For starters, I am not an economist. I am not an economist in the mould of them that work in the Central Bank of Nigeria at least. I am not an economist like Lamido Sanusi Lamido or men who say this today and does another the next day. Here is a man who argued vehemently about the costs of printing and moving money about. He almost with that proclamation made illegal the legal tender in circulation. Only a few months later, the former risk manager thinks it wise to expend N40B to print a new N5,000 denomination. The Americans think a flip-flop is a peculiar problem in their country. They are mistaken.
Arguments like, having a hundred thousand Naira in one’s pocket does not affect the way one spends one thousand Naira and that higher denominations do not result in inflation have been offered freely by the country’s apex bank and its governor.
Several editorials have also been written on the intended policy. One of them written by Business Day backs the idea of the new denomination. The editorial looked at the issue from the standpoint of competition with the US Dollar. It argued that countries like Yemen among others had in the past reviewed their currency denomination upwardly with favourable results. It then lent its support to the policy initiative on the ground that it will encourage Nigerians to hold the Naira as against foreign exchange or the Dollar to be specific.
It is true that there are obvious positives to be gained from the policy of introducing a new denomination such as the N5000 note, but the policy thrust is not just about that introduction. The denominations from N20 down to N5 will be converted to coins. Ladies and gentlemen, this is Nigeria, coins have insignificant use here. That amounts to declaring that those denominations become currencies for the museum. They will become useless except in the office of the CBN where they are kept in a glass shelf for every morning admiration by CBN staff and the governor especially.
Our currency is being devalued. It is moving progressively upward in size but more of it is now needed to purchase the same amount of goods or perhaps less. I do not need to define inflation with the same definition I learnt in school or saw in text books. When so much money chases too few goods is the simplest description of inflation. Our import dependent economy is about to get shocked further.
The woman who sweeps my office complex earns less than minimum wage. Come what may, it is obvious that minimum wage legislation will not change but the cost of goods and service will change upwardly. This woman who gives her son five Naira to buy biscuits will in a few months into the year 2013 consider biscuits a luxury for her son. There are at least 23 million of such women in the land who will make similar decisions resulting in biscuits losing patronage. Or perhaps the CBN governor will spearhead the minimum wage legislation and grant loans to the real sector himself to cause the much needed growth to take effect?
We do not need a revaluation of our currency. We do not even need our currency adjusted and tweaked about by a flip-flop. Such men who make decisions as the spirit leads should not be allowed to fiddle with our currency notes. Nigeria needs real economic growth backed by a real sector that is thriving not currency tweaks that is based on certain monetary policies. There is no capitalism without capital.
For an import dependent economy where the importer is persistently worried about the cost of foreign exchange, the policy makers at the presidency should consider seriously how to stimulate substance based economic growth, not money side economics that is backed by nothing other than fiat proclamations. Devaluation would make sense were Nigeria an export country. Sadly, no effort concrete enough to inspire faith is being made to stimulate sustained exports by a fat government that cannot implement a slim 29% capital budget.
So we have a new era where the value of money is deliberately altered in the interest of maintaining a good monetary policy at the expense of impoverishing an already poor populace whose inability to determine the real value of their worthless Naira is about to get worse. Okay, the new bill will not be widely circulated, but the coins will be? Okay, only banks will be in possession of the new bills for which billions of Naira will be spent to mint?
In the long run, the policy will be implemented. It will be implemented because policy makers are far from prevailing realities on the Nigerian street. They live a life of fantasy where their ostentatious bills are paid at the expense of projects meant to improve the lot of the populace. It is the reason they remain stubborn in the face of strikes and protests. It is the reason arguments that have no relevance with the crux of the issue will be offered. It is the reason, great attempts will be made to blackmail and intimidate the supposed activist that dares offer an alternative opinion to their self seeking interest.
A proper understanding of the Nigerian economic environment reveals that there is urgent need for sustained infrastructural improvement that will stimulate growth in the real sector. The cashless policy the CBN began implementing was supposed to free up cash for investment by commercial banks in that sector. It did not or has not come true as expected. Rather than study to understand and perhaps proffer new ideas to the problem, the CBN thinks it wise to fiddle with an unstable Naira.
There are few gains with the new policy of converting the smaller denominations into coins and fewer gains with the introduction of the new N5,000 note. The losses will be greater because the adjustment of the value of a troubled currency is not based on substance. The only place where it is possible to build castle in the air is in the realm of imagination. When men wake up, it collapses.
Some of us do not spend N5,000 a day while a few others among us spend that more than that an hour. The cashier at the bank is tired of running one thousand Naira notes through the counter, the new N5,000 will be a relief. The bus conductor is having a hard time looking for N1000 change, the new N5,000 note affects us all one way or the other, but there are some people it pays better than the others.
