its all politics.

FAQ's On The New Naira Policy
Especially the Naira Re-denomination
The new ‘Strategic Agenda for the Naira’ announced by the Central Bank of Nigeria on August 14, 2007 is generating a healthy national debate. Before we undertake a nation-wide enlightenment programme, (beginning September 2007) to educate the public on the new policy, it is important to clarify some of the issues/questions that are emerging.

The CBN announced a 4- point agenda designed to make the Naira the “Reference Currency in Africa”, as part of the Financial System Strategy 2020 (FSS2020) and the elements of the agenda are:

Currency Re-Denomination
Adoption of Inflation-Targeting Framework for the conduct of monetary policy
Sharing part of the Federation Account funds in US Dollars to Deepen the Forex Market and for Liquidity Management
Current Account liberalization/convertibility and accession to Article VIII of the IMF
Needless to emphasize that to appreciate the full impact of the new policy on the Naira/national economy, we need to take the 4-point agenda as a package. As a package, the new agenda will:

better anchor inflation expectations,
strengthen public confidence in the Naira,
make for easier conversion to other major currencies,
reverse tendency for currency substitution,
eliminate higher denomination notes with lower purchasing power,
reduce the cost of production, distribution and processing of currency,
promote the usage of coins and thus a more efficient pricing and payments system,
promote the availability of cleaner notes,
deepen the Forex market,
ensure more effective liquidity management and monetary policy,
convertibility of the Naira and hence greater confidence in the national economy and lead to greater inflow of foreign investment
position the Naira to become the ‘Reference currency’ in Africa.
However, most of the questions so far pertain to only one aspect of the agenda i.e. Currency Re-denomination. We have monitored the reactions so far, and note that the concerns/questions raised so far are similar to the ones raised in all the countries that have undertaken re-denomination, including Ghana that is still implementing it now. We clarify some of the concerns as follows:


What is currency redenomination?
Currency redenomination is the process where a new unit of money replaces the old unit with a certain ratio. It is achieved by removing zeros from a currency or moving some decimal points to the left, with the aim of correcting perceived misalignment in the currency and pricing structure, and enhancing the credibility of the local currency.

How will the Naira be redenominated?
It is by dropping two zeros from the currency or moving two decimal places to the left. The name of the national currency will still be the Naira. However, during the transition period, the existing Naira will be referred to as the “Old Naira”, and the new one to be called the “New Naira”. After the transition period, the word “New” may be dropped. For example, the following equivalents will obtain as we re-denominate:

Old Naira
(i.e, Existing Naira as at today) New Naira
(as from August 1, 2008)
50 kobo Half kobo**
N 1 1 kobo coin
N 2 2 kobo coin
N 5 5 kobo coin
N 10 10 kobo coin
N 20 20 kobo coin
N 50 50 kobo coin or note***
N 100 N 1 note
N 200 N 2 note**
N 500 N 5 note
N 1000 N 10 note
N 2000* N 20 note

* Not issued
** Will not be issued
*** Some commentators have come up with a suggestion that we should keep all the Kobo in coins and all the Naira in Notes. We will consider the suggestion.

