N5000 NOTE: REPS' GUARDED INTERVENTION
As debates on the planned introduction of new currency rages, ADESUWA TSAN and EDEGBE ODEMWINGIE write on the House of Representatives intervention and subsequent summon of Nigeria's apex bank's czar.
Nigerians, including economists and finance experts, have raised the alarm that the planned introduction of a higher currency denomination will cause inflation and fuel corruption among other ills.
For one, the House of Representatives say that the Central Bank of Nigeria (CBN) did not communicate to it, its plan of introducing a N5,000 note in the economy.
Scheduled for next year, the introduction of a N5,000 note by the apex bank would also see the conversion of the N20, N10 and N5 notes into coins.
So last Wednesday, the Governor of the CBN, Mallam Sanusi Lamido Sanusi, was summoned to appear before the Jones Chukwudi Onyereri led-House Committee on Banking and Currency to explain the propriety of the apex bank's contentious plan to introduce N5,000 notes.
The Lower House summons was on the heels of a similar move by the Senate, following the public outcry that greeted the apex bank's decision.
A statement issued by the House Committee on Banking and Currency was silent on the specific date Sanusi is expected to appear.
However, the statement outlined factors that will be key to the committee's consideration as: the cost of implementing the policy to government, the inflationary trend, the devaluation implication and cashless policy derivative.
With federal lawmakers away on their scheduled two-month recess, LEADERSHIP learnt that the committee will only communicate the date the CBN Governor is to appear as soon as it is able to form a quorum.
The statement read to newsmen by the Banking and Currency Chairman, Hon Jones Chukwudi Onyereri, queried how the CBN's introduction of higher currency notes would help the apex bank's cashless economy drive.
'The House Committee will invite the management of the Central Bank in an effort for the Committee to know whether the Central Bank is still pursuing the cashless policy, and, if they are, how does this higher currency note complement the cashless policy,' Onyereri said.
The committee chair continued, '…how does this higher currency note compliment the cashless policy or if it contradicts the Cashless Policy, what are the next steps? We believe that the Nigerian people deserve to know whether there is a short, mid-term and long-term strategy that will bring any benefits to the system as a result of this introduction'.
According to the committee chair, the intervention of the Lower House is to ensure that due process is followed and rule of law adhered to.
The statement read in part, 'Whereas we fully respect the separation of powers enshrined in the Constitution and the Central Bank's Autonomy… we have a responsibility to the Nigerian People to engage the Executive branch on issues that may have a far reaching effect on the National Economy, and affect the day to day lives of the ordinary Nigerian.
'As representatives of the people, with particular oversight responsibility over the banking industry, we have set up the processes to immediately address the matter. In doing so, we will rely strictly on the provisions of the Constitution of the Federal Republic of Nigeria, the Central Bank Nigeria Act of 2007 as amended, the Banking and Other Financial Institution Act, as well as other requisite legal and regulatory instruments.
'We will keep an open mind while engaging the Bank Management to have a full picture and understanding of the thinking at the Central Bank and the reasons for this action. Our Constituents have already inundated us with reports, petitions and write ups with arguments on both sides of the Policy divide, but we believe that at this time the most effective and prudent response for the Committee would be to get a full briefing on the Policy from the Central Bank after which we will take a position.
Naira History
The Naira was introduced on January 1, 1973, replacing the Pound at a rate of 2 Naira to 1 Pound. This made Nigeria the last country to abandon the pound currency system. There was a plan to redenominate the Naira at 1 new Naira to 100 old Naira in 2008, but the plan was suspended. The Naira is subdivided into 100 kobo.
Rampant inflation has occurred in Nigeria over the years. With reference from online encyclopaedia, Wikipedia, in 2011, CBN increased key interest rates 6 times, rising from 6.25 per cent to 12 per cent. On January 31, 2012, CBN decided to maintain the key interest rate at 12 per cent, in order to reduce the impact of inflation due to reduction in fuel subsidies.
On January 1, 1973, the CBN introduced notes for 50 Kobo, 1, 5, 10 and 20 Naira. The 50 Kobo notes were last issued in 1989. In 1991, 50 Naira notes were issued, followed by 100 Naira in 1999, 200 Naira in 2000, 500 Naira in 2001 and 1000 Naira on October 12, 2005.
On February 28, 2007, new versions of the 5 to 50 Naira banknotes were introduced. Originally the 10, 20 and 50 Naira were to be polymer banknotes, but the 5,10 and 50 were delayed to late 2009 and only the 20 was released in polymer. The notes are slightly smaller (130 x 23 mm) and redesigned from the preceding issues. In mid 2009, when Sanusi took over as CBN Governor, he eventually changed the 5, 10 and 50 Naira to polymer notes.
On the 1000 Naira notes, there is a subtle shiny strip running down the back of the note. It is a shimmery gold colour showing 1000 Naira. The triangular shape in the middle of the front of the note changes its colour from green to blue when tilted. The main feature on the front is the engraved portraits of Alhaji Aliyu Mai-Bornu and Dr Clement Isong, former governors of the Central Bank of Nigeria.
On the first prints of the 100 Naira notes issued starting December 1, 1999, Zuma Rock was captioned as located in Federal Capital Territory, while actually it is situated in Niger State. Later prints removed the reference to FCT, Abuja.