By MICHAEL EBOH

Stakeholders in the financial sector have kicked against plans by the Central Bank of Nigeria, CBN, to restructure the country’s currency, saying it is cosmetic, a clear contradiction of the cashless policy and will induce inflation.

CBN said it will introduce N5,000 note, N50, N100, N200, N500 and N1,000 notes, while lower banknote denominations of N5, N10 and N20 will be coined, under its currency restructuring exercise, code-named “Project Cure.”

The stakeholders, who are chief executives of various financial institutions, said the proposed currency restructuring will only facilitate corruption, money laundering and terrorism financing.

“It is clearly a wrong move; it signals the interment of all the currencies which are to be turned into coins and will no doubt induce inflation. The cash culture of Nigerians and our history with such actions point to these facts. The sad thing is that we never seem to learn from history,” said Mr. Eghes Eyieyien, Chief Executive Officer, Pharez Consulting.

Also commenting, Mr. Opeyemi Agbaje, Chief Executive Officer, Resource and Trust Company  Limited,RTC, said, “It is a purely cosmetic exercise that actually contradicts the Bank’s stated policy of Cashless Banking, as have been pointed out. It makes movement of large volume cash easier, thus facilitating corruption and money laundering.”

The Governor of the CBN, Mallam Sanusi Lamido, in announcing the restructuring, said the is aimed at achieving numerous objectives, ranging from upgrading the design of the entire existing range of currency; denominations in order to enhance the quality and integrity of the banknotes and achieving an optimal currency structure that will ensure cost effectiveness, balanced mix and utilization of all the currency denominations.

He said the proposed restructuring was due to the fact that Nigeria’s currencies were last reviewed between seven and 13 years, as against five and eight years as obtained globally and which is in line with international best practices.

Sanusi also stated that the CBN conducted several stakeholders meeting on the proposed restructuring and it was advised to coin lower denominations of currency up to N100, encourage the usage of coins, enhancement of the quality of banknotes; introduce higher denomination banknotes to discourage dollarization and reduce the volume of banknotes.

Eyieyien queried the rationale for the proposed review and call on the Presidency to immediately call Sanusi to order or sack him from office.

He said, “Sanusi is too fixated on being applauded as a ‘Reformer,’ such that he would introduce any kind of change for its mere sake. That President Goodluck Jonathan cannot see the destructive impact of Sanusi’s many ill-conceived ideas is perplexing.

“Some examples of Sanusi’s many ill-conceived and inane ideas are: Stopping banks from having Automated Teller Machines, ATMs, in non-branch locations after their huge investments and later reversing the policy at more costs; The “Cash-lite” Lagos fiasco which has seen frequent adjustment of the minimum amounts for withdrawal.

“There is also the AMCON charade that has created an over N4 trillion liability (almost equal to the annual Federal Budget!) through ‘bonds’ that can never be repaid; illegal and unconstitutional Islamic Banking; huge margin of about 2500 basis points between average bank deposit rates and lending rates consequent of CBN’s failed monetary policies and its unwillingness to deal with it.

“These are just some examples of the very disappointing actions of the CBN under Sanusi which make one wonder why the President is unable to show him the door out of office.”

Also, Agbaje said that the only positive side of the review is the lower cash processing cost, noting however, that this is not enough justification for the introduction of the policy.

He said, “It will also cost money; a cost I find indefensible, given the quite recent notes (polymer etc) introduced by immediate past CBN governor, Soludo. It does seem that unclear motives and logic permeates this proposal.

“I, however, do not accept that there is scientific or econometric evidence to support the position that higher denomination currency automatically, without more, will necessarily result in inflation.

“The only positive argument may be the lower cash processing cost that may be incurred by banks with higher currency denominations. I don’t consider this benefit sufficient justification for this seeming diversionary policy.”

In his own opinion, Mr. Tunde Salman, a financial analyst, advised the CBN to wait till 2020 before considering introducing higher currency denominations.

He said, “With steps already taken by CBN itself to address money laundering in the country such as know-your-customers re-validation of banks’ customers and the on going cashless Lagos, one wonder if the propose higher denomination of N5000 will not undermine that effort, coupled with our inability to discover and disrupt terrorism financing.

“This is because, the proposed N5000 naira note appears to me as counterproductive to the effort towards fighting the menace of money laundering especially for a nation that still finds it very difficult if not impossible to discover the sources of funding.

“What we needed now is how to replace the polymer notes (N5, N10, N20, and N50) that seemed not to have secondhand value in terms of durability. If, however, they are desirous of introducing the N5000 note, I think the CBN can wait till year 2020 when we might have achieved that tall dream called 20/2020 for the introduction and elaborate launching.

However, Mr. David Adonri, Chief Executive Officer, Lambeth Trust & Investment Company Limited, said, “The proposed introduction of higher denominated currencies may reduce the cost of producing currency notes. Fewer notes will be required for high volume transactions.

“I am not convinced about the causal relationship between higher denominated currencies and increase in inflation as believed by some critics of the policy. I believe that structural deficiencies in the economy, exacerbated by fiscal indiscipline are the main factors fueling inflation in Nigeria.”