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Tag: Sanusi

  • Sanusi, ex-minister to lawmakers: don’t tamper with CBN’s autonomy

    Sanusi, ex-minister to lawmakers: don’t tamper with CBN’s autonomy

    Central Bank of Nigeria (CBN) Governor, Sanusi Lamido Sanusi and former Information Minister, Frank Nweke (Jr), yesterday urged the National Assembly not to tamper with the apex bank’s autonomy.

    Sanusi, who spoke at the 2012 Annual Public Lecture organised by the law firm of J-K Gadzama & Partners LLP, said if politicians are allowed unfettered control of the CBN, it would not effectively achieve its regulatory mandate.

    “Politicians and even the executive think short term. The CBN thinks long term. If you allow politicians to control the CBN, we’ll not achieve anything. Politicians will never allow us to manage inflation, interest rate simply because they want to win election.”

    Sanusi, who chaired the event, was represented by the CBN Deputy Governor, Corporate Services, Alhaji Suleiman Barau.

    The lecture, which had the theme: “Nigeria in the Year 2012: The Vision of a Cashless Economy,” was delivered by Nweke.

    Sanusi was reacting to a comment by former Chairman, Senate Committee on Banking, Senator Nkechi Nwogwu, who was a guest at the event.

    She said some CBN policies must be subjected to legislative approvals, first, arguing that while CBN should have complete independence in its regulatory functions, some of its policies, such as the proposed introduction of the N5000 banknote, (now suspended), should be subjected to legislative review.

    She said: “I don’t think the Senate has ever said the independence of the CBN should be curtailed. We never said so. The intervention of the CBN in distressed banks and the like is within its purview.

    “But there’s no agency that is an Island. We’re saying that there are some of its projects, which need democratic review. Certain monetary policies must be brought before the legislature for a review. That’s what we’re concerned about. We’re not at loggerheads with CBN at all. All we’re saying is that they should consider the opinions of Nigerians.”

    Senator Nwogwu, also criticised the suspended new banknote policy, saying it contradicts the ‘cash-less’ policy “because in my handbag I can carry N20million.”

    However, Sanusi defended the N5000 banknote, saying it is consistent with the cash-less policy.

    He said the cost of printing a single N100 note is almost the same as printing N5000 note because they are printed on the same paper.

    N5000 note, he said, would therefore reduce the cost of printing, moving and destroying cash.

  • Jonathan suspends introduction of N5,000 notes

    President Goodluck Jonathan has directed the Central Bank of Nigeria (CBN) to suspend the proposed introduction of the N5,000 notes.

    Dr Reuben Abati, the Special Adviser to the President on Media and Publicity, confirmed this to State House correspondents on Thursday night in Abuja.

    “The introduction is being suspended for now to enable the CBN do more enlightenment on the issue.

    “Yes, President Jonathan has directed that the implementation of the new N5,000 note be suspended for now.

    “This is to enable the apex bank to do more in terms of enabling Nigerians to understand why it proposed it in the first place.

    “So, for now, the full implementation is on hold,” he said

    The News Agency of Nigeria (NAN) recalls that the CBN recently announced that it would introduce the note, and coins to replace the current N5, N10 and N20 notes.

    The policy was endorsed by the National Economic Management Team, an advisory body coordinated by the Minister of Finance, Dr Ngozi Okonjo-Iweala.

    NAN, however, recalls that both the Senate and the House of Representatives have passed separate motions calling for the suspension of the introduction of the note. (NAN)

  • N5,000 note: NBA asks Jonathan to sack Sanusi

    N5,000 note: NBA asks Jonathan to sack Sanusi

    The Nigerian Bar Association (NBA) has asked President Goodluck Jonathan to sack the Central Bank of Nigeria Governor, Sanusi Lamido Sanusi. The association has also disclosed plan to convoke a Summit on Peace and Security in Nigeria to address the insecurity in the nation. NBA said it was embarrassed that the apex bank had not been able to offer any sensible answer to the fears raised by Nigerians over the plan to introduce N5, 000 note. Speaking on Thursday in Abuja, at the Summit on the future of the NBA with the theme “The Nigerian Bar Association: The Past, Present and the Future”, Its President, Okey Wali (SAN) expressed surprise that Sanusi could insult former President Olusegun Obasanjo for holding a contrary view. Amazed by the growing obsession for power under the president’s watch, the association charged him to initiate the process that will lead to removal of Sanusi. He said: “It may well be that the CBN has a case, but the problem is that they are not giving any sensible answer to the fears expressed by Nigerians, aside from such pedestrian reason as, it will make Nigerians to hold Naira instead of Dollar. “We are supposed to be in a democracy and since Nigerians have rejected the policy, even their elected representatives in the House of Representatives and the Senate on Tuesday 18th of September, 2012 condemned the plan. Rather than listen to Nigerians, the CBN is engrossed in distribution of insults and name calling to anybody who dared express a contrary view. To my utter consternation, I watched on National Television as an elder statesman and former President of this country was being called names and ridiculed for daring to hold a contrary view. That is a big shame. “Since all indices show that Nigerians do not want the N5,000 note, even if the leadership of the CBN is right, we believe that they are bound by the wishes of the people or they should take the honorable part of resignation, rather than exhibiting such unbridled high level of arrogance and rudeness.

  • Letter to CBN Governor

    Letter to CBN Governor

    Whoever amongst you sees something abhorrent let him change it physically; but if he is incapable, then, let him change it verbally; and if he is still incapable to do so then let him change it wishfully; however the last option is an evidence of a very weak faith”. Hadith of Prophet Muhammad (SAW).

