5000 Naira note: one not necessary. by Ranti Fawehinmi

I am writing as an economist and a custodian of political history.
On the good side, Nigeria's Legends must be immortalised by naming institutions, public squares and other monuments after them, to that regard , the Central Bank of Nigeria did well in remembering the Heroines of our dear Nation. From the news making round, the note carries the face of Funmilayo Ransome Kuti , a woman activisit and Mother of three Legends, olikoye Ransome Kuti ( Nigeria's ex minister of health), Beko Ransome Kuti( a human rights activist), and Fela Ransome kuti ( a musical Icon that fought the Military regimes with his songs). Among the faces in the 5000 Naira note are : Margret Ekpo, a resilient activist who was nominated as a member of the house of chiefs for the eastern region between 1944-66. The face of Hajiya Sawaba also a political activist is also on the note.
To a great extent, it is a worthwhile effort remembering their much contributions to our nascent democracy .
Be that as it may, there is need for a thorough examination of the economic implications of the new note.
Let's take a tour to the evolution of our currency notes and coins over the years remembering that cowries had once served as a legal tender in Nigeria.

1912-1959. The West African Currency Board issued currency notes to Nigeria
The Central Bank of Nigeria took over the responsibility of currency issuance from West African Board following the central bank act of 1959
1999. The West African Currency Board notes & coins were withdrawn
13th July 1962, the hitherto currency was changed to reflect the current status of Nigeria.
The civil war of 1967 compelled a change of notes.
1st January 1973, Nigeria changed to decimal currency and the major currency unit was named Naira and the minor unit called kobo
11th february 1977. A new bank note denomination of 20 Naira was introduced as the first currency note and the highest value as of then.
July 1979. 1 Naira, 5 Naira , 10 Naira notes were introduced .
1991. 50k, & 1 Naira notes were made coins
Dec 1999, 100naira note was introduced
Nov 2000. 200 Naira note was introduced
April 2001 .500 Naira note was introduced.
October 2005 1000 Naira note was introduced
Feb 2007. 50 Naira, 20 Naira,10 Naira,5 Naira bank notes and the 50k coins / 1 Naira were redesigned and a new 2 Naira coin was introduced.

I could remember this vividly at some point in the history that the color or appearance of notes were changed and not an entire redesign .

The planned introduction of the 5000 note by CBN

Though the CBN governor has refused to comment on what the cost of printing the new notes will be, he has directed Curious Nigerians to find that out in their balance sheet for the year. A question that he probably does not have an answer for now until the chips are now but it is being speculted that the exercise may gulped over 40.3 billion naira, moreso that the 5000 note will be printed abroad as our Nigeria printing and minting company is said to be incapable and incompetent in handling this assingnment because of the unique features the currency note is bearing as if it is a majic note.

Direct implication of a higher value note on a developing economy like Nigeria is captured below.
Hyper - inflation: this is a sure resultant effect.
Reduced purchase power. A derivative of inflation
Currency devaluation. As long as its a single note, nobody cares if it's it's 5000 Naira that you are giving out. Nigerians by culture like it when it's many .
Further widenenig the income divide between the super rich and low income earner, especially those below the minimum wage level in the private sector.
Capital flight out of the country. The 40.3 billion Naira or whatever amount that will be spent on the printing of the new notes is enough to create jobs for the soaring number of unemployed graduates.
It is an economic waste and diversionary policy. What becomes of the existing 5, 10, & 20notes? They will be converted to coins and the existing coins of 50k , 1 Naira& 2 Naira will become antiquity . Ultimately the new coins of 5,10, & 20 Naira will be abandoned , am sure from antecedents that Nigerians are weary of guarding the loins with an apron containing pounds of coins. In this slim fit age, everyone likes to travel light and not to be encumbered with sacks of coins.


The New Note and The cashless policy.
It amounts to policy duplication. What is cashless policy after all? It is the conversion of cash base transactions to electronic channels of payment. Nigerians are still grasping with the whole idea, much has not been done in terms of mass education and enlightenment campaign . The fifteen million unbanked population of Nigeria are not even part of this whole thing.
Be that as it may, by the cashless policy the maximum cash deposit and withdrawals for individual on a daily basis is 150,000( one hundred and fifty thousand t Naira) transactions above this ceiling amount attracts penal charge of 100 Naira for every one thousand. So if Nigerians are willing to abide by this policy why the introduction of a higher note value almost about the same time.
Doesn't it amount to insensitivity to the plight of Nigerians?
Other countries like Zimbabwe , DRC who have gone this path in times past have bitter tales to tell.

Ranti Fawehinmi is a policy analyst .