BY GABRIEL OMOH & BEN AGANDE
THE proposed N5000 note will not be for mass circulation, National Planning Minister Shamsudeen Usman said, yesterday. He said the N5,000 note would be reserved for banks and heavy cash users.
The minister spoke in an interview with the State House Correspondents after a meeting of the Economic Management Team (EMT) presided over by President Goodluck Jonathan Usman, just as the Federal Government, yesterday, formally endorsed the introduction of the note despite the criticism that has greeted its introduction.
At the meeting of the Economic Managament Team chaired by President Goodluck Jonathan, the CBN governor, Sanusi Lamido, also explained the restructuring of the currency. The team also dispelled the fear that the introduction of the note will lead to high rate of inflation, saying that there was no link between inflation and currency denomination.
It said that rather, the introduction of the higher currency would help shore up the value of naira as most people who stored money in hard currency would now embrace the high denomination.
The minister of National Planning, Dr. Shamsudeen Usman, who fielded questions from state House correspondents said that the higher denomination did not violate the cash-less economy proposed by the CBN.
Shamsudeen said like the 5000 Euro note, the new N5000 note would not be in normal circulation but would be reserved for the banks and few other heavy cash users to store higher value. He said the meeting had endorsed the proposal by the Central Bank of Nigeria, CBN, to introduce the big note and coinage of N5, N10 and N20. Shamsudeen, who is also a member of the team, said the team endorsed the monetary policy after a presentation by the CBN Governor, Sanusi Lamido Sanusi.
He said the introduction of the N5000 notes would neither lead to inflation nor encourage corruption as argued by those that were opposed to it. The minister also said the new coins would run concurrently with the notes to test ground if they would be accepted by the public.
“Clearly, the N5000 note unlike some people misrepresent, is not going to lead to higher inflation. There is absolutely no link. I am an economist, I had been deputy governor operations of the Central Bank. The last review of the introduction of N1000 note and the various coins I was deeply involved, it was my responsibility at the Central Bank.
There is absolutely no link between inflation and the currency denomination. So, obviously the discussion today was basically to endorse. Mr. President had already approved, that is the only requirement by law. The CBN is to propose and Mr. President is to approve. And since Mr. President has approved, really what is important is to just explain.
“I personally had some concerns about the coins but since some discussion with the CBN governor, he has actually clarified that even the media didn’t get it well. The coins are being introduced on an introductory basis so that if people accept them and are using them, then gradually they will withdraw the other notes but they will run concurrently together with the notes.”
Shamsudeen debunked the argument that the introduction of the N5000 notes would lead to corruption, noting that the allegation of corruption had always been in dollar denomination. He said: “A 100 dollar bill is N16,000 while N5000 note will be 30 dollars, so which one is bigger to carry if you are doing corruption? So, I do not think is necessarily going to increase the level of corruption.
Those doing corruption will probably find that too small than 100 dollar bill, which is still bigger than the N5,000 note.”
Speaking in the same vein, another member of the team from the private sector, Alhaji Aliko Dangote, said the N5000 note would not cause inflation but protect the economy.
The business mogul said that the cost of printing of the note and the coins would not be different from the amount used in printing other notes.
Mr. Aigboje Aig-Imoukhuede, the Managing Director of Access Bank and a member of the team, noted that legal tender and restructuring of currency were part of the normal functions of the Central Bank.
He said the introduction of the new note is not strange and would not lead to higher inflation “It is unfortunate that some have misled people into thinking that it will lead into higher inflation.” Similarly, Chief Atedo Peterside, the Chairman of IBTC, said the N5000 would reduce the cost of printing bills.
“If I were the CBN Governor, I will prefer to print N10,000 notes. Last year, Nigeria spent N47 billion to print these small, small notes.
If we were printing bigger denominations, we will print fewer number and you make a phenomenal savings. Secondly, money is a store of value, all these thieves, rogues and vagabonds running around in various States and all over the country, when they steal money, they will want to keep it outside the banking system.”
Speaking in support of the restructuring of currency which he said were normal parts of the central bank functions, he said “It is very rare for you to have a central bank that does not look at the issue of currency management and issue new notes from time to time based on the reality of the economy. In the case of Nigeria our economy is such that a N5000 note which is in effect a $30note is not strange.
”The greatest argument I have heard about is that it will cause of inflation, the other argument is that it will cost money to introduce the new note.
There is no relationship between the issuance of higher legal tender and inflation, it is unfortunate that some have misled people into thinking that it will lead to higher inflation.
”Every central bank by the nature of currency management will issue new notes all the time, so printing of notes is an ongoing operation that every Central Bank engages in.
”As you are introducing N5000 note you print less of N1000 and N500 notes. It is not going to add to the cost of printing, it is going to basically fall into your normal annual budget for printing. What you should also understand is that with less notes in circulation it is cheaper in the long run based on quantities ordered to print N5000 denomination than lower denominations, is just logical.”
Chairman Dangote group, Alhaji Aliko Dangote, also a member of NEMT on his part said, “the introduction of the N5000 note has nothing to do with inflation.
I think it is even to protect the economy. The cost of printing is not anything different from the amount they are using in printing any other note. It is the same cost.
”The only difference is the design and the figure printed on them. Sometimes minting the coins can even help. If I have a product which I am selling for N5 and I want to raise the price to N6, I wot be able to do that. It is either I swallow the bullet and take it to ten Naira or I don’t increase at all. A lot of companies have not been able to increase their prices even though they are loosing money.
”People are saying that Central Bank is going to spend N40 billion Naira on the new note, ofcourse last year when you look at the budget, they spent N47 billion to print currencies, so it is not different at all.”
Both the Adamawa State Governor, Murtala Nyako and Anambra State Governor, Peter Obi spoke in favour of the N5000, assuring it will not cause inflation.
The NEMT which was also attended by Vice President Namadi Sambo, is headed by the President comprises of the minister of Finance and coordinating minister for the economy, Governor of the CBN, Minister of national planning, Director General of the Security and Exchange Commission, Director General of the Bureau for Public Enterprises BPE, one representative each of Governors of the South and the North as well as key private sector players.
The Governors of Adamawa and Anambra , Murtala Nyako and Peter Obi, also spoke in support of the new monetary policy.
The EMT, with members from public and private sectors, was inaugurated by the President in 2011. It is set up to institute fiscal policies that will encourage local and international investors, inclusive growth and employment generation.
The team is chaired by the President, co-chaired by the Vice President and coordinated by the Minister of Finance, Dr Ngozi Okonjo Iweala.