Hello
folks, how una dey? I hope U guys are doing great and work/life is fine? I just
thought to talk about this new agenda that the FG has continually drummed into
our ears this past few days: N5,000 notes.
The FG has rolled out the big guns in an attempt to persuade us to like these new notes. Believe it or not during the week they had a panel meeting with stakeholders of the community on the new notes. Those in attendance were Governors, Senators, Mr Dangote (whom I respect) and believe it or not ... Mr Femi Otedola (who is still under investigation for the bribery scandal with Mr Farouk Lawal). Funny enough there were no market women, bus conductors, taxi drivers, ordinary day to day workers or in short ordinary people who will be most affected by the currency changes (I wonder how many times Mr Dangote, Mr Otedola and our dear lawmakers go to the bank). In short no ordinary people like me and you.
The FG has rolled out the big guns in an attempt to persuade us to like these new notes. Believe it or not during the week they had a panel meeting with stakeholders of the community on the new notes. Those in attendance were Governors, Senators, Mr Dangote (whom I respect) and believe it or not ... Mr Femi Otedola (who is still under investigation for the bribery scandal with Mr Farouk Lawal). Funny enough there were no market women, bus conductors, taxi drivers, ordinary day to day workers or in short ordinary people who will be most affected by the currency changes (I wonder how many times Mr Dangote, Mr Otedola and our dear lawmakers go to the bank). In short no ordinary people like me and you.
After the meeting, NTA was very
proficient in showing us the many people who supported the move. There was not
a single dissenter covered on the news. I was impressed, what a transformation!
I listened closely to the many reasons these big shots were giving to support
this change and it was clear : We are in big trouble.
First of all there was not a single intellectual there to give any objective opinion. It was just a show of the regular government big wigs and fat pockets - who already had vested interests in the new notes - and you should have heard the reasons they were giving for supporting the move. It would make a corpse start laughing.
Lets take the example of Mr Aliko Dangote for instance : I think he out of the whole pack at least tried to give some credibility to the move. He said ; "It would cost the same amount to print a N5,000 note that it would take to print a N1,000 note." As a shrewd businessman that he is; what he meant was that the CBN would save money by printing fewer N5,000 notes instead of spending the five times the same amount printing N1,000 notes that sum up to the same value - Fantastic point. Governor Peter Obi just went ahead with the crowd by saying that every five years all countries review their currencies.
First of all there was not a single intellectual there to give any objective opinion. It was just a show of the regular government big wigs and fat pockets - who already had vested interests in the new notes - and you should have heard the reasons they were giving for supporting the move. It would make a corpse start laughing.
Lets take the example of Mr Aliko Dangote for instance : I think he out of the whole pack at least tried to give some credibility to the move. He said ; "It would cost the same amount to print a N5,000 note that it would take to print a N1,000 note." As a shrewd businessman that he is; what he meant was that the CBN would save money by printing fewer N5,000 notes instead of spending the five times the same amount printing N1,000 notes that sum up to the same value - Fantastic point. Governor Peter Obi just went ahead with the crowd by saying that every five years all countries review their currencies.
These fine gentlemen
gave their opinion, let me respectfully give mine. It is clear that
the CBN has forgotten its primary responsibility. The CBN is not supposed to be
a profit making business for the government. The CBN (Central Bank of Nigeria)
is meant to look after the monetary and fiscal interests of all Nigerians - not
just the big wigs. Agreed - the CBN will cut some measure of short term cost by
doing what it has proposed but what are the long term costs?
Any currency note is only as good
as the value of what it can purchase. In order words it doesn't matter if the
figure on it is $1,000,000 (like in the recent case of Zimbabwe) and it cannot
buy a loaf of bread; or the value on it is £0.50 and it can buy that loaf of bread (say in the UK). The
question we should be asking is; "How will this influence our purchasing
power?" Renowned
Economist Mr Henry Boyo has already argued the CBN operates a faulty monetary
framework, hence the need to launch a new N5000 note which he claims that due
to inflationary measures, what Nigerians used to buy for N1000 will cost N5000
in the next five years. And this he claims will give the rise to the need for a
new higher denomination of probably N10,000 in some time to come.
Now let us ask ourselves why this
is so, why are all these other countries currencies stronger than ours and why
is ours losing value? Why is it that things are cheaper in
those countries? The reason is quite simple and two fold: 1. The demand
for the currency of those countries is high and 2. Those countries have
invested in the right sectors so they are able to manufacture goods that others
want to buy. It is no coincidence that such countries also enjoy very good
infrastructure coupled with relatively low inflation and unemployment rates
which results in a generally high standard of living.
