CBN’s decision to introduce N5000 note early next year did not excite Nigerian economists.
In a major fiscal restructuring that is bound to trigger a fresh round of controversy, the Central Bank of Nigeria announced on Thursday it was preparing to launch the 5,000 naira note; convert 5, 10 and 20 naira to coins; and redesign the 50, 100, 200, 500 and 1000 notes.
The changes will take effect early 2013, CBN governor, Sanusi Lamido Sanusi, said at a news conference on Thursday.
“It is our pleasure to tell you that a new high currency denomination will also be introduced. It is the N5000 note. In the same vein, the lower bank notes of N5, N10 and N20 will also be coined,” he told journalists.
Mr. Sanusi said the plan was aimed at enhancing the quality of banknotes, incorporating effective feature for the visually impaired and more importantly, minimizing the cost of production, distribution and disposal of banknotes.
The decision drew immediate reactions that questioned the timing of the policy, partly for an economy that has seen little level of production, and for a currency regulator that is currently embroiled with a budding cashless policy.
“While it would not necessarily have any effect on the cashless policy, I don’t foresee any serious advantage to the economy as a whole,” said Jamilah Yaqub, a senior Economics lecturer at the Lagos State University.
“Our problem is structural,” said Akpan Ekpo, a professor of Economics and the former president of the Nigerian Economic Society. “Whether the denomination is big or small does not matter if we are not having greater production.”
Both Economists however agreed the move may help curtail a stubborn inflation rate, and as the CBN governor envisaged, help significantly with the management cost of cash in the country.
“Big denomination should be able to reduce inflation and the cost of maintaining the currency in circulation,” Mr. Ekpo said.
Many of Mr. Sanusi’s regulatory policies have come under criticisms with the controversial Islamic banking and cashless policy, amongst the most notable.
The bank chief said the new currency structure has been submitted to, and approved by President Goodluck Jonathan, in November 2011.
When implemented, the proposal will bring the currency structure in the country to 12, with six coins and six bank notes denominations.
New security features will be embossed on the denominations to be redesigned, while the highest new denomination, N5000, will bear the faces of three late Nigerian female activists namely, Margaret Ekpo(1914 – 2006), the late politician and social mobiliser; Hajia Gambo Sawaba (1933 – 2001), politician and activist and Funmilayo Kuti (1900 -1978) late politician and women’s right activist.