    Dear Governor of the Central Bank of Nigeria, Ordinarily, this open letter would not have been necessary if some other avenues were available for public servants like you to rob minds with the ordinary citizens of Nigeria. Similar letters had been written in the recent past through this column to some other prominent public servants in Nigeria including Mr. President. Though you are being surreptitiously labelled unjustifiably by the Press as the most controversial CBN Governor ever in Nigeria, it is a matter of delight for reasonable Nigerians who follow your focused direction that you are calmly weathering the storm despite unwarranted heat being maliciously generated from certain quarters to ensure your failure.

    You would have probably noticed that ‘The Message’ as a column takes a special interest in your office. This is not because you are a Muslim and in charge of money but because your courageous and patriotic performance so far deserves public cooperation and support. And, by winning the World Banker of the year 2011 award, you have put the malicious sceptics to shame. Ever since you became the CBN Governor in 2010, this column has followed your track record very keenly and has randomly commended or admonished you as the situation warranted. Yet, we have never met one on one.

    By and large, as the 10th Governor of the Central Bank of Nigeria you have wonderfully proved your mettle by showing that administrative prowess is surely a property of intellect with which only the Almighty Allah endows whoever He wishes. The very quantum of your impeccable achievements in that exalted office in the past two years conspicuously stand you out of the pack. In a sane country the citizenry should be proud of you.

    However, there are moments in the life of a leader when it may become necessary to look over his shoulder and see if the foot soldiers are still there to man the rear effectively. Perhaps for you this is one of such moments.

    Going down the memory lane, you will recall that though the British Colonialists first brought monetary coins and currency notes to Nigeria in 1892 such monies were not in public circulation until 1912 when the West African Currency Board was established to issue currency notes for the sub-region. Nevertheless, the history of Nigeria’s Central Bank did not take root until 1952 when the report of an enquiry into banking practice in Nigeria was submitted. That enquiry led by G. D. Paton a Briton appointed by the Colonial Administration paved the way for the first Banking Ordinance designed to ensure orderly commercial banking and to prevent any establishment of unviable banks that year. Subsequently, a draft legislation for the establishment of Central Bank for Nigeria was presented to the House of Representatives in March 1958 which became fully implemented on July 1, 1959 when the CBN officially came into existence.

    Since then, the Central Bank Act, 1958 (as amended) and the Banking Decree 1969 (as amended) have constituted the legal framework within which the CBN operates and regulates banks. Also, the wide range of economic liberalization and deregulation measures which began in 1986 with the adoption of a Structural Adjustment Programme (SAP) resulted in the emergence of more private banks and other financial intermediaries. The Banks and Other Financial Institutions (BOFI) Decrees 24 and 25 of 1991, which repealed the Banking Decree 1969 and all its amendments were, therefore, enacted to strengthen and extend the powers of CBN to cover the new institutions in order to enhance the effectiveness of monetary policy, regulation and supervision of banks as well as non-banking financial institutions. Unfortunately in 1997, the General Sani Abacha led Federal Government enacted a new CBN (Amendment Decree No. 3 and BOFI (Amended) Decree No. 4 to remove completely the limited autonomy which the Bank had enjoyed since 1991.

    Thus, the 1997 amendments brought the CBN back under the supervision of the Ministry of Finance an opportunity that opened the gate for reckless looting of the national treasury. The Decree made CBN directly responsible to the Minister of Finance with respect to the supervision and control of banks and other financial institutions, while extending the supervisory role of the bank to other specialised Banks and Financial Institutions. That amendment placed enormous powers on the Ministry of Finance while leaving the CBN with a subjugated role in the monitoring of the financial institutions with little room for the Bank to exercise discretionary powers. In 1998, another CBN (Amendment) Decree No. 37 which repealed the CBN (Amended) Decree No. 3 of 1997 was enacted. The Decree provided a measure of operational autonomy for the CBN to carry out certain traditional functions which enhanced its versatility.

    However, the current legal framework within which the CBN operates is the CBN Act of 2007 which repealed the CBN Act of 1991 and all its amendments. The Act provides that the CBN shall be a fully autonomous body in the discharge of its functions under the Act and the Banks and Other Financial Institutions (BOFI) Act with the objective of promoting stability and continuity in economic management. In line with this, the Act has widened the objects of the CBN to include ensuring monetary and price stability as well as rendering economic advice to the Federal Government.

    Besides, the regulatory powers of the CBN were strengthened by the Banks and other Financial Institutions (Amendment) Decree No. 38 of 1998 which repealed BOFI (Amendments) Decree No. 4 of 1997. By this Decree, the CBN’s powers on banks, especially those relating to withdrawal of licenses of distressed banks and appointment of liquidators of such banks, including the NDIC was restored. Through those amendments, the CBN may vary or revoke any condition subject to which a license was granted or may impose fresh or additional condition to the granting of a license to transact banking business in the country. This is the Act that gives you as the CBN Governor the enormous powers which you now wield within the banking sector albeit to the great advantage of Nigeria and Nigerians.

    Now that we have a controversy at hand over the desirability or otherwise of introducing a new denomination of Nigerian currency it may become pertinent to also look if briefly at the history of Nigerian currency from colonial times. You will remember that the West African Currency Board was initially responsible for issuing currency notes in Nigeria from 1912 to 1959. Hitherto, the various tribes in Nigeria had used various forms of money including cowries and manilas.

    But on July 1, 1959, the Central Bank of Nigeria issued the first Nigerian currency notes and coins thereby forcing the West African Currency Board to withdraw its notes and coins from circulation in the country. It was, however, not until July 1, 1962 that legal tender status was changed to reflect the country’s new status. The notes were again changed in 1968 as a war strategy following the misuse of the country’s currency notes in certain circumstances.

