasing money supply. But in a country in which the decisions are not taken based on the soundness of an argument but on sentiments, I can't help it. If Nigerians would carry Ghana-Must-Go bags on their backs, that is fine. If they would rather we continue spending money printing these notes, that is fine."
He added: "I made all the arguments at the time. You have had inflation in double digits for a very long time, (and) this has weakened the purchasing power of the national currency and, therefore, means you are carrying much more currency than you need to carry to do your transactions.
In his words: "You go to an ATM, you want N100,000 you have to take 100 notes. Those notes have a cost and printing those notes you are paying for the paper, paying for the security features, paying for transportation and paying for security while transporting them. And then the CBN is going to make for destruction of these notes…. So the economic fundamentals are clear to me, if your currency loses value, printing higher denomination makes economic sense.
"Think of the bullion van, the fuel, the security, the printing, it was very clear to me and very clear that the people who were arguing had no argument. But we had a National Assembly resolution; we had Nigerians threatening to march and the decision is not a CBN one, but a government decision. So if the government suspends it, it suspends it," Sanusi said.
Speaking with Saturday Independent on the issue, a Lagos-based economist, Ayo Teriba, said naira notes must be designed by the central bank with the second category of transactions in mind. If naira notes are to make sense, I should be able to fill my tank with just a piece of naira note. People should be able to pay for live chicken, goat, or turkey with a piece or two of naira notes. A bag of rice, a tin of vegetable oil, should not require more than one or two pieces of naira notes.
"There should be notes with face values suited for the purchase of ram, shirts, suits, shoes, watches, car tyres, and other spares parts if naira notes are to be worth printing and spending. The proposed introduction of N5000 is in the right direction, but is equally arbitrary, as it is not proposed in reference to retail price realities, and is hardly the optimal highest face value for the naira notes at the moment," he said.
"It is the end that justifies the means," Teriba stated. It is the items that people need to pay for with notes that should determine how much we print on the currency notes. That is the economics of naira notes denominations. To be sensible today, naira notes should take face values of N500, N1,000, N2,000, N5,000, N10,000, and N20,000 (current value of the lowest airfare); where N500 and N1,000 could circulate as both notes and coins until further notice.
The Chairman of Advertising Practitioners Council of Nigeria, Mr. Lolu Akinwunmi, speaking in support of the policy, said the introduction of N5,000 note would benefit the economy as well as support the apex bank's cashless policy.
"The governor clearly explained the purpose for the introduction a few months ago, but the main issue from the public was that the sensitisation programme was inadequate. If the reasons remain the same, then it is in order. Clearly, it will support the current cashless campaign, which is working well. The fewer the notes we carry, the better for us, and the economy. It also reduces cost significantly," Akinwunmi said.
According to him, businesses and individuals don't have to carry a lot of cash. "You must see the introduction in tandem with the cashless programme. It reduces the cost of doing business if I don't have to carry too much cash with me. For government, eventually, it will have to reduce the quantity of notes that it prints at a high cost."
However, a Lagos-based Public Relations practitioner, Lekan Ishola, holds a different view. While responding to Saturday Independent question, Ishola said the introduction of higher denomination notes could only serve as incentives for cash transaction and thereby work against the cashless policy thrust.
"It is difficult to see the positive benefit this decision will have on the economy. If past introduction of higher denomination of naira notes, is to be used as yardstick, then one could safely say it would lead to higher inflation. This is because costs of goods will almost certainly go up. Also, the cost of printing and maintaining the new notes will have negative effects on the economy via budgetary provisions," Ishola said.
On whether the N5,000 note project would support CBN's cashless initiative, the PR specialist said "the decision is certainly anti-cashless policy because it will encourage Nigerians (individual and corporate) to want to carry large sums of money. For instance, one needs only two wraps of N5,000 notes to carry a million naira around."
Reasoning along the line of Ishola, a Lagos-based journalist, Oludare Mayowa, said: "I believe the introduction of higher denomination of naira currency contradicts the cashless policy and negates the CBN determined effort to curb inflation. Nigerians do not need a higher currency note but a more robust policy that will enhance the value of the currency. Higher denominations are signs of weak economy. What Ghana did to rid herself of the reproach of higher denomination notes was to redenominate its currency and not introduction of higher denomination."
