Jumping from one inconclusive economic
and political issue to another appears to be a factor that is fast
defining the Presidency of Nigeria’s Dr. Goodluck Jonathan.
The
latest move of the Central Bank of Nigeria, CBN to convert the current
N5, N10 and N20 notes to coins and also step the currency note to N5,000
denomination by 2013 which has already gotten the nod of the President
amidst mountainous agitations by Nigerians has become one controversial
issue in the life of the nation at the moment.
Will the ruling
class have its way as against the wish of most Nigerians? That seems to
be the question Saturday Vanguard’s JOHN BULUS tries to find answers to
in this special report.
“I will continue to fight for your future,
because I am one of you. I will continue to fight, for improved medical
care for all our citizens. I will continue to fight for all citizens to
have access to first class education. I will continue to fight for
electricity to be available to all our citizens. I will continue
to fight for an efficient and affordable public transport system for all
our people. I will continue to fight for jobs to be created through
productive partnerships. You have trusted me with your mandate and I
will never, never let you down.
I know your pain, because I have
been there. Look beyond the hardship you have endured. See a new
beginning; a new direction; a new spirit. Nigerians, I want you to start
to dream again. What you see in your dreams, we can achieve together.”
With
these words, President Goodluck Jonathan on his inauguration as the new
Nigeria’s President on May 29, 2011 sealed a pact with Nigerians
promising to turn their dreams into reality while declaring that the
years of locusts and cankerworms are over.
Even prior to
the time, he had during the campaigns, as he crissed-crossed the length
and breath of the country drew up similar words that may have prompted
Nigerians who massively voted for him during the Presidential election.
But when finally he settled in office, President Jonathan appears to be
pursuing programmes and polices that obviously don’t receive the
endorsement of many Nigerians whose future he promised to secure. More
so, they become much more controversial than expected.
Consequently, every step he takes meets stiff resistance from the people. And
so, one wonders if the President is actually serving the interests of
Nigerians that voted him into power or that the people themselves have
suddenly not seen good the policies of the man they voted into power.
Past events
Some
past issues since the inception of the present administration in May,
2011 may have indicated that most moves taken by the Federal government
are rather making the regime unpopular. Barely 7 months in office and at
a time Nigerians expected a quick fix of the economy, President
Jonathan thought it necessary to delve into heavy political matters.
Thus,
he canvassed for a single seven- year term for President and Governors.
The issue generated unusual dusts from several quarters that when the
bill finally got to the National Assembly, it was already dead on
arrival. Yet, in May this year, the President also came up with the
change of name of the University of Lagos to Mushood Abiola
University.Till date, the controversy surrounding the development still
persists in some sections of the society .
Then came the
removal of oil subsidy, the biggest of all policies that attracted
almost zero applause from the people. For nine days in early January,
2012, Nigerians closed shop and went on aggressive strike to protest the
removal of oil subsidy that suddenly sky-rocketed the pump price of
petrol from N65 to N141. To some analysts, it was not actually the
call by the Nigerian Labour Congress, NLC that gave vent to the strike
but the pangs of poverty fuelled by anger and the time upon which the
subsidy removal came.
And so, there was a spontaneous rash
condemnation of the decision from the people who insisted that it must
be reversed. Obviously, when it appeared that the showdown could totally
cripple the economy, it then became very necessary for the Federal
Government to shift grounds and peg the pump price on N97 Naira, per
liter of petrol.
Similarly, President Jonathan’s advise to
Nigerians to start thinking in the direction of controlling birth rate
as a way of circumventing the harsh economic realities of the present
age recently was yet another issue that would have stirred up another
round of controversy had it been allowed to thrive.
Current Issue
Penultimate
week, the Governor of the Central Bank of Nigeria, CBN, Alhaji Sanusi
Lamido Sanusi audaciously dropped a bombshell. He said that the apex
bank has concluded plans to convert the existing N5, N10 and N20 notes
to coins and introduce into the Nigerian market, N5,000 currency note
next year. In swift response, organizations, groups, professional
associations and Nigerians in their numbers condemned the plan by the
CBN, citing several reasons why it must not scale through.
Nigerians React
Envisaging
the concomitant effects of the policy largely on Nigerians, the Senate
asked the Central Bank to stay action on the planned move to introduce
the note. The Chairman, Senate Committee on Banking, Currency and other
Financial Institutions, Senator Bassey outrightly asked the CBN governor
to put brakes on the move.
He said: “I believe that a project of
this nature requires parliamentary approval because there are numerous
and fiscal implications on the entire economy. “This type of
action is only taken where there is a major crisis and the CBN must be
very careful in order not to send a wrong signal or message to
households, domestic sector and even the external ones that the Nigerian
currency is valueless, which I believe is definitely not, and that for
every unit of value, they need to carry a large quantity of cash.