What we should be doing then is
investing in the right sectors so that we too enjoy such benefits: i.e.
printing the money will not magically make us richer, producing the right goods
that will help us get foreign currency will. In order words
"instead of using the 40 BILLION NAIRA to print new notes, why can't we
instead build some power plants, new roads and train stations?" That will
help our businesses to produce and transport their goods at a cheaper
price and hence become more competitive. it will encourage businesses and also
improve or infrastructure - a win win.
Now let us look at Mr Dangote's
point that it will be cheaper for the CBN to have 1 x N5,000 notes
instead of 5 x N1,000 notes. That argument while good for a
businessman is not right for the government to be making. It defeats the whole
reason for the CBN. Wherever you are if you are reading this take out a currency
note (any currency note - whether it be naira, pounds, dollars or yen) from
your wallet or purse. Look closely at it - you will see it written somewhere on
the note: "we promise to pay on the demand to the bearer the sum of say 20
Naira/Dollars or whatever". This promise is usually made by the Central
Bank of the country the currency belongs to. In order words; the currency note
itself is not the money - it is a promissory note to pay the bearer
that money. The currency is only to be used to facilitate transactions because the
real value which is usually in gold is stored by the Central Bank. Gold is
heavy and cumbersome to carry, so the Central Bank prints currency notes to
facilitate transactions. In our case the demand for our currency is mainly
because of the oil we export.
Will having a higher currency note
help transactions?; maybe, but that will only be if the currency note is
relatively worthless in the first place. The Government spokesmen were quick to
say that in the UK and USA those countries have £50 and $100 notes respectively. What
they did not mention was that those notes are realtively scarce and
in fact when you take it to a shop, the attendant will test it to make sure it
isn't fake. Cash Machines do not regularly dole out those high
currency notes unlike in our system. In order words we need more smaller
denominations or even a quick actualization of the cashless policy
scheme which makes more sense to Nigeria right now.
How about
Governor Peter Obi's assertion that every five years all countries
review their currency? When last did the USA or UK print a new
denomination of notes? Those government spokesmen forgot to mention that those
countries only take action when it is necessary - not to finance
their greedy schemes. And the argument that those who have looted our
treasuries and have monies abroad will buy more Naira notes instead
of Dollars is just foolishness. The premise is faulty so the conclusion is
flawed, are we actually going to encourage looters? Instead of locking them up quickly
in jail and recovering our money from them? Besides they are not stupid enough
to buy the same currency instead of taking "our money
which they have stolen" to a safe place abroad.
In short, we
should not even be discussing new Naira notes now. We should be investing in
POWER GENERATION, TRANSPORTATION and EDUCATION first of all. Then sectors like
agriculture ,manufacturing, health and trade should be looked at. We are
currency facing an unprecedented security attack and this is what the
government is proposing? Why are our leaders so unfocused? This is not what we
need at all. That 40 Billion should be invested wisely.
P.S. Next time the government wants to hold a stakeholder meeting they should ask the common people who will be affected by such changes as well as the rich people. Corrupt people who are under investigation should not even be there and intellectuals must be listened to if we are to develop. Corruption, foolishness and laziness are synonymous with poverty; we don't have time for that. While there is really no proof that having a higher denomination will cause inflation, it cannot be denied that it creates a greater temptation to increase prices as seen in other countries not to talk of the apparent greed of our government officials if we give them the go ahead. How are we sure they will not just keep some Ghana-must-go bags of the new notes before they even get to Nigeria from source?
P.S. Next time the government wants to hold a stakeholder meeting they should ask the common people who will be affected by such changes as well as the rich people. Corrupt people who are under investigation should not even be there and intellectuals must be listened to if we are to develop. Corruption, foolishness and laziness are synonymous with poverty; we don't have time for that. While there is really no proof that having a higher denomination will cause inflation, it cannot be denied that it creates a greater temptation to increase prices as seen in other countries not to talk of the apparent greed of our government officials if we give them the go ahead. How are we sure they will not just keep some Ghana-must-go bags of the new notes before they even get to Nigeria from source?
The
Government should not be making any announcements again except that they have
opened more power plants, built roads, trains stations, equipped our schools
and caught Boko – Haram (In short increased our productive capacity and made
life better for us the humble citizens). Anything short of that for now is a
pure waste of time. God bless Nigeria and You.
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