Soludo has just confirmed that starting from August 1, 2008,  One hundred naira nigerian currency will become one naira Nigerian currency.

This will make the naira to appreciate against the international currencies a great deal. For example, if you have 1,000,000 naira now in a nigerian bank , this will mean 10,000 naira starting from August 1, 2008. A naira will be exchanged for £2.50 (against pounds sterling)  and $1.27 (against dollars)(if the present day exchange rate is maintained on 1st August, 2008). This also means that someone collecting 200,000 naira as a month salary will be collecting 2,000 naira.

What are the implications of this for the economy ?. I guess it's a good development but I stand to be corrected.

Educative and intelligent comments are welcome please

source : http://africa.reuters.com/wire/news/usnL14819379.html

NO MUCH DIFFRENCE IF NIGERIANS DONT GO INTO EXPORTING MORE THAN IMPORT
NIGERIANS SHOULD THINK OF BEING MANUFACTURERS AND EXPORTERS IF OUR CURRENCY MUST HAVE VALUE.
SOLUDO IS TRYING FOR US BUT WE HAVE TO WORK HARD AND SMART.

this is serious? how will this affect everyday buying and selling?

@yidokun

Nigeria is going back to the 1970s. Most things will be sold in kobo (eg bread, milk etc), and most nigerians wont be travelling in their hundreds abroad again. We only hope that our production level will increase with time, but I guess this is a right step in the right direction.

@yodiyokun

it just means - more idi and more ikun for you - u will become yodiyokun times ten - hahahahah.

A major reason for the redenomination is for accounting ease in the everyday use of the naira and to strengthen the naira in the global economy.

I personally think that its a good idea if we are going to further our integration into the global economy. But on the other hand further integration will throw up many issues such as increased volatility in the capital markets.

On a lighter note, whatever the case many Billionaires will become Millionaires and many Millionaires will no longer be! Which I like as psychologically a milliion naira will be almost that in the US and UK.

One of the biggest issues will be management of this redenomination as change management is never an easy task.

I suppose we will have to watch Soludo and his musketeers to see how far come August 2008.

how is this going to help anything?

ok so now the dollar will exchange for $1.27, who the heck told you that will stop people from leaving the country in droves?

this is strictly a value of money issue - if my 1,000,000 becomes 10,000 and buys me the same amount of goods/services as it did before, what have I gained by this naira revaluation?

it will have an effect of throwing the whole economy into crisis, because TOTAL a currency change will be needed in this case, if not, someone who has 1 million in cash will suddenly become a millionaire in dollars because of the currency change! It is a harebrained idea

@debosky

I will appreciate it if we don't ruin this thread by using insultive and vulgar languages. We are here to exchange idea and learn, so the way u view something might not be the way I  see it. So, using words like [b]"you have little understanding" [/b]was way above it.

Educative comments and Intelligent discussion are needed here.

Thank you

@debosky, correction someone who has 1 million Naira in cash will have 10,000 as the cash will be revalued.

my apologies MT, I was carried away a little, but other than easier monetary management of smaller quantities of currency in circulation, I see no other benefits of this proposed plan. In order to carry it out all the currency in circulation will have to be withdrawn and replaced, if not the re-denomination will not work. the costs of doing such will be tremendous and I fail to see the rationale behind that action now.

secondly, it will have no bearing at all on whether people leave the country in droves or not because the essential value of the money they have will still be the same. let me illustrate with an example

i have 10,000 which can buy me 100 chickens that cost 100 naira each

after re-denomination

I have 100 naira which can buy me the same 100 chickens, only this time at 1 naira each.

there is a difference in figures alright, but value remains the same.

@ obi2obi how will the cash be magically 'revalued' without currency exchange? or will two zeros magically fall off the side of each note?

there will of necessity be a need to change currency to achieve this goal

*sorry redenominated, how they will manage and roll out this scheme debosky is what we have to see.

One definite bonus of this is the portability effect of redenomination. The portability of the redenominated naira will make it more convenient to carry large sums of money on a person rather than in ghana must go bags. The time wasted in the counting of large sums of money and the risk involved in carrying large sums of money in nylon bags, or bulging pockets will be reduced drastically with the redenomination. It could also facilitate the introduction of of the use of vendor machines and car parking meters as well as the re-introduction of the use of coins for smaller units of money.

@debosky & obi2obi

Those were quite brilliant piece coming from you guys. I'm learning a lot.