Is the redenomination policy a re-valuation
or resort to a fixed exchange rate regime?
No. Redenomination is not the same as revaluation. A revaluation entails an official adjustment of the exchange value of a country’s currency (usually an upward change in value) relative to other currencies by fiat under a fixed exchange rate regime. CBN will continue to maintain a market determined exchange rate regime. In his August 14, 2007, speech the CBN Governor used N1.25 to US$1 as an illustrative figure. It does not mean that the exchange rate will be fixed at that figure. The exchange rate may appreciate or depreciate depending on market forces.
Is the Currency redenomination
the same as currency decimalization?
No. In the management of currencies, decimalization is the process of converting from traditional denominations to a “decimal” system, usually with two units differing by a factor of 100. For example, Nigeria adopted the decimal system on 1st January 1973, changing from Pound, Shillings and Pence to Naira and Kobo. We also changed our system of weights and measures into the decimal system (i.e. from Ounce and Pounds to grams kilograms; or miles to kilometres; Inches and Feet to centimetres and Metres). More specifically, the CBN Act (Section 15) prescribes a decimal system by stating that “The unit of currency in Nigeria shall be the Naira which shall be divided into one hundred kobo”. The currency is already structured in decimal system. The policy thrust is a re-denomination. The fact that we are removing two zeroes does not make it a ‘decimalization policy’. It could have been one, two, or three zeros.
When will the re-denomination take effect?
August 1, 2008. There will be a ‘transition period’ of five months (August 1 – December 31, 2008) during which both the ‘old Naira’ and ‘new Naira’ will be legal tender. During the period, prices, salaries, etc can be quoted in both the new and the old Naira. Thus, the current Naira will still be legal tender until December 31, 2008.
After December 31, 2008, the ‘old Naira’ will cease to be legal tender, but can still be exchanged at the commercial banks.
How will it work?
The ‘new Naira’ coins and notes will be different from the existing ones i.e. in design, appearance, security features, etc.
All Naira assets and liabilities (including bank deposits), prices, fees, rents, and contracts (including salaries and wages) will be re-denominated by dropping two zeroes or moving two decimal points to the left.
During the ‘transition period’ prices will be quoted in both the ‘new Naira’ and the ‘Old Naira’ and everyone will choose whether to pay in the new or old Naira. These five months will be allowed so that everyone will get familiar with the conversion, and it will become self-evident to everyone why he/she would prefer to transact in the ‘new Naira’ rather than the ‘old Naira’. For example, if a bag of garri sells for N2,000 (old Naira), the price in ‘new Naira’ will automatically be N20. The customer will choose to pay either N2000 in old Naira or N20 in the ‘new Naira’. In the supermarkets and formal markets, prices will be displayed in both ‘old’ and ‘new’ Naira. In the informal markets where prices are negotiated, the negotiation could be done in the ‘old Naira’ as usual and converted into the ‘new Naira’ if the customer wishes to pay with the ‘new Naira’. This will ensure that prices do not rise due to rounding-up. The five months are also needed for everyone (formal and informal sectors) to become fully familiar with the conversion. It will become obvious to everyone that N50,000 of the ‘old Naira’ has the same purchasing power as N500 of the ‘new Naira’. The question then would be: why carry N50,000 of old Naira when N500 of the new Naira will buy you the same thing? Consequently, if you have N50,000 in your bank account, it will automatically become N500 in the ‘new Naira’ i.e. if you want to withdraw in the ‘new Naira’ or you can still withdraw N50,000 in ‘old Naira’ during the transition period (August- December 2008). Similarly, someone whose monthly salary is N50,000 can choose (during the transition period) whether to withdraw and spend the N50,000 in ‘old Naira’ or N500 in the ‘new Naira’. Both would buy him/her the same value of goods and services.
Examples of price equivalents in the new and old Naira could be:

Commodity/Service Price in “Old Naira” Price in “New Naira”
Fuel price per litre N70 70 kobo
Price of one bag of garri N2,000 N20
Price of a bus drop N20 20 kobo
House rent (e.g. a flat in some parts of Nigeria) N5000 per month N50 per month
Stock price of a company Assume it is, say:
N20 or N80
20 kobo or 80 kobo
Airline ticket for domestic flight N12,500 N125
Exchange rate: N to US$ Assume it is say:
N125
Or N130
Or N100 to US$1.
N1.25 = US$1
Or N1.30 = US$1
Or N1 = US$1

Therefore, nobody will lose any value in terms of his or her money.
What are the Benefits of the Re-denomination?
The medium and long-term benefits can only be appreciated when redenomination is seen in the context of the other three policy initiatives. The specific benefits of re-denomination include:

Making pricing more efficient. Given the level of prices and low purchasing power of the coins, prices generally adjust in discrete jumps of five or ten Naira, rather than in Kobo. Under the new regime, one kobo will have relative value. We can see the price of fuel go up from say, 70kobo to say, 71 or 72 kobo instead of the current jumps of N65 to N70 to N75, etc. Correcting this distortion in pricing structure can have enormous impact on the national economy, especially as we commit to low inflation.
cultivating the habit of using coins and reinforcing the on-going currency reforms.
Promoting a more efficient payments system e.g. making ATMs part of our payment culture and de-congesting banking halls. Instead of withdrawing N50,000 from an ATM machine, N500 of the ‘new Naira’ will command exactly the same value.
As we aspire for an international financial status and to become Africa’s financial hub by 2020, re-denomination will make for easy conversion to other currencies. As a ‘Reference Currency’, it will be easy for citizens of West Africa and other countries to convert to their national currencies and other currencies
Reducing the risks associated with carrying large physical cash as we eliminate large denominations with very little value
Discouraging currency substitution and addressing the perception that the domestic currency is weak despite its stability.
Reducing the cost of printing, distribution and processing of currency
Discouraging the abuse of the Naira as each Naira note under the ‘new Naira’ will have relatively high value, and coins will dominate transactions at the lower end of the market.
Will the new Naira Policy or the re-denomination solve all of Nigeria’s economic problems?
No. The new policy (as a package of 4-point agenda) will only deliver the things outlined at the beginning of this Note. Mr. President has outlined a 7- point agenda needed to create wealth and jobs, reduce poverty, and ensure security of lives and property. The new Naira policy will help to create the macroeconomic stability, efficient payments system and confidence, which constitute an important building block to enable Mr. President’s programme work well. All stakeholders in the Nigerian economy--- public and private sector institutions and individuals--- will have to do their respective parts under the able leadership of Mr. President for the Nigerian economy to boom and endure.
Does the CBN have adequate plans to enlighten/educate Nigerians, especially the villages/rural areas about the change?
Yes. This is why we have announced the policy one year in advance. Specifically: o We have designed a mass education/enlightenment programme. The programme will be translated into several of Nigerian languages. o We plan to collaborate with mass organizations including labour unions, religious organizations, NGOs and Civil Society organizations, schools, professional organizations and trade unions, market associations, transport unions, organized mass mobilization agencies such as the National Orientation Agency, state and local governments, military/paramilitary organizations, council of traditional rulers, the mass media, etc to reach and educate every Nigerian on the change. o We shall embark on two phases of enlightenment programme: first (September – December 2007--- a general nation-wide enlightenment on what the policy is all about; second (February- July 2008)—nation-wide education on the operations of the programme, especially on pricing/conversion from old to the new Naira.
What will be the level of involvement of other agencies/organizations in the implementation of the policies?
The support and involvement of everyone will be needed. • More specifically, we will set up a Steering Committee and an Advisory Technical Committee to drive the process. The goal is to ensure that there will be no unintended effects, and to minimize the adjustment costs (if any) of the exercise.
Is it true that currency re-denomination is usually done under conditions of hyper-inflation?
Not necessarily. Indeed, countries that did it under such circumstances without complementary reforms ended up re-doing it again and again. • Re-denomination is most successful when a country has achieved a measure of price stability and restored confidence in the national currency. It then proceeds to remove the ‘zeroes of shame’ to get the currency properly aligned. This is the condition now in Nigeria.
Which other countries like Nigeria have successfully undertaken such reforms?
Country Year
1.
Ghana 2007
2. Croatia 1994
3. Finland 1963
4. Poland 1995
5. Uganda 1987

Several other countries have undertaken currency re-denomination including Israel, Turkey, Germany, South Korea, China, Brazil, etc.

Nigeria is not imitating any country. We are re-denominating because the fundamentals of our currency structure require the new direction. We would also implement it in a way that takes our peculiarities into account. • We have learnt from the experiences of those who did it before us and would strive to make ours the most successful (just as we did with the banking sector reforms).
New lower denomination currency notes
and coins have just been launched into circulation.
Why currency redenomination at this time?
The CBN has proceeded with reforms in measured steps. The first was to re-build the basic financial infrastructure that would facilitate effective implementation of monetary policy and improved payments system (ie, reforms of the banking system). It was followed by gradual liberalization of the Forex market. The third is the currency reforms which are proceeding in two stages: first, re-design of the lower denominations, re-introduction of coins, and experimentation with the polymer substrate. Typically, countries re-design their currencies after 6- 8 years but our lower denominations were re-designed about 23 years ago (1984). The essence was to streamline the security features to combat counterfeiting and safeguard the integrity of the currency, as well as achieve cost savings. We have learnt a lot from these reforms, including the fact that the effective cost of printing currency notes and minting coins has been reduced by an average of about 50 percent.

Currency re-denomination and deeper currency reforms are most successful under conditions of price stability and confidence in the currency/economy. Single-digit inflation has only been sustained for a year now. The convergence of the official and bureaux de change exchange rates have only recently been achieved. These are some of the pre-conditions we needed before deeper reforms.

With the demonstrated commitment of President Umaru Yar’Adua (GCFR) to maintaining macroeconomic stability and deepening the institutional and structural reforms, the time has become auspicious to take currency reforms to the next higher level. Aside from the fact that the economic fundamentals (as the CBN Governor listed in his speech) support deepening the reforms, the most important driver of the new focus is the President’s commitment to macroeconomic stability/reforms. The new Naira Policy is thus part of the larger agenda to achieve Mr. President’s vision of economic prosperity.