“The
CBN in 2008 and 2009 came up with a proposal to re-denominate the
currency; that was even to take off the zeroes. This was just 2008 and
2009 and here we are in 2012 seeing a kind of policy somersault even
though we understand the dynamics of the sector very well. I believe
that we have to be well briefed on this. “Also in 2005, the CBN
undertook a major currency restructuring which ran into billions of
naira. Till date, a proper value has not been done to know its cost to
the Nigerian taxpayers and the extent of the benefits in that 2005
coinage. I think it did not work at all because goldsmiths and
blacksmiths converted the coins to molding bangles, earrings and so on.
So, we believe that the coinage works very well where there is
infrastructure to take it like a half, probably like parking where you
go and put it. “We have not developed that real basic
infrastructure and those coins, most of them are nowhere to be found.
So, the CBN will have to prove that the policy is not a clear
contradiction or at variance with its cashless society, which they are
even yet to justify and whether this is the popular economic way to go.”
He
further stated, “Actually, we are not really going to rely on laws
perse. What we are trying to do here is what is best for the Nigerian
people. The Senate is not really against the independence of the CBN,
but what we want in place is proper check and that there should be
checks and balances in all these things that we do. So, I believe that
at some point, we will be able to sit down together and look at the
merits and demerits, but till now, we do not know anything about it and
we do not know what the people stand to gain and until that is properly
put through, we say everything about it must stop.”
Similarly, the
House of Representatives through its Banking Committee Chairman,
Chukwudi Jones said: “Unfortunately, we are on vacation and we can’t
take any legislative action now. But when we are able to get a few
members of the committee, we can do something based on the urgency of
the matter”.
The lawmaker also stressed that “Our primary concern
is that the measure will not hurt the economy and will not affect the
daily lives of the average Nigerian”.
Governors’ Forum not aware
The
Nigerian Governors Forum is astonished that such a decision has not
come up in the National Economic Council which has the Governors of the
36 states of the federation as members.
Hear Governor Gabriel
Susuwan of Benue State who is a member of both Groups: “Let me tell you
that economically, I don’t support that. I am not an economist, I don’t
know what informed that but quite frankly, it means that our naira would
be devalued. I don’t know how it would address the economic issues that
are confronting us by printing N5, 000 notes, but like I said, I am not
an economist. So, I don’t know the nuances of printing N5, 000 notes.
If we are saying that we would promote a cashless society and in the
same vein printing N5,000 that can make it possible for somebody to
carry N10 million in his pocket, I am a bit confused about that. But I
expect that this should have been addressed at the National Economic
Council meeting. We have never discussed it at any point in time. I am
as confused as the man in the street”.
Nigerian Medical Association, NMA, reacts:
The Nigerian Medical Association, said that the decision was borne out of sheer insensitivity by Nigeria’s leaders.
The
President of the Association, Dr. Osahon Enabulele, told journalists in
Abuja, that the insistence of the CBN governor to carry on with the
widely condemned policy was among several critical national issues
discussed at the just-concluded National Executive Council (NEC) meeting
of the NMA, which held in Owerri, the Imo State capital.
Enabulele
also told journalists that the NEC expressed great worry over the
proposed introduction of the single N5,000 note, N20 and N50 coins into
circulation, on account of the naira devaluation and rise in inflation,
which many Nigerians and economists have continued to point out since
the policy was first contemplated by Sanusi. He further charged
Nigerians to join their voices in the condemnation of the decision.
The position of the Nigerian Bar Association, NBA, is no less of its NMA counter-part. In
a speech in Abuja at the Annual General Conference of the association
which held recently, Mr. Joseph Daudu, the immediate past national
Chairman of the bar said that the proposal would further
devalue the naira.
“The
CBN’s introduction of the N5,000 notes would devalue the naira and it
is against the cashless policy being currently promoted by the bank. The
proposal by the CBN is shallow and should not be allowed to further
damage the already fragile economic system”, he said.
Reacting to
the development, Lagos State erstwhile governor, Senator Ahmed Bola
Tinubu said the plan is insensitive: “The economy is on reverse, it’s a
yoyo economy. This government is not serious; they don’t know what they are doing.”
