The proposed introduction of the N 5,000 note into Nigeria’s currency system has continued to generate reactions from Nigerians in every sector. Like every normal discourse, the N 5,000 issue has people who are in support while majority of Nigerians have expressed dissatisfaction about the proposed move.
While justifying the introduction of the N 5000 note, Ugochukwu Okorafor, Central Bank’s Media Director said “we are making a currency that cannot be forged so as to help transactions. With the fresh denominations structure, we will have six coins and six notes.”
While many Nigerians are apprehensive that the introduction of the N 5,000 note will worsen the inflation being experienced in the country, Okoroafor said “it will not cause inflation. It is consistent with the cashless programme of the Central Bank. People will carry fewer notes. The cost of production, the cost of transportation will also be reduced.”
The Media Director also argued that carrying bigger denominations of money does not necessarily mean one would spend more. He said “I challenge anybody to bring the economic theory that says if you have a larger denomination in your pocket, you will spend more money.” He also stated that the visually impaired are being carried along in the new currency move. He said “in this review, people who are blind and visually impaired have been taken into consideration. When they touch the currency, they will know what denomination it is.”
He further stated that ”those who are complaining about N 5000, when they go to banking halls and they give them money in N 100 notes, they will say please give me N 1000. So instead of bringing inflation, it will help us in our financial transactions.”
While economists in some quarters have stated that denominations such as the N 5,000 note is absolutely unnecessary and fit only for countries going through currency crisis, the CBN’s Media Director reacted that “currencies ought to be reviewed every now and then, at least every 8 years. The N 100 note has been there for about eleven years now, N 200 has been in use for 8 years.”
Speaking further, Okoroafor said “the things we did two to three years ago are now being done elsewhere, look at our banking industry, from the consolidation, people are copying from us. Look at what is happening in the Eurozone. The banks in Iceland are disappearing. Ireland and Greece are in trouble. I think Nigerians should be happy that they have a Central Bank that is alive to its responsibilities.”
Meanwhile, one of the other issues pointed out by Nigerians is that if the currency is reviewed every seven or eight years as Okoroafor postulated, recognizing the denominations might become difficult for some people, especially Nigerians who have been outside the country for long periods of time.
Another school of thought also argued that the value attached to the Naira by citizens will also be affected on the long run, for example, the way a cash gift of N 1,000 is being appreciated will likely change if a higher denomination comes. The 12.5 rate of inflation was also mentioned with arguments that with the inflation rate increasing by that much annually, what N 5,000 can buy this year will reduce in years to come and with time, another higher denomination might have to be introduced.
Wondering why people are kicking against the proposed introduction, the CBN Director said “do you know that in America they have $ 10,000 note? And even though it is a legal tender, it is not being used. The highest denomination is the $ 100 which is about N 15,000. In England, it is £50, but what people use mostly is the £1 and £10”. Findings however revealed that the United States of America retired the $ 10,000 bill in 1969.
Okoroafor argues that the introduction of new coins will enable children to save money while adults too will have change in their pockets. He also stated that it would help prevent cheating and “rounding off” which has become a common thing in Nigeria as people often cheat their customers in the name of not having “change”. An Economist who spoke to Street Journal however faulted the CBN official on the issue of “rounding off” change. He stated that “the Central Bank is just not being sincere. How on earth can they say they want to prevent rounding off when they are the ones that started the rounding off in the first place? As an authority, the CBN successfully rounded off kobo from the Nigerian system. So what are they preventing? It is a faulty monetary policy”.
Another question Okoroafor had to answer bordered on why N 2000 was not used in place of the N 5,000 note as well as the effect on the ordinary Nigerian and his purchasing power. He said “the fact that you have your salary in coins will not in any way increase the amount of money in your pocket. Your spending habit will remain the same. If you fill a bullion van with N 5,000 notes, you will need to fill 50 bullion vans with N 100 to get the same amount. If you fill the vault of an ATM with N 5,000, if you are filling with N 100, you will fill 50 ATM vaults. Let’s not be cynical about our progress. We are making progress.”
Though most Nigerians may not know the results of the research (if any) the CBN carried out before the choice of the N 5,000 note, the Director was asked what the life span of the proposed bill will be as research has shown that the lifespan of the $ 100 bill is 90 months. He said “we should ask Nigerians. We keep telling them to respect the Naira. Some people fold it in their pockets, we say people should use wallets. We say don’t spray, people will insist on spraying, you will see a note that has just been printed being trampled on. You will see butchers splashing blood on it too, so it is how long Nigerians want it to stay that it will stay.”