Furthermore, the new policy is part of the Financial System Strategy 2020 (FSS2020) designed to make Nigeria an international financial centre and the hub of the Africa’s financial system by the year 2020.
Will currency redenomination
not entail enormous costs?
No. The new policy will not translate to high costs. Indeed, it will lead to much lower costs of printing, processing and management of currency over time. The following points are illustrative. First, most countries typically stock-pile 2-3 years of buffer stock of currency and when they embark upon currency re-design or re-denomination, such buffer stock is lost. In our case, we have no buffer stock. The ‘old Naira’ notes to be used in 2008 are just the ones currently under printing/minting. The life span of these notes is short, and there will be no waste. No new order will be placed for printing the ‘old Naira’ in 2008. Second, even without re-denomination, CBN would typically still incur costs in printing/minting the currency. Third, because the new currency structure will be dominated by coins (which last an average of 10 - 20 years) compared with currency notes which last a few months, the total cost of currency issuance and management will drastically be reduced over time. On cost considerations alone, the new policy is a winner.
Will the redenomination policy undermine
the proposed ECOWAS common currency?
No. It is consistent with the proposed ECOWAS common currency and Nigeria is committed to the sub-regional goal. Ghana has just embarked upon a re-denomination exercise (by dropping four zeroes) and it is also part of the common currency agenda. Our policy agenda will provide leadership in the process of monetary integration.

I've been reading this topic & I'm very amused - most pple who support it do so because they have a (rather blind) trust in Soludo. I agree he has done wonders for the Nigerian economy & supported the bank initiative. However, I didnt support his move earlier this yr to convert our lower denominations to polymer & also re-introduce coins because d costs dont justify the benefits.

Now to the re-denomination of the naira. I've done some research on this & will like to share with u guys. For all those who point to Ghana doing the same, yes, Ghana has done it, but they only did it on July 1st 2007! So of cos, it's way too early to determine its success or otherwise in Ghana. Right now, Ghana is using both the old cedi & new cedi and from the end of this yr, only the new cedi will be legal tender. As many pple have pointed out, only countries recovering from wars & hyper-inflatin have gone through this route. Germany after the wolrd wars, Argentina after their economic meltdown a few yrs ago, Brazil (when they moved from the extremely lousy Cruzeiro to the increasingly lousy Real in the 90s), Ghana (whose cedi was exchanging at ridiculous values),etc.

Nigeria doesnt fall into this category. If anything, in the later OBJ yrs, the naira has stabilized & even appreciated against major world currencies a few times. This makes the naira convertible as it is, with no need for a re-domination. Some plpe have said this reverses what IBB did in the 80s. Sorry to disappoint u, but it doesnt. IBB DE-VALUED the naira. Soludo is not re-valuing the naira. He is only changing decimals, which DOES NOT CHANGE THE VALUE of the naira. So we'll still be where we are right now come Aug 08, with a couple decimals removed.

Why is the CBN doing this? Becos we want the naira to become the official currency of Ecowas (not Africa as many pple have erroneously noted. The Rand is far for convertible, no matter how many 0s we remove. Besides, there's no plan that I know of to implement a single currency in Africa as a whole). The plan was for the Eco to become the currency in Anglophone West-Africa (the Francophone countries already have their Francs). What's happening right now is a race btwn Nigeria & Ghana to have their currency as the basis for the Eco, same way the German marks was the basis for the Euro.

Does it make sense? Well, for the feel-good factor, I support this initiative. However, I'm not happy that this comes a few yrs after introducing 200, 500 & 100 naira notes & a few months after introducing the new N5, N10, N20, N50 notes, plus coins. It's crazy, infact, considering the costs involved and of course, new notes across board will have to be printed next yr.

How will it affect foreign investment? Not much, becos as a foreign investor, if I have $1million, I can still do the same with it next yr as I can right now. Same applies for salaries, costs of goods, tips to policemen, money siphoned by politicians, etc. But that's in theory.

