Opinion: Two sides to a note – The CBN N5000 policy

by Abdullahi Aborode

As we all know every policy has its advantage and disadvantages, these are few reasons why I’m now in support of the introduction of the N5000 note and if it will be implemented ‘diligently’  it will not ruin the economy.

It’s been an ongoing debate for a while now and a very tough one at that. Many intellectuals have come to defend while some have protested against the N5000 note policy by the present CBN Governor Sanusi Lamido Sanusi and as expected, some are indifferent to it, but it will only be wise if we open our minds and see the two sides to the issue before making a final conclusion.

Cost

The CBN governor claims the production of the new note will help reduce the cost of producing and recycling lesser denominations. This is a valid point by SLS. If for instance, production of N20000 all in N1000 (i.e. 20 of that) will cost N200 then we should be rest assured producing N5000 (i.e. 4 of that) notes will be cheaper and will be costing N40 for the same value of N20000, hence saving us costs.

Also the introduction of coins which we all know lasts longer than notes will reduce the cost of recycling from time to time.

Value

There have been arguments about diminishing values of our currency, let’s assume I go to a filling station, I buy a fuel of N5000 and pay with a five N1000 notes. Will the fuel be exhausted faster if I paid with a single N5000 note? NO! It won’t. If I buy garri for N400 a bag, will I pay N5000 because there’s a new note? I certainly won’t do that. So the new note has nothing to do with diminishing the value of goods and services.

Extinction of coins

It is a myth that Nigerians don’t have a culture of carrying coins, my parents and uncles spent coins, my dad’s breakfast used to be 15kobo, geisha used to be 70kobo and tin of peak milk 50kobo. Didn’t Nigerians spend coins? The N1 and N2 coins earlier introduced by Soludo were inactive because there was nothing to purchase for that rate. Sachet water is N5 and in some places N10 if it’s in coins will you tender N5000 note because you want to buy N10 pure water? If the coins are introduced, provided they have their value and things they can buy, they’ll definitely be accepted by the market.

Security

Considering our current security ‘excellence’ it will be very unwise not to know the introduction of N5000 will save us a whole lot of stress in that terrain. I can easily stuff N500,000  in my pocket and no one knows how much I have on me as I can carry it and move cheerfully without causing attention.

Education

This is one factor that we can’t shy away from, majority of Nigerians prefer to do hand in hand transactions, majority don’t have bank accounts to aid transactions, and majority don’t have access to internet to enable online transfer. So if we are to save their lives against armed robbery and the likes, its better they have huge bills that can be easily kept without causing attention. Imagine a situation where you hire an illiterate labourer and you intend paying him via bank transfer, will you be making any sense?

Cashless Policy

If we are thinking Point of Sale terminal, where we have to pay at shops with our debit/credit cards, we have to know; how many Nigerian institutions/shops are registered? If SLS will be agitating for cashless policy then we should know it is beyond him as he will need the corporation of the police to ensure that all atm machines placed in public places are safe from hoodlums. Also, saying cashless society doesn’t mean we won’t have any cash in circulation, we will have them at a controlled rate and the introduction of bigger bills will help reduce the circulation of lesser bills and we will be forced to use bank transactions on a lot of occasions. But, until there’s security it will be difficult to achieve a cashless society.

Target

The proposed N5000 is not aimed for public circulation but for large transactions for those who need it. If I earn N20000 per month, will I be aiming to withdraw them all from the atm? Knowing fully well that it means I’ll be having just four notes in my pocket? NO! In other words way I’m going cashless. The bill will only be utilized by the middle class that deal with huge bills not for a student whose pocket money is N10000.

Obasanjo

The former president has come out to go against this policy like majority of us have done, but it will be wise to remember Baba introduced N20 to ‘honour’ General Muritala Muhammad in 1976. Also, under Baba’s nose; N100, N200, N500 and N1000 notes were printed, Baba didn’t condemn this, why is Baba now tagging this has a bad policy?

Sanusi

Now to the major issues with SLS; as the Central Bank Governor I know you don’t have the power to build roads, improve security nor produce atms. But as the CBN Governor you have the power to revaluate our currency, when our currency is revaluated, there will be absolutely no need to print larger bills, there will be no need recycling large amount of notes from time to time, the coins will be widely used and coins last longer. Why are you not thinking in this direction? We know this current rate (N160 = $1) is favourable for the cabals as they own virtually everything this country possesses and they deal with foreign currency, why are you supporting the wicked taxation policy of having a lesser value of naira to dollar? When you know that increase in dollar rate is taxing the public to pay more while the rich get richer and the poor get poorer? It seems you prefer when the public are to be taxed rather than put pressure on the government and the cabals as you did during the subsidy.

As we all know every policy has its advantage and disadvantages, these are few reasons why I’m now in support of the introduction of the N5000 note and if it will be implemented ‘diligently’  it will not ruin the economy.

I may be wrong, you may be right. I may be right, you may be wrong. I stand to be corrected!

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Abdullahi Aborode tweets from @abdulahiaborode

 

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

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Comments (5)

  1. *Note: The writer Abdulahi resides in the UK (where things work because leaders are not thieves).

    I agree in principle with some of the opinion expressed by my friend Abu, but the reality is every currency converted from notes (paper) to coins in Nigeria have gone extinct [FACT].

    Another fact is the commodities, goods and service purchased at the value of a Note converted into [a] Coin automatically gets jacked-up to the nearest paper denomination.

    For example, a bottle of soft drink was sold at N1 (note), but after the conversion of the N1 note to a coin, within a space of a year and half, the price of soft drinks rose astronomically from N1 to N5 [note] the nearest paper denomination.

    My friend [and brother] Abu, are you still for us or against us?

  2. *Note: The writer Abdulahi resides in the UK.

    I agree in principle with some of the opinion expressed by my friend Abu, but the reality is every currency converted from notes (paper) to coins in Nigeria have gone extinct [FACT].

    Another fact is the commodities, goods and service purchased at the value of a Note converted into [a] Coin automatically gets jacked-up to the nearest paper denomination.

    For example, a bottle of soft drink was sold at N1 (note), but after the conversion of the N1 note to a coin, within a space of a year and half, the price of soft drinks rose astronomically from N1 to N5 [note] the nearest paper denomination.

    My friend [and brother] Abu, are you still for us or against us?

  3. Note: The writer Abdulahi resides in the UK.

    I agree in principle with some of the opinion expressed by my friend Abu, but the reality is every currency converted from notes (paper) to coins in Nigeria have gone extinct [FACT].

    Another fact is the commodities, goods and service purchased at the value of a Note converted into [a] Coin automatically gets jacked-up to the nearest paper denomination.

    For example, a bottle of soft drink was sold at N1 (note), but after the conversion of the N1 note to a coin, within a space of a year and half, the price of soft drinks rose astronomically from N1 to N5 [note] the nearest paper denomination.

    My friend [and brother] Abu, are you still for us or against us?

  4. In as much as I want to agree with part of dis justification of the 5000 naira note introduction,I disagree with the fact dat most of ur points contradict one another. You stated the fact that the 5000 naira note will be used basically for large transactions and all. How come You are giving examples of buying fuel and garri???? Things that are basically needed by the masses…. Won't say more than that

    1. My Dear Kunle, This Man Actually thinks Nigerians are Dumb.

cool good eh love2 cute confused notgood numb disgusting fail