BY BRIGHT JACOB
There was a time not very long ago in the past when Nigerians were gobsmacked about the exchange rate of the naira to the CFA franc, the name of two currencies, the West African CFA franc, used in eight West African countries, and the Central African CFA franc, used in six Central African countries.
Then, in exchange for a few naira notes, Nigerians would say they would “cart” home the CFA francs which were noted to run into “millions”. In fact, the currency (CFA franc) was one of the most uninspiring for Nigerians, who were content with their own low-denomination banknotes. As at then, too, the current N1, 000 note denominations was not yet in the works, and coins like 5k and 10k were still in vogue and were proudly a part of the purchasing power of their owners.
So, when the Central Bank of Nigeria began to mint the N1, 000 notes, it came with mixed feelings for Nigerians. While some Nigerians applauded the introduction, and said it would help to reduce bulk handling of cash, others were of the view that the introduction was a sure-fire route for the country to slide into the same financial doldrums where the CFA franc users were. Today, however, the story seemed to have changed.
1 West African CFA franc now exchange for N0.75. The CFA franc has also continuously and significantly been doing well against the naira. And not only the CFA franc, the Ghanaian Cedi has also been faring well, too, compared to the naira. It’s small wonder that Nigerians and companies previously doing businesses in the country have relocated to the former Gold Coast.
Right now in Nigeria, the plan to redesign the N200, N500 and N1,000 note denominations is already in full swing, but is plagued with a couple of hiccups here and there as the experience has come with challenges associated with its implementation. Banks have been besieged by customers trying to swap their old notes for the new ones or simply trying to get hold of some cash as the scarcity of the new notes bites harder, with some errant banks accused of “hoarding” the much-sought-after notes.
“WE ARE NOT YET READY FOR N5, 000 NOTES BECAUSE EVEN THE CURRENT NOTES WE HAVE ARE NOT AVAILABLE TO THE POOR. N5, 000 NOTES WOULD NOT SOLVE THE PROBLEMS OF THE ECONOMY IN ANY WAY. RATHER, IT WOULD CREATE ROOM FOR PEOPLE TO ROB YOU, AND ALSO MAKE FOOD ITEMS AND OTHER COMMODITIES VERY EXPENSIVE”
Some customers also exchanged blows in some banking halls, and in some bizarre instances, went unclad in the banks as a form of protest over the scarcity. And as of Friday last week, most of the banks were under lock and key. And even though a deadline of January 31 was earlier announced by the CBN for the expiration of the old banknotes, the beleaguered apex bank eventually bowed to pressure and extended the deadline to February 10 as the final date.
But even at that, the Godwin Emefiele-led institution hasn’t been able to address the attendant naira scarcity that spread like wildfire throughout the country, and which was accompanied by the pocket of protests mentioned earlier, and sometimes, too, vandalism and attacks on the facilities of commercial banks, with members of staff not spared the onslaught by the angry customers. Notwithstanding the gesture by the CBN to extend the deadline, some Nigerians, like Oliver Twist in the fictional novel by Charles Dickens, had demanded for an elongated extension.
And at the forefront of those who requested for the additional time frame were the governors of Kaduna, Kogi and Zamfara States, who took the Federal Government and CBN to the Supreme Court, and thereafter, obtained a temporary order suspending the CBN’s February 10 deadline.
Interestingly, too, even though the CBN Governor made bold to say that the naira redesign was due to several challenges confronting currency management in the country, the presidential candidate of the All Progressives Congress, Bola Ahmed Tinubu, in one of his campaign rallies alleged that the policy was targeted at his presidential ambition. Some of the former Lagos State Governor’s supporters had even gone ahead to say that among all the candidates vying for the office of president, he was the only one who spoke up against the policy they noted had brought untold hardship on the masses.
Tinubu’s detractors have however questioned the politician for “crying foul” when his party is at the helm of affairs in the country. Two weeks ago, the Council of State meeting presided over by the president, Muhammadu Buhari, gave its outright support to the naira redesign policy. The Council of State also ordered the CBN to print more of the new notes, or recirculate the old ones.