My biggest fear about this is that it could lead to inflation. How? Let's assume I'm a crooked landlord. I see this initiative & I decide to make money from it. I rent out my house at d moment for 60k a month. From Aug 08, I shd rent it out @N600/month. I decide to use the confusion to change it to N800/month. Who's going to ensure this doesnt happen? Multiply this by the no of sharp, crooked pple we have in this country & factor in the fact that we dont have effective regulatory & consumer protection agencies in this country & you'll see the big potential for inflation. Yes, they say both old prices & new will be "displyed" during the transition period, but when did ur garri seller & danfo driver start to "display" prices. Even the formal sector pple will find a way of making an extra buck from this, if only to cover their transition costs.

Will it eliminate the forex black market? No. As long as the demand & supply for forex both remain the same, you wont eliminate the black market. However, when Soludo announced this initiative, he also said states will receive part of their allocation in dollars. This singular act will increase the dollars in supply & will definitely increase the value of the naira & reduce the need to have a parallel (black) market at all. I support this aspect 100%. Makes me wonder why we need the re-denomination at all.

So in summary, I'll say this project has d ff positives:
1. A huge feel good factor
2. Some reduction in waste
3. Slight reduction in cash you carry (because effectively, they're introducing a 2000 value note by making new N20 the highest value)

Negatives:
1. Very expensive project.
2. High possibility of leading to inflation.
3. More of a political race with Ghana than a sound economic move.

Finally, I'll say Japan is a very sound economy with an exchange rate close to ours. Bahrain is a developing economy with an exchange rate even higher than the British pound. The Italian Lira had a lousy exchange rate b4 the Euro came along, but their economy wasnt crashing to earth - if anything, they've had more probs with the Euro, but that's because exports are more expensive, which doesnt apply to us (the impulsive importers that we are).

My position is: it's not the most necessary thing our economy needs right now. I'll prefer it's not carried out, but if they must do it, then pls proceed with extreme caution. I'll accept my salary, savings & investments going down by 2 zeros, but feel cheated if bread, fuel, cars, etc dont go down completely to 2 zeroes.

Talking about coins: I dont know why some pple think Nigerians cant carry coins. Coins r not alien to us. I opposed the earlier intro of coins this yr because the coins were of little value, so really didnt need to be introduced. With the re-denomionation, the coins carry 100x more value so we'll accept them whether we like or not. I personally dont like carrying coins, but whenever I'm in Uk (or any foreign country for that matter), I collect my change to the last 1p cos of the value it has. Inevitably pple will get used to d coins in Naija too.

Also, when it comes to Owambe, some pple think spraying will stop. Spraying has become cultural, especially to Yoruba pple (I'm Yoruba, so no one shd accuse me of being tribalistic). Werent pple spraying b4 IBB devalud the naira? Even now, in Uk, pple spray $1 bills during owambe parties. Since CBN is pushing thro legistation to make spraying illegal, sprayers can then use $1 which is worth N127-129 & dropping.

And talking bout cards, some pple think re-denomination will increase d use of cards. Far from it! In fact, the use of cards reduces d need to remove decimals, because with ur cards, it doesnt matter whether u have 1 million or 1000. It's d same plastic. Pls note that the re-denomination exercise is not an economic cure-it-all! In fact, it cures only a very few specific things in d economy.

And no, it will not make more Nigerians abroad come back home either. This is not some economic silver bullet & even Soludo doesnt claim it is, so I'm really shocked when some naive pple say stuff like Nigerians abroad will come back home, foreign investments will increase, blah blah blah.


Dont get me wrong, I like Soludo & Yar Adua & I think this country is on the right path economically, BUT re-denominatin is an expensive process which wont achieve a whole lot for the economy.

I don't see the re denomination as a race between Nigeria and Ghana.
It was pointed out by some people that the Japanese Yen is about Y100 to $1, and they still remain the 2nd largest economy in the world.

My conclusion is that, we can't follow the footsteps of others if we really want to develop. Every nation that is developed today, had at one point in time fashioned there own economic policy based on their peculiar circumstances, that is what CBN is doing now.

@Stealthy

What credentials do you have that will make us take your line of argument and discard the line of argument of others?

My conclusion is that, we can't follow the footsteps of others if we really want to develop.

Your conclusion does not follow; you pulled it out of your ass. (And that is exactly how Soludo got this idea.)

I completely agree with @stealthy. I ave been a soludo fan until now, I've keenly watched the economic scenario of this great country and i can tell this forum that this is a wonderful initiative with a wrong timing. This would have been wonderful if Nigeria was running a closed economy or if we were a relatively high producing or manufacturing economy.