    And on March 31, 1971, the then Head of State, General Yakubu Gowon announced that Nigeria would change to decimal currency on January 1, 1973 in line with the modern monetary policy in the world. He said the major currency unit to be called Naira would be equivalent to ten shillings of the British currency of Pound Sterling while the minor unit would be called kobo 100 of which would make one Naira. The decision to change to decimal currency followed the recommendations of the Decimal Currency Committee set up in 1962 which submitted its report in 1964. But for the January 1966 military coup that led to a civil war, the Nigerian decimal currency would have been in use since 1966.

    The change that took place in January, 1973 was a major one which involved both currency notes and coins. The major unit of currency which used to be one Pound (£1) ceased to exist and the one Naira which was equivalent to ten Shillings (10/-) became the major unit. Yet on February 11, 1977 a new banknote denomination of 20 Naira value was issued as the highest denomination. This was special in two respects. Its issuance became necessary not only as a result of the growth of incomes in the country but also as a preference for cash transactions and the need for convenience. Thus, N20 note became the first currency note in Nigeria to bear the Portrait of a Nigerian citizen, in this case, the late Head of State, General Murtala  Ramat Muhammed (1938-1976) who was killed in a February 13 1976 military coup attempt.  He was declared a national hero on the 1st of October, 1978. The note was issued on the 1st Anniversary of his assassination as a befitting tribute to a most illustrious son of Nigeria.

    Again, on July 2, 1979, new currency notes of three denominations: N1, N5 and N10 were introduced. These notes were of the same size: 151 x 78 mm as the N20 note issued in 1977. In order to facilitate identification however, distinctive colours similar to those of the current various banknotes were used. The notes bore the portraits of three other eminent Nigerians who had been declared national heroes on October 1, 1978. These were Herbert Macaulay; Sir Abubakar Tafawa Balewa and Chief Alvan Ikoku. The back of each of these notes was engraved in such a way as to reflect the cultural traits of the country. But by 1991, when the Structural Adjustment Programme (SAP), had terribly battered the value of the Naira rendering it almost valueless, both the 50k and N1 Notes were reduced to coins. Later, in response to the expansion in economic activities and to facilitate an efficient payments system, the N100, N200, N500, N1000 were introduced respectively in December 1999, November 2000, April 2001 and October, 2005. And on February 28, 2007, N50, N20, N10, and N5 banknotes as well as N1 and 50K coins were reissued with new designs, while a new N2 coin was introduced.

    Since 1991 when SAP rendered the Naira almost valueless, the coined denominations of Nigerian Naira has become moribund having been rejected by the populace thereby turning Nigeria into a country without coins. Despite this however, Nigerians had never queried any need for introducing new currency denomination as they are now doing in respect of N5000 note.

    Now, many questions are begging for answers:

    1.   At a time when corruption is virtually at its crescendo in the country and you as the CBN Governor are calling for a cashless economy what informs the introduction of the highest currency denomination note of N5000?

    2.   Is there no contradiction in advocating for a cashless economy with one side of the mouth and campaigning for introduction of N5000 with the other side as you are now doing?

    3. What is the logic in introducing N5000 note at a time when Nigerians have not been convinced on the need to return to the use of coins which you are now trying to reintroduce?

    4. Why is such a delicate and highly controversial action being unilaterally taken with neither the involvement of the legislature nor the consent of the populace through a referendum?

    5. In a democracy, who should have the way on a vital national policy as new currency? Is it the majority or the minority? Are you aware that an imposition of such a policy by you the CBN Governor, the Presidency and the pseudo politicians called business group may boomerang especially when the same group is seemingly responsible for the current national economic doldrums?

    6. How economically reasonable is it to spend about N40 billion to mint new currency only to gain N7 billion as being claimed by your spokesmen?

    Perhaps you need to be hinted that the general impression in the country about this new monetary policy and which is probably responsible for the overwhelming opposition to it is the suspicion that you may be inadvertently colluding with some corrupt politicians to ditch Nigeria economically.  This impression is a direct opposite of the high esteem in which you were held before now by most Nigerians because of your marvellous performance in the banking sector. In the past one year, two Nigerian public officials have positively rendered the populace nonplussed by their wonderful actions. These are your esteemed self and the Inspector General of Police Muhammad Dikko Abubakar.

    Mr. CBN Governor, you have done well so far. Please, do not allow these chameleonic politicians to use you for their own purpose because they will eventually dump you characteristically and turn back to laugh at you. A leader is known not by the power he wields but by his application of magnanimity in the use of such power. You are already considered by the populace to be a national economic hero. Do not allow any political charlatan to reduce you into a villain. Politicians are best known for doing that. You are not one yet but you know them. A word is enough for the wise. We shall meet again in a foreseeable future to exchange notes God willing.

    •Historical facts in this article were culled from the internet.

  • Questions for CBN Governor Sanusi

    Questions for CBN Governor Sanusi

    SIR: Please help us ask the Central Bank of Nigeria (CBN) governor, Sanusi Lamido Sanusi to give sincere answers to these questions….

    Will the introduction of the new N5000 note make the naira exchange rate higher than dollar, pounds, rand, euros and so on? If yes, please tell him Nigerians can’t wait to have the new currency.

    With the intended introduction of the so-called coin tellers or ATM machines, will the CBN governor and his “pro-=N=5000” note group accept and spend the coins and also will they move around with these coins in their pockets of expensive and imported suits?

    Will the new note change the life of the poor masses or will only make the rich richer?

    Please the CBN should have a rethink. May God bless Nigeria.

