Governor of the Central Bank of Nigeria
(CBN) Sanusi Lamido Sanusi has berated former president Olusegun
Obasanjo for his stand on the planned introduction of N5, 000 note,
saying he was a very successful farmer but a very bad economist.
Sanusi, who defended the proposal to
introduce the N5,000 note next year, said Obasanjo as head of state
introduced more high-currency denominations than any other leader in the
history of Nigeria.
Obasanjo had, last Thursday, stated that
the introduction of the N5, 000 note would kill production and affect
small businesses negatively.
The CBN governor, while delivering the
keynote address at the 6th Annual Banking and Finance Conference of the
Chartered Institute of Bankers of Nigeria (CIBN) in Abuja yesterday,
pointed out that Obasanjo introduced the N20, N100, N200, N500 and
N1,000 notes, yet inflation was low during his tenure.
Sanusi said: “I like General Obasanjo;
he is a very successful farmer but a very bad economist. He has
introduced more higher denominations in Nigeria than any other head of
state. He did the N100 in 1999, N200 in 2000, did N500, I think, two
years later and, in that period, inflation was low because it was
accompanied by very tight monetary and fiscal policy reforms.
“So for somebody who has gone through
that to stand up and say that introducing higher denomination will cause
inflation… I don’t know if somebody wrote the speech. I am trying to
see him, or maybe he was misquoted. Because if he actually said that,
then, he must be the single most important determinant of inflation in
our history, given the number of notes he has introduced.”
According to him, simply producing
higher denominations cannot cause inflation if it is not accompanied by
an increase in money supply. “We all know that you cannot have inflation
simply by introducing higher denomination if you don’t increase money
supply, and yet we keep repeating the opposite.”
The CBN governor said that the apex bank
had reduced the cost of cash management from N49 billion in 2009 to N32
billion in 2011, adding that it planned to bring it further down to N25
billion by 2014.
“We started a project, over two years
ago, aimed at reducing the overhead in the Nigerian banking industry by
at least 30 per cent in a two-year period. That project involved shared
services and cash management and cash production and data control and
operations. It involved an increased use of technology; so you now have
PoS terminals, ATMs, mobile banking, NIBSS transfer, the clearing days
have been shortened,” he said, adding that the CBN had looked at how it
could be more efficient in the management of cash. “In 2009, we did a
survey and saw that, of all the cash transactions done in banks, only 20
per cent were for more than N150,000, and that 10 per cent accounted
for over 70 per cent of the value of cash. So a very small number of
customers are the heavy users of cash and we pay a lot of money printing
paper for them,” he stated.
The CBN governor said the accounts were
there for the record: the total cost of printing and minting all
denominations of currency in Nigeria in 2009 at N47 billion, in 2011 at
N32 billion and 2014 at N25 billion. He said that 50 per cent of the
total cost of procurement could be saved.
Malam Sanusi said printing of the N5, 000 notes could not cost more than N2 or 3 billion.
He noted: “In the 1970s when the N20
note was introduced, N20 was the equivalent of $30. In 2013, when we
introduce the N5, 000 note, N5,000 will be the equivalent of $30. It’s
the statistics. If we could buy $30 with one N20 bill in 1978, you now
need 250 N20 bills to buy $30 and we have to print the whole250 notes,
pay for the paper, pay for the ink, pay for the security features, for
the transportation, for insurance, for clearing, for the bullion van for
the … processing, disposal…”
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