Opinion: Soludo’s solution to restructure naira

by Vincent Bamigboye

A NATION’S currency is one of its most powerful symbols. Leaders will go and leaders will come but the nation’s currency remains.

The American Dollar symbolises the strength, the all-pervading power of the United States of America, to the extent that all inter-governmental and international businesses the world over are done through the powerful American greenbacks. The Zimbabwean Dollar also symbolises the degradation that years of dictatorship of Mugabe has done to that once African pride.

Nigeria’s Naira must symbolise the economic strength and pride of the African giant that she is. Recent attempt at reconfiguring the Naira by the Central Bank of Nigeria (CBN), as enunciated by the CBN Governor, Lamido Sanusi, has been met by comments from various levels of Nigerians, from politicians, to priests and those who should know better than most of us in the shape of economists such as Professor O. Teriba. Most of the comments have been critical and uncomplimentary to say the least. Most people believe that spending a warping N40 billion to reconfigure the Naira into coins and notes is a colossal waste of our scarce resources. Most importantly, the introduction of N5,000 notes has been judged to be an invitation to financial anarchy, inflation and encouragement of corruption. A world class economist in the person of Prof. Teriba thinks this is a good idea. He even suggested the introduction of higher denominations such as N10,000 and N20,000. Talk of the tower of Babel!

A few months into the ill-fated Musa Yar’Adua’s Presidency, the then CBN Governor Professor Soludo came up with what most of us thought was a good idea that would strengthen the Naira and the Nigerian economy. This was to be introduced during the dying days of Obasanjo’s Presidency, but time was against it. It would have been one of the enduring legacies of the short-lived Yar’Adua’s Presidency.

The idea was to reconfigure the Naira such that one zero would be removed from what we currently have such that our current N10 would become N1, N20 would become N2, N50 would become N5 etc up until the highest Naira denomination of N1,000 would become N100. It was to prevent the Liralisation or Zimbabweanisation of the Naira.

One is no economist nor financial guru but a Nigerian who hopes that our Naira will remain the very symbol of our nation. One thought that the Soludo’s solution was a very good idea. One also remembers that a similar currency restructuring was carried out by Ghanaian Government to improve the status of the Ghanaian Cedi and it did the Ghanaian economy no harm.

If anything, it was one of the measures that improved the Ghanaian economy to the extent that Nigerian businesses, business people and university students started relocating to Ghana! The Nigerian economic evolution shares great similarities with that of Ghana compared to the economies of Japan and other advanced economies our current CBN Governor, Sanusi cited as his reasons for introduction of N5,000 notes. These advanced economies are based on heavy industrial outputs, which are lacking in Nigeria. Our economy is a struggling agrarian economy, which is also highly dependent on a finite product namely petroleum oil. Apparently the Nigerian moneybags and politics killed the idea out of poor understanding of the dynamics of finance and economic trends. President Yar’Adua cancelled it to please these wolves.

One of the arguments against introduction of higher Naira denomination is worsening of inflation. As things are, a lot of Nigerians are hovering at the edge of and some are even completely outside the productive side of the economy. The inflationary trend that will be the outcome of further increase in denomination will further serve as the death knell to the poor people and the aspiration of those who are struggling to join the middle class. It is alarming to note how far removed the Abuja politicians and their cronies such as Governor Sanusi are from the realities and economic woes of those they are supposed to be serving.

It has also been argued that the introduction of N5,000 notes will result in increased corruption and capital flights. Anybody who wishes to conduct successful business transactions in Nigeria knows that you are as successful as the amount of money you are ready to part with in bribing corrupt officials in the Civil Service, Custom and Excise, the Nigerian Police etc. Size of Naira notes and the risk of detection somehow limit these practices at the present. Increasing the denomination of the Naira and the relative ease of carrying more Naira notes in smaller forms will encourage these greedy elements in their unpatriotic acts. Those who siphon our scarce resources abroad will be further strengthened in their nefarious activities.

The coinage of the Kobo denominations had not been successful in the past. One was reliably informed that each time coins were introduced, unscrupulous Nigerians, in collaboration with their foreign counterparts, melt the same down for export. This is mainly because the coins are worth a lot less than their face values thus it is worth more to melt the coins down and sell the metals (copper and silver) to foreign countries. Thus the coins disappeared as soon as they were introduced. My sources expect that the same fate will befall future coins. One has no way of verifying this, but isn’t it interesting to note that the Kobo coins have not been seen in the Nigerian markets for sometimes! The Naira notes that Governor Sanusi wants to turn to coins carry the images of Nigerians leaders that fought for our independence at great personal risks and charted the course of our early history. Common sense dictates that they be preserved.

All these and other reasons are against the restructurings being touted by Governor Sanusi. Thus one believes that introducing higher Naira notes and coinage of a large part of our money is not a good idea at this stage of Nigeria’s economic development. May be a revisit of the Professor Soludo’s idea jettisoned by Yar’Adua’s government is a good idea. One hopes that common sense rather than unbridled pride and unnecessary competition will prevail on Governor Sanusi in making a decision that will affect the Nigerian economy and people for years to come.

 

Op-ed pieces and contributions are the opinions of the writers only and do not represent the opinions of Y!/YNaija.

One comment

  1. Wisdom is a priceless quality in a man, A man may be educated but It will take a man of wisdom to make polices that will benefit the people. Soludo's polices brought economic boom, But SLS's polices are……..

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