    • Lukman Adamu

    Mararaba, Nasarawa State

  • Senate, House to CBN: don’t print N5000 note

    Senate, House to CBN: don’t print N5000 note

    Lawmakers will urge Jonathan to stop Sanusi

     

    AFTER a brief lull, the N5,000 banknote row resurfaced yesterday.

    Senators were angry with Central Bank of Nigeria (CBN) Governor Mallam Sanusi Lamido Sanusi’s insistence on introducing the N5000 banknote.

    They unanimously vowed to stop the CBN from re-denominating and issuing N5000 note.

    It was their first sitting after a long break.

    The lawmakers resolved “to urge President Goodluck Jonathan and the CBN to stop issuance of N5000 note and all issues connected therewith”.

    This followed the unanimous adoption of a motion entitled “Introduction of N5000 notes by the CBN”.

    The motion, sponsored by Rules and Business Committee chair Senator Ita Enang (Akwa Ibom North East) saw Senators express anger over what they described as exhibition of “arrogance, high handedness and claim of monopoly of knowledge” by Sanusi

    Senate President David Mark noted that it was obvious that the argument for the introduction of N5000 “is not convincing”. “The disadvantages of the N5000 note, at the moment, far outweigh not introducing it and, on balance, we should not go for it,” he said.

    Mark said: “I also heard it from the news the way you heard it. I was not briefed. The only briefing I had about this issue was in the national dailies.

    “The important thing is that if Nigerians say they don’t want a particular policy at any given moment, there is no harm in government retracing their stand on the issue and I think that is the situation that we find ourselves.

    “I have listened to the arguments from those who support it, but those arguments are simply not convincing.

    “They appear to me to be highly theoretical and technical in nature and they do not address any practical issue on ground.

    “Any policy that does not address issues directly but just talking about indices we cannot verify for now should wait.

    “We have not reached that level where we are just talking of hypothetical cases all the time.

    “I think the disadvantages of the N5000 notes at the moment far outweigh not introducing it and on balance, we should not go for it.

    “And also, from the contributions on the floor, we are all in support of the fact that the timing is wrong and the policy is unnecessary at the moment and the arguments being advanced is not convincing and there is no urgent need for it to take place now.

    “There is no ambiguity on our stand on the issue. I am not sure that Sanusi is aware of the Constitution. If he was, he would make reference to us before addressing the issue.”

    Deputy Senate President Ike Ekweremadu noted that though he may not be an economist, he understood the implications of the controversial fiscal policy.

    Ekweremadu said on the basis of sovereignty, Nigerians have spoken through their representatives, “it is in the interest of the government to listen and withdraw from this course they are pursuing”.

    Senate Leader Victor Ndoma-Egba (Cross River Central), who seconded the motion described it as timely.

    Ndoma-Egba noted that in a democracy, nobody should claim a monopoly of knowledge or wisdom.

    According to him, monopoly of knowledge and wisdom is strange to democracy and “even if the policy were to be for the good of the people and they say they don’t want it, it is their right to reject something that is even good for them”.

    “This is one moment that our policy makers must listen to every Nigerian, even those in the street, Ndoma-Egba said, adding:

    “In this case, I am not an economist and I don’t pretend to be one, but former heads of state of this nation has spoken.

    “Chief Olusegun Obasanjo has spoken against this policy and, recently, the very respected Yakubu Gowon spoke against it.

    “They may not be economists, as has been alluded, but with their knowledge or lack of knowledge to manage the economy of this country for very many years, we must listen to them.”

    Ndoma-Egba said that Nigerians must reaffirm their commitment to the fight against corruption.

    He said, “We cannot in one breadth be saying we are committed to the fight and in the same breadth we make it convenient for people to move around with millions of Naira in their pockets. So, on those two points, because I believe that there are several other points against but with just these two, I support this motion and urge our other colleagues to support it.”

    Senator Olubunmi Adetunmbi (Ekiti North) said that the debate of the planned redenomination of the naira is important because it has a lot of technical contents as well as emotional aspects.

    He added that the parliament must be able to distinguish between both and be seen to inform the public appropriately.

    He said, “There are about four platforms upon which this policy is predicated and over the period of the holiday, I had the privilege of doing extensive study to find out what really is the motive behind this policy, which has generated a lot of debate.  The very first one is the issue of dollarization.

    “A respected member of the Economic Management Team of Mr President had said and I quote, Mr. Atedo Peterside:

    “Money is a store of value and all these thieves and vagabonds running around the various states and all over the country, when they steal money, they will want to keep it outside the banking system.

    “So, they need higher denominational 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, they will move away from dollar and reduce the demands for American notes and move into our currency as opposed to the use of dollars to hide their loot.”

    “This was Atedo Peterside speaking to Nigerian media on the reason why Nigerians should support this policy of government and here we are as a legislature, part of the ruling class that is being referred to, that this note is meant for us to hide loot.

    “This is a serious issue. It is true that the US dollar and British Pounds is a store of value outside the United States and the United Kingdom.

    “You want to store your value in a currency that is stable and hard, not in naira.

    “We need to work naira to the level of reputation that other international currencies are enjoying now before we can position naira to store value locally.

    “We are also told that the equivalent of this N5000 naira is just about 30 dollars.”

    Senator Smart Adeyemi (Kogi West) described the planned fiscal policy as “ungodly, satanic, unconstitutional and uncalled for and does not make reasonable economic sense”.

    Adeyemi cautioned President Jonathan to be wary of some of his aides.

    He said Sanusi has turned out to be one of those misleading Jonathan.

    He said it is ungodly for Sanusi to attempt to divide Nigerians through the introduction of a currency that would be used by only a section of Nigerians.

    Finance Committee chair, Senator Ahmed Makarfi, said the statement by Sanusi that the N5000 is not for every Nigerian is a slight on Nigerians.

