Minister of Planning, Shamsudeen Usman
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THE POPULAR outcry against its introduction notwithstanding, the entry of the N5000 note into the nation’s money market is a fait accompli, the Federal Government has said.
Minister of Planning, Shamsudeen Usman, who spoke to journalists at the meeting of the Economic Management Team on Tuesday said that President Goodluck Jonathan had approved the proposal to print the N5000 denomination. He added that government would push ahead with the printing.
“The discussion today (Tuesday) was basically to endorse(the introduction of N5000 note). Mr. President had already approved and that is the only requirement by law. The CBN (Central Bank of Nigeria) is to propose and Mr. President is to approve,” he said.
Jonathan presided over the EMT meeting which has Alhaji Aliko Dangote, Mr. Femi Otedola, Mr. Atedo Peterside, Mr. Aigboje Aig-Imoukhuede and other top government officials as members.
Denomination of controversy
The CBN governor, Lamido Sanusi, penultimate Thursday announced a proposed comprehensive review of the nation’s currency with the highlight been the introduction of the N5000 note and conversion to coins the present N5, N10 and N20 notes.
But Nigerians, especially economists, have argued that the introduction of the note would lead to inflation in the system.
Just on Tuesday, about 500 protesters led by a former member of the House of Representatives, Dino Melaye, demonstrated in front of the CBN office in Abuja against the N5000 note.
Melaye, the leader of the placard-carrying protesters, said the proposed N5000 note would send a wrong signal about the worth of the Naira.
Lagos-based lawyer, Femi Falana, has also written to the Attorney-General of the Federation, Mohammed Adoke, to use his office to stop the CBN from introducing the N5000 note.
But Usman said there was no correlation between higher notes and corruption and that it did not contradict the CBN’s cash-lite policy.
No inflation, corruption
He said, “Clearly the N5000 notes, unlike some people misrepresent it, is not going to lead to higher inflation. There is absolutely no link. I am an economist, and I have 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.”
On the contradiction between higher denominations and the CBN cashless policy, the minister said “It is not in variance. The Euro has the €500 note. If you go to the countries where the Euro is in use, you will not get the €500 note in normal circulation. But it is used by the banks and a few other heavy cash users to store higher value.
“I have been in parts of the United States where you draw the $100 bill and give it to somebody and they start looking at it as if it is something strange, they probably have not seen it.
“So the higher denominations are there to create higher value, they will not be in the widest of circulation. And I think what is important is that there is no link between it and inflation.”
“I think people alleged that corruption is being done in dollars. A $100 bill is N16, 000; N5000 note will be $30, so which one is bigger to carry if you are doing corruption?
“So I don’t think it is necessarily going to increase the level of corruption. Those doing corruption will probably find that too small, the $100 bill is still bigger than the N5000 note,” he added.
He said the current lower currency notes would run concurrently with their coin versions when introduced.
Usman, however, faulted Sanusi’s handling of the message to Nigerians on the currency review.
“I think even that aspect didn’t come out well. So, the CBN is going to communicate to Nigerians that the coins will run concurrently with the note. They are like testing the waters, if they get accepted and are being utilised, only then will they take subsequent actions,” he explained.
N10000 note?
While supporting the planned introduction of the N5000 notes, Peterside said if he was the CBN governor, he would have even gone ahead to introduce a N10000 note.
He argued that the country would save huge money whenever it printed bigger denominations.
He said, “If I were the CBN Governor, I would prefer to print N10000 notes.
“Last year, Nigeria spent N47bn to print these small notes. If we were printing bigger denominations, we will print a fewer number and make 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.
“So they need a higher denomination notes. Right now, they are using the $100 notes all over Nigeria because they are the best store of values for them.
“If you give them a better store of value in Nigeria, they will move away from these dollars and reduce the demand for the $100 notes and move into our own currency as opposed to the use of $100 notes to hide their loots and so on.”
Peterside added that the country is currently losing in two ways by importing US dollars to finance the activities of corrupt persons and (by) squandering scarce resources printing large volumes of “worthless notes.”
N5000 to protect economy
Dangote also held the view that the introduction of the N5000 notes would not cause inflation but would rather protect the economy.
“People are saying that Central Bank is going to spend N40bn on the new notes. Of course, last year when you look at the budget, they spent N47bn to print currencies, so it is not different at all,” he said.
Aig-Imoukhuede on his part said the negative reactions that had trailed the planned introduction of the N5000 notes were unfortunate.
He said legal tender and restructuring of currency are normal parts of the CBN’s functions.
He said, “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 it is that the introduction will cause 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 people have misled Nigerians into thinking that it will lead into 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 N5,000 notes, you print less of N1,000 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.”
Protest
The Melaye-led protesters complained that the currency restructuring that would lead to the conversion of N20, N10 and N5 notes into coins would eliminate the contributions of nationalists like Tafawa Balewa, Alvan Ikoku and Murtala Muhammed, whose photographs grace the notes.
Some of the placards carried by them had inscriptions like, “Sanusi is wicked”, “Sanusi must go”, “Nigerians say no to Sanusi’s crooked notes”, and “Nigerians reject the wicked N5000 notes”, among others.
According to Melaye, the CBN’s action will send a wrong signal to the world that the Naira value is so weak that more of it is needed to transact businesses.
He said, “The implication of the N5000 notes on the economy is serious. The policy is unnecessary and will serve no useful purpose. We have more socioeconomic challenges than restructuring currency at the moment.
“The United States, which is the strongest economy in the world, has $100 as its highest denomination in circulation. The UK largest denomination of the pound sterling ever printed for circulation was the £1000 note issued between 1725 and 1745. The £100 note was issued from 1725 to 1943 and was withdrawn in 1945. Since then the £50 note has remain the largest denomination of the British pound in circulation. Saudi Arabia 500 Riyals is its highest denomination.”
The CBN’s Deputy Governor (Operation), Mr. Tunde Lemo and other officials of the apex bank, including its Director (Corporate Communications), Mr. Ugochukwu Okoroafor, addressed the protesters.
Lemo said, “The most important task of CBN is to fight inflation because inflation hurts the masses more than anybody else. I am yet to read your paper but we will go through it. Let me tell you, for the leadership of CBN led by Mallam Sanusi Lamido Sanusi and his colleagues, we are interested in ensuring that the masses of this country are well taken care of.
“But let me debunk something that I have read in the Newspapers, we are not spending N40bn to print N5000 note. Whether we introduce N5000 note or not, every year, we print money and whatever we decide to do, it is to make sure that we reduce cost of printing money.
“Anything we do, we make sure we reduce the cost of printing money. I can assure you that we are sensitive to the masses and we are sensitive to the people of the Federal Republic of Nigeria. We will look at all the issues and respond.”
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