The Point recalls that in August 2012, erstwhile governor of the CBN, Sanusi Lamido, had shocked not a few Nigerians after he announced plans to introduce N5, 000 notes. After he reeled out all the benefits of the soon-to-be-used banknote, his novel idea was met with backlash and criticism, and the government at the time eventually suspended the introduction to enable “more enlightenment campaigns” by the CBN.
Now, in the midst of all the furore that greeted the recent CBN policy to redesign the N200, N500 and N1, 000 banknotes, the Director General of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture, Sola Obadimu, said that the CBN should have introduced N5, 000 notes instead of redesigning the old notes. Among the reasons adduced by Obadimu was the notion that the introduction would have mopped up the money in circulation without creating all the hardships Nigerians were encountering because of the new CBN policy, or even reduce them to the barest minimum.
The Director General also said that the strength of the Naira against foreign currencies was another major concern why the introduction of the N5, 000 notes would have been welcomed with open arms. He said, “Another thing is that our highest denomination, which is N1, 000, is only worth $2 at official rate and it is not too good for our image. “There are 50 and 100 Euro notes and how much is 100 Euro note in Naira. A Euro is almost N1, 000. So, 100 Euro is about N100, 000. That is just a bill and ours is worth just two dollars, which is not good for our image,” Obadimu added.
Perhaps, what the NACCIMA boss didn’t highlight, according to a chartered accountant, Ifeoma Ogbonna, was the inalienable fact that such a move would devalue the naira. According to her, Nigeria is not yet ready for the N5, 000 notes. Ogbonna also said that even though such denomination would reduce the volume of money Nigerians could carry around, it would most likely be beyond the reach of the poor. “We are not yet ready for N5, 000 notes because even the current notes we have are not available to the poor.
N5,000 notes would not solve the problems of the economy in any way. Rather, it would create room for people to rob you, and also make food items and other commodities very expensive. “Again, if you bring N5, 000 notes into the economy, it devalues the lower denomination of notes. We have N5, N10, N20, N50, N100 and N200…. what are the values of these currencies now in our present economy? N50 and N100 no longer have any value.
They are only issuing the old N100 note at the banks because the new N500 and N1, 000 notes are not available. “If you brought N5, 000 into circulation, it would mean that N200 would no longer have any value, and we need our currency to have some value. “So, irrespective of the fact that it would reduce the volume of money carried around, it would increase the risk of people carrying larger amounts of money and getting robbed easily. “And if you say you are driving towards a cashless policy, you should reduce the amount of money that is available. In fact, our highest denomination should be the maximum ‘they’ met, and that’s N1, 000, or even N500.
But since we already have N1, 000 note…all well and good,” she declared. Also reacting, an asset inventory manager, Ifiok Usanga, who also spoke to The Point, said that it was a shame that while other countries of the world were “moving forward”, Nigeria would be “moving backwards” if it conceived any new plan to “resurrect” the introduction of the N5, 000 notes.
He disclosed that the United States of America phased out higher denominations of the dollar, like the $1,000 and $5,000 denominations in 1946 because it was a “serious country” which wanted to tackle money laundering. In his opinion, the N5, 000 notes would be an avenue for looters and money launderers in Nigeria to “drain” the nation economically. Usanga, who said any plan to introduce N5,000 notes could “take Nigeria to the era when the CFA franc was worthless”, also observed that whereas ATMs in the US only dispensed small denominations of the dollar, higher denominations were usually freely dispensed in Nigeria.
“We are going towards a cashless policy and mustn’t think of printing N5, 000 notes. If you ask me, I would tell you that they may be planning to gradually take us to the period when the value of the currency of some African countries, I mean the CFA franc, was ‘worthless’.
“The US, I believe, in 1946 phased out higher denominations of the dollar because they wanted to make it more difficult for criminal elements to launder money. In Nigeria, the reverse seems to be the case. “In the US, most of their ATMs only dispense $10 and $20 dollar bills. You can hardly get $100 bills at the ATM. And even if you enter their banks to get the $100 denominations, you would be subjected to a grilling before you laid your hands on them. Sadly, for us here, we are flirting with the idea of circulating N5, 000 notes here,” Usanga said.