    He said that the CBN boss woke up and announced a major fiscal policy, thereby taking Nigerians for granted.

    Enang, in his lead debate, urged the Senate to note that on Thursday, the 23rd of August, 2012, the CBN announced the introduction of the 5000 Naira note as legal tender in Nigeria and the redenomination of the Naira.

    He said the Senate should consider the proposal as a direct negation of the cashless policy of the Jonathan administration, which discourages cash transaction in preference for electronic cashless transactions now in operation.

    He noted that the Senate should be aware that in cashless economies, such as Nigeria, high bills or currency notes, such as the proposed N5000, are not required as transactions are conducted from the payer to the payee’s accounts without any need for physical exchange or handling of cash by either of the parties.

    The Senate, he said, should be worried that the policy will create multiple economic problems, such as inflation, corruption and security challenges, and would erode the value of the nation’s currency and ruin the economy.

    Other Senators who supported the motion included Senators Abdul Ningi, Nurudeen Abatemi-Usman, Isa Galadu, Atai Idoko, Bello Tukur, Mohammed Ali Ndume and Bassey Otu.

  • N5, 000 banknote: Senators, Reps plan showdown with Sanusi

    N5, 000 banknote: Senators, Reps plan showdown with Sanusi

    A  show down is looming between the National Assembly and the Governor of the Central Bank (CBN), Mallam Sanusi Lamido Sanusi over his insistence to introduce the N5000 banknote.
    The two chambers are due to resume from their annual recess on Tuesday with members determined to stop the introduction of the new banknote.
    Influential members of the Senate and the House of Representatives are said to have been meeting to strategise on their move following the pronouncements of the CBN governor to forge ahead with the plan and his description of critics of the banknote as bad economists.
    It was gathered that the NASS members are likely to first approach President Goodluck Jonathan to prevail on Mallam Sanusi to have a rethink on the policy.
     The lawmakers, one source said, are angry that in spite of the opposition to the new note, the CBN is pressing ahead with its proposal to introduce the larger bill and convert the N20, N10 and N5 bills into coins as from 2013.
    According to findings, the Senators and Reps met in Abuja last Wednesday and Thursday and resolved that their position on the matter has been strengthened by a recent survey conducted by the National Bureau of Statistics (NBS).
    The survey confirmed that 75.1 per cent of Nigerians are opposed to the currency restructuring. Only 16.1 per cent of the populace are in strong support of the CBN policy while 4.04 and 4.62 per cent are partially in support and against the currency restructuring policy respectively.
    The anti-N5000 banknote federal lawmakers resolved to make the new note a major issue upon resumption from recess.
    A source at the meetings said: “We have met and concluded that since the new note is unpopular, we will ask the CBN to stop the minting of the new currency.
    “We won’t be part of any policy that will lead to inflation because the consequences will be too much for the economy. In a country, where people live on less than $2 in a day, it is not ideal at all.
    “Definitely, we will overrule the CBN on this policy which is a contradiction of the cashless policy of the government.”
     A principal officer of the House said: “Some of us have been meeting because the NBS survey has shown that it is not a popular policy. The economy is better run based on the interest of the citizenry.
    “Why will a good government go against the popular wish of all Nigerians? We want to lay the card on the table on why the new note policy is ill-timed.”
    A Senator from the South-East said: “Most of us prefer mass employment to minting of new notes. There is no point having a higher note without empowering Nigerians to spend it.
    “The cost of producing the new note and coins, whether locally or abroad, can provide many jobs. This is a question of opportunity cost.”
    On his part, a high-ranking Senator added: “Some of us are trying to prevail on the leadership of the National Assembly to hold dialogue with President Goodluck Jonathan to reverse the policy because it will hurt the economy.
    “We want to try as much as possible to avoid a fresh row with the Executive. But if the President does not listen, we will pitch our tent with the masses.”
  • The other side of Sanusi’s coins

    The other side of Sanusi’s coins

    The planned conversion of some paper denominations of the naira into coins continues to generate mixed reactions. Bukola Afolabi reports on enduring attitudes towards coins, and how the Central Bank’s action will impact the nation’s economy.

