Some have argued that the currency policy negates the ‘cashless society’ initiative of the CBN. But remember, we were not born into a ‘cashless’ society, so no one should expect the ‘cashless’ thing to permeate 100% all over Nigeria. The cashless policy will soon meet with serious resistance when they begin to approach market towns and areas of high illiteracy. Even in Lagos, it poses quite a problem in spite of the high-literacy there, such that banks now devise means of ‘illegally’ helping their customers, else the customers will close their accounts. The penalties for violating the cashless initiative is rather too high, such that customers are screaming. There is never going to come a day when all market women will accept card payments and send money to their suppliers via the internet. We seem to take everything to the extreme here. There is no country in the world where they are 100% cashless, and Nigeria will not be the first. Anyway, nothing stops the CBN from pursuing two policies at the same time in the performance of its role. The Bank can keep driving the cashless initiative, trying to encourage people to use less cash, while at the same time, driving down the cost of printing currencies yearly. Is the CBN just a victim of its own success?
Another quite cogent argument that have been advanced against the introduction of this N5,000 note, is the likelihood that it will aid corruption and money laundering, because in the era where corrupt people stash cash in the caps, hats, shoes, socks, babbanriga, danshiki, Etiboh (Naija Delta), agbada, and god-knows-where-else, a handful of N5,000 notes will amount to a lot of money. The CBN adduced an even stronger counter point to this, because in the case of Otedollar and Far-Crook for want of just one example, the base currency for that transaction was… yes, the almighty Dollar. Perhaps it is not the currency that will curb or increase corruption, but our ability to see the futility, folly, and stupidity of wanton earthly acquisitions, through fraudulent means. Say, if Nigeria cancelled N1,000 and N500 notes and reverted to the time when the highest denomination was N200, will corruption and/or inflation reduce? Ehmm, I don’t think so!
Nigerians have also asked CBN to instead go down the route taken by Ghana. But like I mentioned earlier, the Ghanaian economy has been worse-off for that decision called “redenomination”. When Ghana redenominated sometimes in 2007, the Ghanaian Cedi was 0.92 to the USDollar. Today it is around 1.95, a freefall against the dollar. The Ghana Cedi has lost precisely 54% (more than half) of its value since that redenomination! Surprisingly, the Naira has fared better, having lost about 24% of its value against the US dollar since then (it was N127 to the Dollar in 2007, and about N160 now). This comparison with the Ghanaian situation is important, to let us know that it is not in every situation that we should rubbish our own ideas, for oftentimes when it looks like the grass is greener on the other side of the fence, it actually isn’t.
In order to assist the country by reducing currency management costs, there is a need to bring back coins BY ALL MEANS. A coin stays much longer in circulation compared to notes. Reintroducing coins will be a great achievement for the CBN if it is able to pull it through someday, but much education is required. I have heard several arguments and people saying ‘Nigeria has moved past the use of coins!’, ‘Coins are too heavy!’ etc. Is our economy better than Europe or America? Are we better human beings than they are? So I propose that we should see a return to the use of coins as a NATIONAL DUTY, because we would be saving this country a whole lot of money. The CBN currently spends close to N40billion yearly printing currency. This can be effectively reduced by N20billion yearly if our currency system made sense and if we embraced coins. By rejecting coins, Nigerians are being unnecessarily proud (for nothing), and we are all penny-wise, pound-foolish.
One great concern I must add, regarding this subject, and an argument I haven’t heard from any quarters, is that an unexpected and massive devaluation of the Naira, will make mincemeat of this policy, because if the N5,000 note debuts at somewhere close to $35 in value, all the gains of store of value and de-dollarisation will erode if the value of that note drops to say $15. The only strategy to curtail this risk may be to ensure that the core reasons for having that note is quickly ingrained into the subconscious of Nigerians before the threat of devaluation comes. It seems most likely that the Naira may devalue against the Dollar in the future, especially if for any reason, the price of our main commodities drop. Also there is a principle called ‘self-fulfilling prophecy’ in the study of currency crisis, which is very operational in our clime. It says that if a people believe a currency will soon devalue – whether they are right or wrong – that currency will devalue, because someone will make the first move by selling the currency and buying one which they deem more stable. In the same vein, since our ‘intellectuals’ have WRONGLY posited that the printing of N5000 will bring inflation and corruption, they may just have set increased inflation and corruption in motion, because the rest of Nigeria hears them and everybody will move accordingly. There is therefore a need for proper education, from the CBN, and other intellectuals, and for better dialogue between all parties and stakeholders. It is also very important for government to price a lot of its services between N10 – N40 so that people MUST NECESSARILY carry coins to pay for them.
To conclude this series, I must emphasise that I cannot comment on whether there was a fraudulent intention beneath the plans for the new currency, but I can only advise professionally as to the good things it can be made to achieve. On balance I think there are more advantages than disadvantages. Also as someone who emphasizes the value of history, one critical misgiving I had about the policy was the proposed ‘demotion’ of great sages like Tafawa Balewa, Alvan Ikoku and Murtala Mohammed from our currencies. I would have suggested that the N5000 note be used to RE-UNITE Nigeria, by putting the pictures of FIVE GREAT MEN, viz Abubakar Tafawa Belwa and Nnamdi Azikiwe (first prime minister and president), larger, and the leaders of the three regions then (Awolowo, Sardauna and Opara), smaller. Then people will actually spend the money with respect and pride.
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