@debosy, it's ok. no hard feeling.

I hope more people contribue so that we can all learn and have a new idea.

obi2obi:

One definite bonus of this is the portability effect of redenomination. The portability of the redenominated naira will make it more convenient to carry large sums of money on a person rather than in ghana must go bags. The time wasted in the counting of large sums of money and the risk involved in carrying large sums of money in nylon bags, or bulging pockets will be reduced drastically with the redenomination. It could also facilitate the introduction of of the use of vendor machines and car parking meters as well as the re-introduction of the use of coins for smaller units of money.

Could not have been better said! If we want to see vending machines and other things paid for in coins, this is the way forward. I'd also like to be able to talk to people from other cultures about pay/prices and the like without having to think if I missed a few zeroes when dividing N6, 500, 000 by N128 to get USD

Is there a Soludo fan club anywhere? I'd like to join.

I believe the move of ECOWAS towards a single monetary unit is also a factor. . . most especially if Naira becomes the official ECOWAS money.

The truth must be told that its an effort in futility if our industries are not revamped.

otokx:

The truth must be told that its an effort in futility if our industries are not revamped.

True, but we must all do our own parts. Soludo is doing his own. Over to us, PHCN and others.

Very good idea, I would say that Soludo and his crew should start now to sensitize Nigerians about this brilliant measure in other to prepare them down for this grand design. This is the best way to give better value to our currency.

Honestly i dont think this wud solve our problems in any way. Might make us look cool in the international community  but only for a short while cos i trust there come some 'patriotic Nigerians' who wud exploit the situation. We can collectively increase our production , provide more jobs and reduce importation and still get the same end result ! The whole thing jus makes the Wealthy man Rich and sends the poor man deep in mediocrity ! You know this thing has recently been put to practice in Ghana!

the most important advantage of this revaluing will be:

- drastic reduction in banks roundtripping. Since N1.25 = $1, more money will be available to give out as loans rather than hoarding dollars and reselling at inflated rates.

- sounding a death knell on the illegal money changing mallams. they can now get a proper job.

i hope Soludo know what he is doing, By the way , did he know all this when he was introducing N1000 note, or did he have brain tumour

Unless we revamp our economy, this entire process will lead to monumental inflation in the country. Why do we think countries like China and Japan would rather have their currencies the way they are, than let them appreciate over the dollar?

Whenever Soludu and the CBN decide to start this madness, I'll withdraw my holdings in naira and reinvest them in a more stable currency like the Euro. Thereafter, I will stand aside and watch us as we begin the macabre dance of economic death.

We can achieve what we want to achieve by ensuring a more productive economy. Let there be constant power supply and social security in Nigeria, and every other thing would be added unto us.

Its one step forward then two steps backward; this is tantamount to awarding one contract for a project twice.

easimoni:

Could not have been better said! If we want to see vending machines and other things paid for in coins, this is the way forward. I'd also like to be able to talk to people from other cultures about pay/prices and the like without having to think if I missed a few zeroes when dividing N6, 500, 000 by N128 to get USD

Is there a Soludo fan club anywhere? I'd like to join.

@Easimoni
Hear Hear!
You are still at the level of fan club? I am ready to pre-order a copy of his Memoirs even if the book is set to take another 5 years before it hits the bookshops . So tell me if you know any bookshop or seller that is taking pre-orders for Soludo's memoirs, which would be a must read for many persons. The man is a tribute to local content, when Soludo was first appointed, an Associate Prof of Economics in UNICAL told his students to look out for the strides Soludo would achieve. The aforementioned Prof also alerted his students to the fact that Soludo being a home-trained Economist would not work with a western mindset, it is happening before our eyes .
I am not an economist, all I have is a simple C6 in Economics. But even a simpleton can actually tell the difference between Soludo and those brainwashed people that have run the CBN until Soludo got there. It must be said that though I hadn't the privilege of attending the UNN, this man-Soludo-represents what can be achieved when our local unis get their act together.

@ALL
Note dis:
wotever u proclaimed u worth,never 4get to divide it by 100 oh.if u are billionaire,u are now demoted to millionaire oh Dangote& Jimoh Ibrahim ,etc are now Millionaires ,if u are Millionaire,ur new financial status is now change to thousand naira worth while d thousandnaires can only wine & dine wit Hundrednaires,hundrednaires wil bcome kobonaires,while my brothers and sisters dat are kobonaires wil bcome kobolessnaires .