      Reactions keep pouring in on the planned conversion of lower naira denominations into coins. Recently, Governor of the Central Bank of Nigeria (CBN), Sanusi Lamido Sanusi, sparked controversy with the announcement that effective from 2013, the current paper notes for N5, N10 and N20 denominations will be converted to coins.
    He hinged the move on reasons such as high cost of producing polymer notes, as well as the need to reduce inflation. “We need to spend less on the production of our currency; much money is being spent on the current notes. That is why we came up with this initiative to curb inflation. Producing the new note and the coins would save the country about N7billion,” Sanusi said.
    The CBN is not alone in this line of thought. Gboyega Sanni, a banker with a first generation bank, is confident that the introduction of the new coins will not only help to stabilise the economy, but will also reduce the cost of producing paper notes.
    As a banker, he says coins are an important part of business transactions. On many occasions, he explained, customers make deposits that require coins to balance transactions for the day. The reintroduction of coins would therefore make work easier for bankers.
    For him, there is no reason why Nigerians should be disgruntled over the usage of coins, since there are some items that should be sold in coins. He cites the example of sachet water, which price was increased by 100 per cent following the fuel price hike last January. “The price of sachet water was increased from N5 to N10, but if we use coins in our economy, perhaps it would have been N6.50k,” he said.
    Sanni also expects that the reform would help reduce cases of dirty notes in circulation. “You know we don’t handle our notes well, but with coins we will have fewer dirty notes in circulation. Things like sugar, groundnuts and sweets should be paid for in coins. It is because there is no coin that is why things are expensive. When you buy something, you should be able to collect your change to the last kobo,” he said.
    But many are unhappy with the stand of the apex bank, warning that the new policy would spell doom for the nation’s already comatose economy. Economists and policy analysts are quick to recall that a similar attempt few years ago by the immediate past CBN Governor, Prof. Chukwuma Soludo, ended as a failed policy because coins, though still legal tender, are hardly ever accepted for any form of transaction in Nigeria.
    Equally worrisome is the fact that while banks pay out coins to the public in some instances, deposits of same are not accepted by them. A top management staff of one bank told The Nation on Sunday that at the introduction of coins during the Soludo era, the public would enthusiastically pay in the coins in the banking hall.
    But the same CBN which rolled out the metallic denominations soon issued a directive that banks should not receive coins as deposit from customers, but could pay them with it. “It did not produce any meaningful result as Nigerians adamantly refused to accept coins,” the banker said.
    Another banker source, who pleaded for anonymity, however, disputes the CBN governor’s position that the introduction of coins is a way of checkmating inflation. For him, Sanusi has not done his calculations well. Rather than changing to coins again, he feels more should first be done to address the other factors affecting inflation. Unless this is done, the N40billion expected to be spent on the exercise could end up as a waste of the limited public funds.
    But backing the apex bank is Dr. Ayo Teriba, a renowned economist, who believes that the conversion is long overdue. He takes an even more radical position – arguing that even the N100 note should be converted to coins.
    “As a matter of fact, I am of the view that even N100 should be in coins. Coins should be used to purchase goods and other things like newspapers. This move is long overdue and should be welcomed by Nigerians. I am sure as time goes on, Nigerians will get used to it and prices of commodities will start coming down,” he says.
    For his part, Nuru Abdulahi, who is self-employed, fears that the introduction of coins would lead to inflation. He particularly expects transport fares to rise. He argues that unlike three decades ago when coins had appreciable value, the same cannot be said of present times. “Nigerians are no longer used to going about with coins. How do you expect traders, most especially market women who sell foodstuff everyday to carry coins? It would be too heavy for them,” he said.
    Though Sanusi has insisted that the CBN would press ahead with its plans, Abdullahi, like many other Nigerians, has vowed that he would never accept the new coins when they are pushed into the market. “Even if the National Assembly approves the introduction, I’m never ever going to use it, nor touch it. I cannot imagine coins jingling in my pockets,” he said.
    Indeed, the resistance to coins by many is a sign of the times and a reflection of the parlous state of the economy. Risikat Bello, a septuagenarian living in Itire, a suburb of Lagos State, recounts that in her days as a timber trader, business was conducted even in coins, and they had great value. Such coins denomination came in 1/2, 1, 3 and 6pence, 1 and 2 shillings. The 1 and 2 penny coins were bronze and had hole, and they all had big purchasing power.
    Solomon Osakwe, an economist, blames devaluation for the rejection of coins. Though he reckons with the efforts of the CBN in trying to mop up excess liquidity, price stability has become a challenge for the economy which is affecting the acceptance of coins.
    He disclosed that in 1982, $1 exchanged for 79 kobo, thus making the use of coins valuable. Osakwe reasons that since the nation’s monetary policy is driven by debt and a volatile foreign exchange market, and its fiscal policy shaped by budget deficit and high recurrent expenditure, the place of coins in this dispensation may have been eroded.
    Sola Oni, managing director and chief executive, Sofunix Investment Communications, sides with those who think the key issue in the coins saga is purchasing power. He says that at a time one kobo could buy a useful commodity, but the reverse was now the case.
    He counsels government to focus on developing the productive sector of the economy rather than playing to the gallery with the introduction of coins, which he fears could lead to further devaluation of the naira in the long run. This is because, based on the Nigerian factor, prices of goods and services respond to the highest denomination. “It is not the quantum of naira that matters, but what it can purchase,” Oni says.
    In an interesting dimension to debate, even clergymen are wary of the effect of a new currency regime. They fear that coins would have a negative impact on the level of contributions made by members of their churches.
    “What it means is that pastors will now be counting more coins. If one hundred members contribute N20 coins each during church service that means you will have N2, 000 in coins. How long are you going to count that?  You can imagine how heavy it will be. Some pastors will no longer want to collect N20 or N50 from their members. What will happen is that members will be forced to contribute nothing less than N100 and above because pastors will no longer value N50,” a pastor of a pentecostal church, who wants his identity protected told The Nation on Sunday.
    Yet, another pastor reasoned that the trend could discourage some worshippers who may not be keen on coming to church except they have up to N100 to contribute as offering, because when coins are dropped in the offering basket, the sound would be heard and it may be embarrassing to them.
    “The smaller notes would eventually become useless because people would no longer value them. Some people would start thinking that if they don’t have up to N100, they cannot go to church because others would look down on them. You cannot give somebody N50 and the person would appreciate it. What CBN is trying to do is to make N100 note the lowest denomination which is not good,” he said.
    Osakwe says the solution is for government to focus on monetary policy that is discretionary. The solution to the problem of coin rejection lies in government’s will – if the executive and legislative arm of the government can be discretionary, then the past feelings over coin usage can be assuaged, he assured. He adds that if the nominal devaluation of naira is driving up prices, the real devaluation will stabilise the excess liquidity. Such thinking may be right considering that in the 80s, Israel and Argentina were faced with similar problems, but their focus was in stabilising price through infrastructural development, reduction of real interest rate and cutting the boisterous recurrent expenditure as well as creating a well structured tax system.
    President and Chairman of Council, National Institute of Marketing of Nigeria (NIMN), Chief Lugard Aimiuwu, urges the CBN to sensitise Nigerians on the need for them to accept the new coins. “Maybe Nigerians should be encouraged to support a culture of having coin boxes all over the place where people can pay for things in coins. For instance, the dual carriage rail system they say they are doing from Lagos to Ibadan; if they ask the passengers to pay with coins, this will support the culture of coin usage,” he suggests.
    For now, all bets are off as to whether the CBN under Sanusi can get Nigerians to return to an age when the use of coins was a normal part of everyday business transactions – and not the subject of a full-blown national controversy.
  • Did Sanusi actually say that?