In
his own reaction, Ita Enang, Chairman of the Senate Committee on
Business and Rules, foresees a situation where the present controversy
stirred by Sanusi will truncate President Jonathan second term bid. Said
he: “I pray Mr. President should be sensitive to this and take action
against the move because I am certain the plan is intended to embarrass
the President of the Federal Republic of Nigeria and to make the
government of Goodluck Jonathan unpopular in years to come so that
people will not like to vote for him in the next election. “I
think what Sanusi is aiming at with the introduction of the plan against
Nigerians is to ensure that the people will be so unhappy with the
President that in the next election they would not like to vote for him.
Mr. President should therefore call the CBN governor to order with
immediate effect”.
The Nigerian Labour Congress, NLC has vowed to stop the process. It
said: “Psychologically, for the working people, it means they work so
much for little notes with introduction of N5000. This may fuel crisis
of expectation for more wage increase as bigger banknotes will be
chasing fewer goods. Nigeria is better with smaller banknotes that can
deliver goods and services rather than higher bills without any value”.
Comrade Abdulwaheed Omar said in Lagos: “Comrades, the recent proposal by the Central Bank of Nigeria is one
of those policies we must be prepared to vigorously oppose. We see in
the proposal a policy contradiction that completely exposes our policy
makers as playing the devil’s advocate. Most of these policies are
clearly not designed by them but obviously by institutions outside our
shores. Comrades, we must collectively oppose this and we must not allow
the CBN continue with this clearly unnecessary project. We believe the
CBN should not supervise the total collapse of our economy with the
introduction of a policy that has historically led to the total collapse
or subjugation of the economies of some countries in Africa, Europe and
South America”.
He added: “There is no genuine reason for the
introduction of N5000 note in a country that is dwindling in production
and suffocating under high inflation. While our government complains
about lack of funds to reactivate infrastructures critical to economic
development, the CBN is planning to spend over N40 billion to produce
new denominations of our currency”.
General Secretary of the
labour union Comrade Issa Aremu told newsmen in Kaduna recently that the
bank should rather be more concerned about improving the value of the
Nigerian currency as against others in the international market. “The
current highest bank note of N1000 was introduced in 2005. We had
currency review in 2007 and 2009. It should not be customary for every
CBN governor to change the nation’s bank notes. Incessant turning out of
higher bank notes is an attempt to legitimize the devaluation of the
Nigerian currency.
There is a direct relationship between higher
bank notes and devaluation of the currency. The CBN should concentrate
on stabilizing the value of the Naira rather than legitimizing the
devaluation of the currency. CBN under Sanusi Lamido Sanusi should
continue with the good work they are doing with respect to revival of
manufacturing sector and management of inflation and interest rates.
The double digit inflation rate as we currently have cannot take us out of the economic crisis”, Aremu said.
The
Conference of Nigerian Political Parties, CNPP, in a statement signed
by its General Secretary, Willy Ezeugwu, accused Sanusi and the economic
team of hiding under the new currency to further devalue the naira.
The
statement reads: “The decision of the CBN, as endorsed by the so-called
economic team, flies in the face of reason, especially when all the
explanations and analysis that these clueless officials have so far
given are reminiscent of the sing song they engaged in January during
the ill-conceived removal of petrol subsidy.
The assurances given
at that time turned out to be false as Nigerians feared because today,
we all know that the quality of life has worsened since the partial
removal of subsidy while most of the supposed palliative buses have
vanished into thin air.”
Also, Founder and President of Oodua
Peoples Congress (OPC), Dr. Fredrick Fasehun has described the
insistence of the government to introduce the N5, 000 note despite
people’s opposition as autocratic
and insensitive. The Medical
Doctor said: “Government is in place for the people and not people in
place for the government. We will resist the unpalatable morsel they are
trying to force down our throat. We will not allow those in power at
our instance to dictate undemocratic policy to us and expect us to
swallow it hook, line and sinker”.
Apart from the unanimous
agitations against the proposal by the associations, some Nigerians have
physically staged protests to register their feelings on the issue. For
instance, former Federal Lawmaker in the House of Representatives,
Honourable Dino Melaye on Thursday led a group of protesters to CBN
headquarters in Abuja against the issues.
Under the aegis of Anti
Corruption Network, Melaye reiterated the opposition of Nigerians to the
currency restructuring policy of CBN. He told Tunde Lemo, Deputy
Governor of CBN who received the protesters that the introduction of a
single N5000 note will result in inflation and that Nigerians are
opposed to it and asked the CBN Governor, Alhaji Sanusi to listen to the
views of the people on the matter.
FG’s Meal of Surprise/Defense
Nigerians
who had waited to get a good deal from the Federal Government upon
whose approval, the CBN carries out the plan were rather flabbergasted
when the federal government during the week, arising from the National
Economic Management Team (NEMT) threw its weight behind the CBN governor
on the action, conspicuously ignoring the cries and submissions of the
Nigerian people.
