CBN defends N5,000 note amid calls for Sanusi’s sack
By
Ugochukwu Okoroafor
Bank: no plan to spend N40b NMA, CNPP, CDHR angry
OPPONENTS of theN5,000 banknote are not giving up, despite the official support for the plan.
In fact, they have raised their demand – from asking the government to tell the Central Bank of Nigeria (CBN) to pull the brakes on the scheme to calling for CBN Governor Sanusi Lamido Sanusi’s sack.
But the CBN, again, defended the plan yesterday, saying it will not cause inflation – as feared in many quarters – and will be economical to produce.
The CBN explanation came amid fresh protests by some organisations, who are opposed to the plan. They called for Sanusi’s sack.
Angry are the Nigeria Medical Association (NMA), the Committee for the Defence of Human Rights (CDHR) and the Conference of Nigeria Political Parties (CNPP).
The CBN plans to spend less than N32 billion to print the new regime of currencies, which will be introduced from the first quarter of next year.
A statement from the CBN’s Director of Corporate Communications, Mr. Ugochukwu Okoroafor, said the apex bank had over the years reduced the cost of printing and minting currencies, as such, the printing and minting of the proposed new currencies will follow the same trend.
Okoroafor said: “Under the new currency structure, in which the N5000 denomination will be introduced, our projection is that the total volume of currency to be produced will drop and the total cost of production will drop consequently.”
He pointed out that “ giving that the total cost of printing in 2011 amounted to N32.627 billion, it is evidently false that a single high value denomination (N5000), which will be printed in relatively small quantity, will cost N40 billion.”
Okoroafor based his argument of the past costs of printing currencies for the country, which he disclosed to be N47.1 billion in 2009; N45.5 billion in 2010 and N32.627 billion in 2011.
Okoroafor maintained that the total cost of currency management will drop and there will be significant savings in cost, stating that “cost reduction had been a major accomplishment in the Bank’s currency management in the last couple of years.”
The CBN spokesman, reacting to recent reports that contracts have been awarded for the printing and minting of the new currency, denied any such move and declared that “no decision has been taken on any contract pertaining to the proposed currency restructuring exercise”. ”It is, therefore, also false that firms have been contracted to produce the currency notes.”
Said Okoroafor: “Before any contract for the printing or minting of currency notes and coins is awarded, several steps must be taken. These include, the determination of the indent – the number of currency notes to be produced, the structure, volume and their special features.”
The new currency notes, he explained, will have tactile marks to aid the visually-impaired and “also eliminate the existing dependence on patents held by non-Nigerian entities. For the first time, the Nigerian currency will feature female personalities,” he said.
According to the CBN spokesman, “one major consideration in the volume of the new currency to be introduced is the rate at which existing currency notes are rendered unfit through usage.”
The proposed currency notes he reiterated, will not all be introduced at the same time but phased, and both the old and new currency notes will circulate side by side for an orderly withdrawal.
The proposed N5, N10, and N20 coins “will also circulate side by side with notes of the same denominations until such a time when we are assured that the coins have gained wide acceptability.”
The CBN, Okoroafor said is required to withdraw and destroy unfit currency notes, adding that “one of the reasons for the ongoing campaign for greater respect for the Naira is to reduce the frequency of replacement and therefore the overall cost of currency management”.
The planned currency restructuring, he explained, will not cause inflation in any form whatsoever as it will not increase money supply.
Instead, the currency restructuring he said, will make payments easier and check unnecessary rise in prices that come through ”rounding up”.
Currency restructuring, Okoroafor noted, may actually help in tackling inflation, noting that when “the CBN introduced the N500 banknote in 2002, inflation dropped from 16.5 per cent to 12.1 per cent in 2003. Similarly, when the N1,000 banknote was introduced in 2005, the inflation rate actually dropped from 11.6 per cent to 8.6 per cent (single digit) in 2006 and dropped further to 6.6 per cent in 2007.”
SOURCE: 6 September 2012.
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