    Did Sanusi actually say that?

    It is manifestly clear that the only crested badge that adorns the collar of the Governor of the Central Bank of Nigeria, Mallam Sanusi Lamido Sanusi, is wreathed in arrogance. Gosh! Does this man wear it with such riotous pride! We may not doubt the fact Sanusi is a well-rounded economist and probably the right man to handle the tempestuous volatility that has bedevilled the Nigerian currency, the Naira, for some time now. What is in doubt is his capacity to, in simple language, pass on the logic in his fiscal policies without needlessly overstepping the bounds of decency that is expected of such a high office. If anything, his interface with the public on economic matters has been nothing but a monumental disappointment, ironically, at a point when he should be receiving plaudits for his ability to rein in some big crooks in the banking sector. It is to his credit that our banking system has not gone bust regardless of what some of his critics may feel. However, to say the least, it is unfortunate that such a sound mind is adept at complicating issues that he should ordinarily simplify for the general populace. In modern day Nigeria, hardly can one get a public officer that barks and bites like Sanusi does. And that is sad!

     

    As the nation’s money manager, Sanusi reserves the right to formulate and implement monetary policies that he deems fit, to strengthen the economy. Yet, with his varied experience in fiscal matters, he must appreciate the fact that such policies would not only be subject of intense debates but would also be put under the strictest scrutiny by various stakeholders including the common man. This is because whatever decision is taken has significant impact on the people. He should also understand that the growing outrage over the CBN’s plan to print N5,000 notes and redenominate some lower currencies into coins is to open up the discourse. This is definitely not the time to keep quiet or swallow hook, line and sinker CBN’s spurious, one-sided broken lyric. We need to melt the ice and break things down. True, some of the arguments against the printing of a higher denomination of the Naira may sound trite, mundane or spurious to the apex bank’s chief pontificator, but that does not give him the liberty to throw caution to the winds and spew forth inanities – all in a bid to forcing the policy down the throat of Nigerians.

     

    That Sanusi was able to convince other highly privileged elites, including President Goodluck Jonathan and members of his economic team on the need to rush to the mint with a N40 billion bill for the production of new, N5, 000 notes does not confer on him the right to shout down those opposed to the policy. Rather than rev up the CBN’s public enlightenment unit to engage the populace, Sanusi would rather throw tantrums and abuse our collective sensibilities. That was exactly what he did when he, in his usual style, threw darts at former President Olusegun Obasanjo for arguing that introducing N5000 note at this inauspicious time would not only aggravate the inflationary trend but also impair an already wobbly production sector. Obasanjo, it must be said, was merely adding his voice to that of many others who have expressed the fears that, no matter the seeming sound economic logic behind the proposal, the common man remains the collateral damage of every monetary policy. Somehow, the rich always get themselves sorted out!

     If Sanusi is finding the drumbeats of opposition against the N5, 000 note frustrating and discomfiting, then he had better enlist for a crash course in leadership considering his lifetime ambition of becoming a high-ranked chief in his home state, Kano. Yes, Obasanjo’s brashness may be legendary but, on this matter, Sanusi completely missed the point by dismissing him as a successful farmer who is bereft of any economic idea. Coming from a well-bred technocrat with the noblest of upbringing, that was harsh and, I dare say, irresponsible.

    Listen to him: “”This is an interesting country because my uncle or my father, who is our former Head of State, Gen. Obasanjo, you know he is a very successful farmer, but he is a very bad economist. He stands up and says that this higher denomination (N5,000 note) will cause inflation and improve hardship. Gen. Obasanjo did N20, he did N100, N200, N500 and N1,000. He introduced higher denominations in Nigeria than any other head of state. He did a N100 note in 1999, he did N200 in 2000, he did N500 two years later and in that period, inflation was coming down because it was accompanied by prudent fiscal and monetary policy.

     “For somebody (Obasanjo) who had done this to stand up and say introducing a higher denomination will cause inflation must be an empirical, most important determinant of inflation in our country given the number of notes he had printed. We all know that we cannot have inflation by printing higher bills if you don’t increase money supply and this is simple economics.”

     Truth is: today’s Nigeria does not need the services of an economist, not the least, one that attends to the very exclusive and insensitive taste of the rapacious elite, to forecast the inglorious direction the latest menu about to be served by Sanusi CBN may likely lead us to. If all that is required for rapid economic growth is the expertise of an economist, most western countries including the United States of America will not be swimming in recession waters today. Unfortunately, they are in deep mess because the economic theories that the CBN chief is making a song and dance of are not sacrosanct. There are other variables and the X factor lurking in the corner. And so, economic theories are mere projections that could fail at any time. That is why the populace, including several members of the elite like Obasanjo, are a bit nervous about Sanusi’s prognosis that all it takes is the application of “simple economics.” How simplistic? That Obasanjo did it with lower denominations and was able to back it up with prudent fiscal and monetary policy does not mean that it can be done under the present arrangement where the President has farmed out issues concerning the economy to a team of technocrats, capitalists and friends of power. In any case, Obasanjo did not print higher denominations solely to satisfy the demands of heavy cash users as the CBN plans to do. The Ota farmer, it must also be stressed, did not print the higher denominations in era when the CBN was planning to go cash-less.