I have lent voice in support of reason. But then, I am not an economist or not an economist in the mould of the Sudan trained risk banker who now runs or rather fiddles with our Naira. He is the economist, but he is also inconsistent and we must watch carefully.
Arguments like, having a hundred thousand Naira in one’s pocket does not affect the way one spends one thousand Naira and that higher denominations do not result in inflation have been offered freely by the country’s apex bank and its governor.
Several editorials have also been written on the intended policy. One of them written by Business Day backs the idea of the new denomination. The editorial looked at the issue from the standpoint of competition with the US Dollar. It argued that countries like Yemen among others had in the past reviewed their currency denomination upwardly with favourable results. It then lent its support to the policy initiative on the ground that it will encourage Nigerians to hold the Naira as against foreign exchange or the Dollar to be specific.
It is true that there are obvious positives to be gained from the policy of introducing a new denomination such as the N5000 note, but the policy thrust is not just about that introduction. The denominations from N20 down to N5 will be converted to coins. Ladies and gentlemen, this is Nigeria, coins have insignificant use here. That amounts to declaring that those denominations become currencies for the museum. They will become useless except in the office of the CBN where they are kept in a glass shelf for every morning admiration by CBN staff and the governor especially.
Our currency is being devalued. It is moving progressively upward in size but more of it is now needed to purchase the same amount of goods or perhaps less. I do not need to define inflation with the same definition I learnt in school or saw in text books. When so much money chases too few goods is the simplest description of inflation. Our import dependent economy is about to get shocked further.
The woman who sweeps my office complex earns less than minimum wage. Come what may, it is obvious that minimum wage legislation will not change but the cost of goods and service will change upwardly. This woman who gives her son five Naira to buy biscuits will in a few months into the year 2013 consider biscuits a luxury for her son. There are at least 23 million of such women in the land who will make similar decisions resulting in biscuits losing patronage. Or perhaps the CBN governor will spearhead the minimum wage legislation and grant loans to the real sector himself to cause the much needed growth to take effect?
We do not need a revaluation of our currency. We do not even need our currency adjusted and tweaked about by a flip-flop. Such men who make decisions as the spirit leads should not be allowed to fiddle with our currency notes. Nigeria needs real economic growth backed by a real sector that is thriving not currency tweaks that is based on certain monetary policies. There is no capitalism without capital.
For an import dependent economy where the importer is persistently worried about the cost of foreign exchange, the policy makers at the presidency should consider seriously how to stimulate substance based economic growth, not money side economics that is backed by nothing other than fiat proclamations. Devaluation would make sense were Nigeria an export country. Sadly, no effort concrete enough to inspire faith is being made to stimulate sustained exports by a fat government that cannot implement a slim 29% capital budget.
So we have a new era where the value of money is deliberately altered in the interest of maintaining a good monetary policy at the expense of impoverishing an already poor populace whose inability to determine the real value of their worthless Naira is about to get worse. Okay, the new bill will not be widely circulated, but the coins will be? Okay, only banks will be in possession of the new bills for which billions of Naira will be spent to mint?
In the long run, the policy will be implemented. It will be implemented because policy makers are far from prevailing realities on the Nigerian street. They live a life of fantasy where their ostentatious bills are paid at the expense of projects meant to improve the lot of the populace. It is the reason they remain stubborn in the face of strikes and protests. It is the reason arguments that have no relevance with the crux of the issue will be offered. It is the reason, great attempts will be made to blackmail and intimidate the supposed activist that dares offer an alternative opinion to their self seeking interest.
A proper understanding of the Nigerian economic environment reveals that there is urgent need for sustained infrastructural improvement that will stimulate growth in the real sector. The cashless policy the CBN began implementing was supposed to free up cash for investment by commercial banks in that sector. It did not or has not come true as expected. Rather than study to understand and perhaps proffer new ideas to the problem, the CBN thinks it wise to fiddle with an unstable Naira.
There are few gains with the new policy of converting the smaller denominations into coins and fewer gains with the introduction of the new N5,000 note. The losses will be greater because the adjustment of the value of a troubled currency is not based on substance. The only place where it is possible to build castle in the air is in the realm of imagination. When men wake up, it collapses.
Some of us do not spend N5,000 a day while a few others among us spend that more than that an hour. The cashier at the bank is tired of running one thousand Naira notes through the counter, the new N5,000 will be a relief. The bus conductor is having a hard time looking for N1000 change, the new N5,000 note affects us all one way or the other, but there are some people it pays better than the others.
I have lent voice in support of reason. But then, I am not an economist or not an economist in the mould of the Sudan trained risk banker who now runs or rather fiddles with our Naira. He is the economist, but he is also inconsistent and we must watch carefully.
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