The NEMT, which is headed by the President,
comprises the Minister of Finance and coordinating Minister for the
Economy, Dr. Ngozi Okonjo-Iweala; Sanusi Lamido Sanusi, the CBN
Governor; Minister of National Planning Dr. Shamsudeen Usman; Director
General of the Security and Exchange Commission (SEC); 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.
Dr. Shamsheen Usman, the Economic and National Planning Minister said of the plan:
“Clearly,
the N5,000 note will not lead to higher inflation. There is absolutely
no link. I am an economist; I have been deputy governor(Operations) of
the Central Bank. During 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 understand. “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 with the notes. Those
were my concerns, initially, because you remember during my time in the
CBN, we introduced the one naira and two naira coins. Unfortunately,
they were not utilized at all. Part of that is really the value of one
naira and two naira today; what can you buy? So because they are
higher denomination, they may be accepted. I think even that aspect
didn’t come out well in the communication and 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 utilized, only then will they take subsequent actions.”
Dr.
Usman has lieutenants and supporters who see no wrong in the act. One
of them is Mr. Atedo Peterside, a banker and NEMT member who argued that
besides the fact that it does not add to increase in cost of printing
of currency, money, being a store of value, the higher the denomination,
the better it is for the economy as those who made money legally and
illegally will want to keep their loot in naira rather than hard
currency.
He said: “If I were the CBN governor, I will prefer to
print N10, 000 notes. Last year, Nigeria spent N47billion to print these
small, small notes. If we were printing bigger denominations, we will
print fewer number and you 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.”
Lending his
voice in support, the Access Bank Managing Director Aigboje
Aig-Imoukuede described the reactions trailing the N5000 note as
unfortunate. 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 causing 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
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”.
Of
course, the big African business mogul and a member of the Economic Team
of the President Jonathan, Alhaji Aliko Dangote would have said
otherwise just as his counter-part in the oil business, Femi Otedola
would as well.
Dangote said: “The introduction of the N5,000 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”.
Meanwhile,
CBN’s Director of Corporate Affairs, Mr Ugochukwu Okoroafor said CBN
would instead sensitize the public on the introduction of N5,000 note
into the economy. He said: “We are about to carry out
sensitization campaign on the introduction of N5000 note and the
restructuring of the nation’s other currencies. Everything will
not take off at the first quarter of next year. We are starting with a
particular currency in the first quarter of next year; there will still
be currency and coins for the denominations that will be coined like N5,
N10 and N20 so that both will be operational side by side.”
He
added: “We want to be among the top 20 largest economy in 2020; we
believe in it. What we should do is pray for Nigeria to have a financial
system that can support one of the world’s largest economies. We cannot
do it, if we don’t have the right framework. We want to ensure that
life is made a lot easier for Nigerians and will continue to improve the
system.”
Okoroafor said the report that N40 billion would be
spent to print the N5000 note is false, saying the cost is in the CBN
annual report.
Analysts have submitted that some other reasons why
the decision can’t be allowed to fly at this time included the
inability of the government to better the lots of the citizenry.
They
asserted that coming at a time the country’s leadership has incessantly
pooh-pooed in its promise to restore the security of lives and
property, improve on the welfare of the ordinary Nigerians and provide
basic social infrastructures, the government not expect that the
Nigerian people will gladly accept what is clearly going to be the
reserve of the rich.
Again, in the light of CBN’s cashless society
campaign, keen observers queried why a society that does not carry
physical cash but makes transfers should suddenly concern itself with
the introduction of a higher denomination.
Apart from eclipsing
the opportunity posterity would have in knowing Alvan Ikoku and Murtala
Mohammed, Nigerian fallen patriots whose faces appear on the N10 and N20
Naira notes respectively, another argument against the CBN’s move is
that it will completely obliterate the N5, N10 and N20 notes when
converted to coins and ostentatiously give rise to high cost of common
goods.
For instance, they said that a sachet of (pure) water will automatically become N50 which will certainly make
mockery of the Naira.
In
a similar move by the same CBN under Professor Charles Soludo during
ex-President Olusegun Obasanjo regime, the government assured the people
that N1.00 note when converted to coins will be a tool for figure
counting for infants and posterity. But today, suffice it to say, N1.00
is neither seen in circulation as such nor carried by anybody even
traders.
Indeed, with this array of threats and condemnation, most
analysts posit that a little less, if not more of what Nigerians
experienced during the oil subsidy strike in January this year, might be
in the offing should the Federal Government and CBN forge ahead with
the currency devaluation exercise. But until then, Nigerians are
watching with keen interests.
Source: Vanguard
