License to print money

on   /   in Outside looking in 12:18 am   /   Comments

By Denrele Animashaun

If you go out into the real world, you cannot miss seeing that the poor are poor not because they are untrained or illiterate but because they cannot retain the returns of their labour. They have no control over capital, and it is the ability to control capital that gives people the power to rise out of poverty- Muhammad Yunus

Please mind the double entardre. It is necessary to be that verbally   combative from the get go.  So the Central Bank of Nigeria plans to introduce a N5, 000 notes into the system? And the Central Bank of Nigeria (CBN) on Monday announced the devaluation of the naira, setting the new official exchange rate at N155.00 to the US dollar from its previous rate of N150 and maintaining the band of +/-3 per cent.

The proposed note  will  be  highest  denomination and in  its defence, they argue,  that  it  is  high  time  there  was  a review  of  the  nation’s currencies. Judging from the subsequent furore that followed the announcements people  are  not  happy .Well, the  social  network sites  bore the  brunt  of  the  response  and it was indicative of   people’s fears,  scepticism and apathy.

It was apparent was that most people did not see   this   coming. Like a conjurer, CBN Governor, Mallam Lamido Sanusi, pull this rabbit   out of the bag while briefing journalists in Abuja. But more  was  to  come   from  the  esteemed   Governor, much  more, that   changes  included  in the review that   the notes  of  the N5, N10 and N20 notes  converted to coins.

As a piece meal notable women social reformers will grace the new   currency. Well that  will appease  the  womenfolk !They  miscalculated, as   most  working   women   will  not  have  the  means   to   handle or exchange  the  notes   to  notice. So, Mrs Margaret Ekpo, Mrs Funmilayo Ransome-Kuti and Hajiya Gambo Sawaba and   yes, for good measure, the senate complex will form the backdrop. It  seem that the  new  note was  meant  to  be  representative  but  no one  is   buying  it.

So  perhaps , the rich  will  carry  on  them  N5,000 notes  and  the  rest  contend to   jiggle  and  jangle   down  the  streets   and attract the  attention of   hoodlums with  N5,N10 and  N20   coins  in  their  reinforced  pockets.  This reminds   one of the Russian Rouble (pre-Perestroika) and the   Zimbabwean Dollars Mugabe (pro-Mugabe Association).

The Zimbabwean dollars money was  so devalued that in order to  pay  for small items you will need a  wheel  barrow to cart away your  money and   those   using the  ATM  needing bother, as the queue  will be  waiting  round  the  block   waiting for the machine  to  dispense  money.

In  its defence, The Director, Corporate Communications Affairs of the Central Bank of Nigeria (CBN), Mr Ugochukwu Okoroafor has affirmed that the apex bank’s decision to introduce the N5, 000 notes is to strengthen the cashless policy of the bank.

Mr Okoroafor was on a breakfast show, Sunrise; he stated that the N1, 000 has been in existence in the last seven years. N500 has been around for 11 years, N200 for 12 years and the N100 for 13years; hence the need for this overall review of the currency, which according to him is ‘over-due’.

The main reservations for some  people  are ;  that  the  new   denomination  will herald   a  spike  in  inflation, more crimes,   spates  of   ritual killings, pricing   staple food out  of the  reach  of   the  middle  class and   the  poor . It   may also mean that   the Naira becomes   so devalued and worthless.

It could  mean that  some services and product providers  may  fail  to do business with others  or resort to  use of multiple currencies alongside the Naira.  The corporate affairs manager also argued that it is essential to rejuvenate the currency, “to make it new”, “for an economy that is just coming out a global recession”.  So have we   really   come out of recession and has the common man been   notified?

The Action Congress of Nigeria has advised the Central Bank of Nigeria to have a rethink about its widely publicised intention to introduce the N5, 000 notes as the highest denominated legal tender in Nigeria by 2013. They warned  that  the  new  currency may help  the  nation raise  revenues, but the benefits may outweigh the cost of transactions and induced inflation.

The Senate Committee on Banking, Insurance and other Financial Institutions on Monday has directed the Central Bank of Nigeria to suspend the introduction of N5, 000 notes until the Senate was properly briefed. The House of Representatives Committee on Banking and Currency says it will invite the Central Bank of Nigeria (CBN) to clarify its position on cashless policy and, in specific the planned introduction of the N5, 000 notes.

“We believe that Nigerians deserve to know whether there is a short, mid-term and long-term strategy that will bring any benefits to the system as a result of this introduction. “The intervention of the house is to ensure that due process is followed and the rule of law adhered to” on the cashless and wireless payment system policy of the CBN, which we understand is designed to reduce the actual cash in circulation.”

The house has an oversight responsibility over the banking industry, would set up the processes to immediately address the matter. This is quite disconcerting, as there are parts of business and commerce where Naira is not used to do business in cashless transactions.

On the other hand, in the affluent camp some of the schools that their children attend,  they pay  school  fees  in  American dollars or Pounds sterling.  So   the   rich need not  change    their life  styles but  the   middle and working   class   will  bear  the  brunt  of  this  development.

Of course, this type of services and life choices are beyond the reach of ordinary Nigerians. So, imagine if you will, what would happen to the price of food, fuel, health and transportation?

This is not the time for fiscal experiment. People are skeptical, cynical and are convinced with reasons, that the rich will get richer and the poor, poorer. You cannot get poorer than poor can you?

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