    It is obvious that it was not only Obasanjo, the successful farmer but ‘bad economist,’ that has questioned the rationale behind the N5,000 note. Prominent Nigerians and professional bodies have also raised intelligent questions and given reasons why the printing of the notes would impact negatively on the economy and further impoverish about 70 per cent of Nigerian citizens whom Sanusi’s CBN and the Federal Government have consistently failed to extricate from the malevolent grips of dreadful poverty. As I write this, the CBN and its publicity unit are yet to win the argument; rather, they are boasting that the matter is a fait accompli since the President’s approval has been secured. Not that fast sir! That is where they miss the point. Sanusi and his league of voodoo economists need to tread softly before they push this country down the ladder with their streak of untamed arrogance.

     At the base of this argument is the plight of over 160 million Nigerians, majority of who have no opportunity to lend their voices to the debate. Still, some questions need to be answered. Will Sanusi’s textbook economic theories address our peculiar case of a total disdain for coins? Will a pack of sachet water still sell for N20 when the smallest denomination note is N50? What is Sanusi’s response to Alhaji Aliko Dangote’s opinion that the new policy would enable manufacturers to increase the prices of goods minimally? When commercial bus drivers hike fares simply because they do not want to be bugged down with bearing heavy coins, is that not a basis for inflation? Why should these heavy cash spenders require a higher denomination in a supposedly cash-less regime? By labelling those opposed to the new policy as ignorant people, is Sanusi claiming to be wiser than every other person on this matter?

     Pride, the sage says, comes before a fall. Sanusi has to be careful with the reckless manner he has been casting stones from the 11-storey glasshouse called the CBN Headquarters in Abuja. I am yet to fathom the logic of his subtle but rabid affront against the opinion of millions of Nigerians, including former President Obasanjo. A successful farmer but bad economist! Did Sanusi actually say that of a man he called an uncle and father? Well, if that is the despicable opinion he holds of a father figure, then we ought not to fret if he sees the rest of us as a bunch of ignorant whiners who should be shouted down when policies that would affect our collective existence are being discussed. So much for arrogance and government elites’ preference for top-down decision-making, that negates the spirit of participatory democracy and inclusive governance! Shweeee!

  • Sanusi: Obasanjo successful farmer, bad economist

    Ex-President Olusegun Obasanjo is a bad economist, although he is a successful farmer, Central Bank of Nigeria (CBN) Governor Sanusi Lamido Sanusi said yesterday.

    Sanusi took on the former President while defending the planned introduction of the N5,000 banknote – a plan which many Nigerians including Obasanjo, have criticised.

    It was the first time the CBN governor has publicly defended the introduction of the banknote.
    He spoke at the 6th Annual Conference of the Chartered Institute of Bankers of Nigeria (CIBN) in Abuja.
    Obasanjo last week said the introduction of the new denomination will cause inflation and increase the hardship people are going through.

    But Sanusi said Obasanjo’s comment came to him as a surprise because most of the higher denominations were introduced during his regime.
    Sanusi said the monetary policy measures being undertaken by the CBN were intended to stabilise the financial system and enable it to play its catalytic roles as a major source of pooling funds to grow the economy.

    He said: “This is an interesting country because my uncle or my father, our former head of state, General Obasanjo, you know he is a very successful farmer but he is a very bad economist and he stands up and says that this higher denomination will cause inflation and improve hardship. General Obasanjo did N20, he did N100, N200, N500 and N1, 000. He introduced more higher denominations in Nigeria than any former head of state.”

    He described the reported comments by the former President and other analysts that printing the N5,000 notes would exacerbate the inflationary trend of the economy as not premised on sound economic logic.

    To him, if printing the N5,000 notes will trigger inflation as being insinuated, Obasanjo should be seen as the greatest factor responsible for the high inflation in the economy, having printed five of the existing denominations during his tenure.
    Sanusi added that Obasanjo “did N100 note in 1999, he did N200 in 2000, he did N500 two years later and in that period, inflation was coming down because it was accompanied by prudent fiscal and monetary policy.”

    The CBN governor said those opposing the N5,000 note were ignorant of the benefits of the currency restructuring. He explained that its introduction would lead to efficiency of the country’s payment system since the policy is targeted at a small number of Nigerians handling huge cash.

    Sanusi explained that contrary to the widespread rumours about the cost of printing the N5,000 notes which the public has been informed will cost a N40 billion, it will cost between N2 billion to N3 billion, but with the potential of saving the government at least N7 billion yearly.
    Defending the restructuring plan, Sanusi said when the N20 bill was introduced in the 1970s, the bill was equivalent to $30 noting that by 2013 when the N5, 000 bill comes into existence, it would also be equivalent to the same $30.

    He said: “If you could buy $30 with one N20 bill in 1978, you now need 250, N20 bill to buy $30 and you would have had to print those 250 bills, pay for the paper, the ink, for the security features, for transportation, for insurance, for clearing, for the bullion van and processing and these are cost to the economy.”

    Sanusi said the CBN was introducing coins for various reasons, first as part of cost management since the N5, N10 and N20 note have very high frequency and have to be replaced every three months but the coins last longer. “Secondly we are working on a hypothesis that the reason Nigerians do not accept the coins is because they couldn’t buy anything with them and maybe if you give them coins that have value as a medium of exchange, they would accept them,” he said.
    The introduction of the N5, 000 he pointed out, will enhance the store of value function of the naira.

    The CIBN President, Mr Segun Ajayi, restated professional bankers’ commitment to ensuring that banks continue to play their financial intermediation roles in the economy by standardising the practice and collaborating with key stakeholders, including development partners and other financial institutions.