Two major opposition political parties, the All Nigeria Peoples Party and the Congress for Progressive Change, have condemned the planned introduction of N5,000 note, saying it will compound the suffering of Nigerians.
The two parties said in different statements on Friday in Abuja that the introduction of a higher denomination was not what Nigerians needed now.
Similarly, foremost economists and financial experts have faulted the plan, saying it contradicted the cash-less policy just introduced by the Central Bank of Nigeria.
The CBN on Thursday had announced its plan to add a higher currency denomination of N5,000 to the country’s list of notes by early next year.
It said it would redesign the N50, N100, N200, N500 and N1,000 notes to improve their security features, while the N5, N10 and N20 polymer notes would be converted to coins.
The new N5,000 note will have the portraits of three women who fought for the country’s independence.
But the ANPP, in a statement signed by its National Publicity Secretary, Chief Emma Eneukwu, said the action of the CBN would lead to inflation and reduce the purchasing power of Nigerians.
It said, “It is an established fact that the Nigerian populace is averse to the use of coins, and therefore, the decision by the Federal Government to convert some lower denomination notes to coins smells of a premeditated agenda to further mop up cash from the nation’s space and whip the Nigerian people in the process, just as it had done through the increase in the pump price of fuel and hike in electricity tariff.
“In fact, one does not need an economics professor to know that this move will eventually cripple the value of the naira because countries like Japan, Germany and Singapore do not have strong currencies because they printed higher denominations.”
The party said it was not true that going cash-less was synonymous with printing of higher denominations, adding that what should be paramount in the minds of the government and the CBN officials was how to make the naira stronger and not to weaken it.
It called on both bodies to delineate responsibilities among key stakeholders and advocate enabling laws that would inspire confidence in the country’s e-payment network, both locally and internationally.
The ANPP, therefore, called on the FG to caution the CBN and mandate it to streamline the resources that would be wasted “in this ill-timed and unreasonable exercise into more people-friendly fiscal projects with the aim of reviving the fast-waning confidence of the masses in the government.”
The CPC, in a statement signed by its National Publicity Secretary, Mr. Rotimi Fashakin, said the introduction of the higher denomination would lead to more corruption in the country.
It added that with an economy susceptible to fragile macroeconomic distortions, the tendency was often for the price of goods and services to be at par with the currency notes in circulation.
“What will invariably happen is the spiralling inflation that may cause further macroeconomic distortions and unwittingly, bringing about political upheavals,” the party said.
Apart from this, the CPC said the CBN’s action would further widen the gulf between the rich and the poor.
However, the Chief Executive Officer, Financial Derivatives Company Ltd., Bismarck Rewane, noted the plan to introduce N5,000 note had been overtaken by the cash-less economy, which he said was more desirable at this point in the economy.
He described the new note initiative as totally unnecessary when compared with the ongoing cash-less programme, which encourages people to go cash-lite.
“Yes, a higher denomination makes it portable to move huge amounts decently, but its relevance has been overtaken by the cash-less policy, which will be nationwide in 2013.
“The impact of the cash-less economy is most profound in Nigeria and in the next two to three years, nobody will carry cash around. So, why do you need a N5,000 note?
“The $1,000 note exists, but I have never seen it because people don’t have to carry it about. This is a case of contradictory monetary policies. In fact, the long term effect of this new policy is neutral to the economy.”
The view of a foremost economist, Dr. Henry Boyo, is similar to Rewane’s.
He feared that the people in charge of the nation’s monetary policy management were confused.
He wondered why the same CBN regime that decried the carrying of huge amounts of naira around because of security risks among others, now turns around to encourage it.
Boyo asked why the CBN did not follow the due procedure by first introducing a N2,000 note instead of moving straight to N5,000.
He said one of the implications of having a N5,000 note was that one only required 200 pieces of it to move N1m from one point to another.
He said this could frustrate the security aspect that the cashless policy was supposed to answer.
He said, “CBN is again facilitating the physical movement of huge value of cash by introducing the N5,000 note. All the CBN has been doing is to provide backing for the banks at the expense of the public.
“In spite of these policies and the promise to offer the customers a better deal, nothing of such has been experienced. We have not been able to enjoy lower interest rates, no better services from the banks, nothing to the benefit of the people.”
Meanwhile, the Registrar, Institute of Chartered Economists of Nigeria, Mr. Peter Ikpamejo, said that the introduction of the N5,000 bill would lead to an increase in the prices of goods and services.
In a telephone, he said that rather than increase the country’s money bill, the naira should have been redenominated to make N100 the highest currency.
He said it was wrong for the CBN Governor, Mr. Lamido Sanusi, to compare Nigeria’s economy with Singapore and Japan with high money bills because of their strength in manufacturing.
Ikpamejo called on the National Assembly to caution Sanusi as the new move would reduce the value of the naira, adding that the policy would indirectly kill the N5, N10 and N20 notes, which will be converted to coins, because Nigerians don’t like using coins.
He said, “Somebody should caution the CBN governor because the introduction of the N5,000 note will fuel inflation. We feel he should have redenominated the naira by removing one zero and making N100 the highest currency.
“He should also try and make a policy that will make the coins to work and stop comparing us with Singapore and Japan. These countries are producing countries but we are not. Our manufacturing companies cannot meet our demands so we have to depend more on import to meet our needs.
A doyen of the Nigerian Stock Exchange, Mr. Samuel Olayemi, said it was unfortunate that the CBN had contradicted itself by introducing a new policy to negate its belief in the cash-less economy.
Olayemi feared that the move might trigger inflation and make the coins valueless, while heightening security risks because the people will renew their confidence in moving huge amounts physically.
The Director, Centre for Social Justice, Mr. Eze Onyekwere, said the policy was a contradiction of the CBN cashless economy initiative.
He said, “Ideally, money should be used as a store of value. I don’t see a problem with the policy if the amount used to print the new note isn’t too high.
“But I think since we are talking about a cashless economy, then the bottom line is that the initiative to introduce the N5,000 note contradicts the CBN cashless policy.”
However, while introducing the plan, Sanusi had explained that the aim was to upgrade the design of the entire range of currency denominations to enhance their quality and integrity, incorporate more effective features for the visually challenged, and introduce new security features on the redesigned banknotes.
Other reasons given for the policy direction were: to achieve an optimal currency structure that will ensure cost effectiveness and balanced mix and utilisation of all the currency denominations; introduce a new series of coins that will be generally acceptable for the purpose of transactions; and reduce the cost of production, distribution and disposal of banknotes by introducing higher bills that will reduce the volume and cost of banknotes in circulation
The CBN governor said the savings made from the reduction in production cost would be used to provide incentives for the usage and acceptance of coins.