9ja na wa oh.We don't know where to run go again oh.Dis wil definitely result into GROSS CONFUSION,COMMOTION & CHAOS because landlords no go gree,marketwomen,etc go fight u,if u pay them present cost of there wares now DIVIDED BY 100

If wot i said is nt true,just wait and see wot wil happen come Aug.2008 and beyond.

Never worry God dey
see u on AUG.2008 & beyond
Cheers,

I have been reading the posts by nairalanders and I am especially fascinated by this topic cos of its serious implications. I want to commend the effort of the govt in this direction if it is actually meant to facilitate economic development and revitalise our economic sectors. However, I want to say that the value of any currency is determined by what it can purchase (its purchasing power) and not the figure on the currency. If you will have to purchase a specified quantity of goods  for =N=1 come August,2008 which would have been bought for =N=100 before then, the implication is that nothing has actually changed.If you will have to put in the same number of hours in work to get =N=1 just as you had been doing to get =N=100, then no difference.
The arrangement will then be nothing but a make-belief. The economy of a country cannot be made better by such an approach. There are factors which foster economic development and I want to believe these are the factors that must be concentrated on to ensure the economy assumes an upward trend naturally without the introduction of an artificial measures which at the end of the day leave things as they were.
The nation's economic recovery hinges so much on an uninterrupted power supply and not until that is adequately addressed, we are still all living in the fool's paradise. It is a fundamental factor for any national development. Our leaders should note this.
Appreciation of the value of naira cannot be divorced from power stability which has a direct and indirect connection to all other factors for economic development that we can ever think of. Let us grow our economy by doing what is right. We will not only improve the value of our currency, posterity will be glad that we came before them.

That's interesting, hope that really benefit Nigerians, maybe they should fight smuggling like NAFDAC fought fake drugs

......

Nigerians are always looking for short cut, but there isn’t any in our quest for economy prosperity. At the moment 1 Naira is about 7.5 South Korean Won, yet Korean economy is world class. 1 Tunisian Dinar is equivalent to 0.78 US dollar. Now does it mean that Tunisians are far much better economically than Americans? No , because this is all about numbers that are not economically significant.

We have to look at our balance of trade with the world. Well only sell oil and import millions of items. We run a monotonous economy and cannot be competitive in the global market place. So long as we have this disparity in foreign trade, Nigeria will forever remain a backward country economically. China is even devaluing its currency so that the world will consume more of its products. Good balance of trade is what keeps your money strong not by artificial means. This is another exercise in futility.


http://www.oanda.com

The re-evaluation of the Nigerian currency is without any doubt a good news; however, important questions should be put into intensive consideration before taking this dangerous, but nevertheless vital, step into reviving the economy of a not-so-thriving nation. This decission should, rather than serve as a delusionment charm to us, be an awekening call to face the dounting responsibility of keeping the Nation's head above the waters by maintaining a stable or rising economic system.

What joy it'll bring to see the Naira rise again like a phoenix; but a consequential plummet due to an onslaught and failure to curb the level of corruption will only revert us to our present state; and believe me when I say that this time it'll take the phoenix a century to recuperate its bones let alone rise from its ashes. A stable corruption level + an increased currency value is just as stupid as feeding the people to lions. It'll be great shame to rise and fall again but cawordly to have never risen

Of course, corruption is not the sole factor crippling our system. It is a known cliché that we Nigerians have an unconstrained affinity for foreign goods owing to our massive inferiority complex. Unfortunately, our Government are still about to realize that in order to make money you have to sell stuffs. Our importations by far outweigh our exportations which is similar to a business venture buying more than it is actually selling out.
Honestly, the only difference between our Government and toddlers is that they don't wear diapers; otherwise tell me how it has managed to escape their comprehension that most things that are imported are actually being manufactured by the local production companies. Nigerians are very talented in virtually all aspect of employment you can possible come up with, but yet the Government stand from afar and watch the talents of their people follow them to the grave. We need employment and not some bullshit of "revaluation of the Naira"; of what use is the currency if there are no employments? How better off will we be then if the facilities of our companies go to rot? Plagued by corruption and greed we are and doom is our destination.

Nigerians should go to the market and start buying pouches to keep their naira coins, i wonder whether they would invent ATM machines that withdraws coins,