Stopping introduction of N5000 note regrettable – Sanusi
Central Bank of Nigeria (CBN) Governor Sanusi Lamido Sanusi said on Monday that only a redesign of the naira would halt the rising cases of counterfeiting of the Nigerian currency.
Sanusi, whose plan to restructure the currency, was shot down by Nigerians two years ago, said that was the right way to go in the light og growing ingenuity of currency counterfeiters.
Part of the plan was the introduction of N5,000 note, which split economists into two divides, with those opposed arguing that it would fuel inflation.
Sanusi also revealed that the Excess Crude Account is down by $7bn from $12billion to $5billion.
Sanusi, who spoke during an interactive session organized by the Jones Onyereri- headed House Committee on Banking and Currency, said the opposition against the restructuring plan was borne out of ignorance.
According to him, currency redesignation or restructuring should be done every seven to eight years.
The House brought the CBN and other stakeholders to an interactive session on three motions referred to the committee, namely:
- the rising incidence of fake Naira being dispensed from Automated Teller Machines (ATMs);
- the urgent need to stop banks from introducing N100 maintenance charges on ATM cards;
- and need for a single digit interest rate to encourage small- scale investors.
He said: 'One of the reasons we wanted to have a restructuring of the redesign of the currency a few months ago was because, as explained, many of our notes had been in existence for upward of eight or even ten years. Now best practice is that within a period of five to eight years, you redesign the currency because after that period counterfeiters tend to catch up. Even at that, Nigerian notes in terms of what we see as counterfeit and processing, the percentage is very low.'
Giving the percentage of counterfeit notes per million, he said: 'We had about 3.9 per million in 2007, 6 per million in 2008, 8.4 per million in 2009, 7.4 in 2010, 5.4 in 2011 and 8.4 per million in 2012 of the notes processed which were counterfeit.
'But with ATM machines, it should not happen because it has been processed and we would be very pleased to know if there are specifics about any bank so that we can draw their attention on the importance of processing them before putting them in ATM machines.
'Now, unfortunately, the redesign suffered because of all the noise around N5,000 and, therefore, it is being delayed because that is what would have made it impossible for counterfeiters to forge so they have to wait for another five, six, seven years before they learn how to counterfeit by which point , the CBN should be redesigning the notes again.
'So I suppose that at some point the country would have to revisit the issue of redesigning the notes but at the moment, based on popular demands, we have had to step down the redesign.'
On interest rates, the CBN governor said delivering a low rate of interest is the easiest thing for the apex bank 'because the CBN prints money and interest rates come down when you have a lot of money and that is not a problem.'
'If you want interest rates of 2 per cent, it is not a problem; we simply double and triple the money supply in the system.'
He, however, said that was not the way to go.
Sanusi said a weak currency shoots up import and banks may not be lending to the real sector for other reasons, apart from interest rates. Other things to consider, according to the CBN boss, are power, security, storages, credit records and customer identification, amongst others.
' When MPR was at 8 percent, how much were being lent to manufacturers? It was going to shares and oil marketers,' he said.
Sanusi said there was need to attract foreign exchange because the country is import dependent. 'In the current environment, the likelihood of rates going down is very low. It is more likely to go up,' he said.
He gave the solution to the problem as reduction in government domestic borrowing, completing reforms in the power and petroleum sectors, ensuring security and providing infrastructure that will attract foreign investment and stimulate domestic business.
The governor further revealed that the Excess Crude Account is down from $12 billion to $5 billion because the economy is import dependent and money had to be moved to balance the budget.
Sanusi warned that there are economic postulations that oil may likely sell for as low as $60 and that there is need for the country to diversify, if the government keeps borrowing at the between 13 to 14 per cent and keeps increasing the budget deficit, the country may be in trouble.