I have always said from the onset that this is a short cut to solving our economic problems. There are better ways of adding value to the naira than redenominating. The only thing we majorly export in this country now is crude oil, what happened to cocoa, groundnut, coal, our solid minerals, rubber, farm products among others. The government should come up with policies and modalities that will boost some other sectors of the economy which will eventually lead to a high Export to Import ratio which will add value to our curruncy internally and on the foreign scene. Redenomination is not what we need right now.

I earn 20000 NGN now to earn 200NGN by Aug 2008 which is of same value does not worth the stress.

Consumer right protections has not worked for our petroleum products (PMS, AGO etc) on which could be readily enforced, how much more taxi fare, house rent, meal ticket, petty goods among others if this eventually works.

Does it mean that Soludo has not thought of this at the inception of the 1000 NGN note as well as the new lower denomination notes & coins knowing fully well that redenomination is priority to our economy in the nearest future? This tells you that there is more to this than have been made public.
Anyway, am yet to be convinced of the motive behind this because at the end, nothing happens to the value of our currency, remember you can only influence your foreign exchange by some bedrock factors that is not this. This is just a change of figure in the naira whose cost would have added a lot better infrastructure and amenities than the country presently enjoys.

u know solu old is very rigid no matter the protest he 'll still implement his dogged policy.

@seun, whether we like it or not the plan will be implemented and will be successful. So if u were planning to opress anyone in naija u have a few months left cuz Nigeria will be on the golden age time clock from august 1st 2008.

How do you want to achive that, with doing noting out of noting, wake up its all political moves.

InCar_Nav:

@Stealthy

What credentials do you have that will make us take your line of argument and discard the line of argument of others?

InCar_Nav, I'm a humble engineer who spends 20-40hrs each week reading on economics, personal development, finance and basically things of value. I dont know all the answers and dont claim to. However, I think I can spot an obviously good idea & an obviously bad one. With my experience working in a financial services firm & investing, reading & listening to other investors, I think I have a fair idea of how these things work.

naijaway:

@seun, whether we like it or not the plan will be implemented and will be successful. So if u were planning to opress anyone in naija u have a few months left because Nigeria will be on the golden age time clock from august 1st 2008.

Pls get real! If u can "oppress" now, u can "oppress" after Aug 08 - the value of ur savings & net worth will not change! This is not an economic cure-it-all, like I've said before. Dont get carried away. I agree with you that Nigeria will begin a golden age (by God's grace), in fact, I feel we've already started a new age economically. But it will not be because of this currency change.

Stealthy:

InCar_Nav, I'm a humble engineer who spends 20-40hrs each week reading on economics, personal development, finance and basically things of value. I don't know all the answers and don't claim to. However, I think I can spot an obviously good idea & an obviously bad one. With my experience working in a financial services firm & investing, reading & listening to other investors, I think I have a fair idea of how these things work.
Please get real! If u can "oppress" now, u can "oppress" after Aug 08 - the value of your savings & net worth will not change! This is not an economic cure-it-all, like I've said before. Dont get carried away. I agree with you that Nigeria will begin a golden age (by God's grace), in fact, I feel we've already started a new age economically. But it will not be because of this currency change.

Who is oppressing who, you mean the gorvernment will still oppress the citizen after 08/08?
Pls, we need physical changes not political amendments.

@Stealthy: please, keep telling them. I'm glad there are one or two people who can see through this illusion.

I personally dont agree with this re-denomination or re-decimation.

After the exercise, how long will it take for anyone to convince the market woman to sell what she hitherto sold for 200naira at 2naira? Before it is achieved, a lot of damage may have been inflicted on the economy. Nigeria does not really have a stable enough economy for this kind of solution at the moment.

I hope the guy is not jumping the gun

Seun:

@Stealthy: please, keep telling them. I'm glad there are one or two people who can see through this illusion.

Frankly, I think both you and Stealthy are talking out of your asses. Let's maintain the status quo because you are comfortable with it?

I'm not comfortable with the the status quo. I want the government to spend its limited resources on things that matter such as the justice system. The police, the courts, the prisons must be in top shape. I want the government to do something about the security situation in the Niger Delta. I want inflation to be minimized.

Breaking News: Naira Redenomination: Suspended?

Seem like those who wish to see the redenomination stopped finally have their way.

No reform is easy, we have to work through it.

I still hope that after Soludo have discussed with the President, the redenomination we still go on.

Seun:

I'm not comfortable with the the status quo. I want the government to spend its limited resources on things that matter such as the justice system. The police, the courts, the prisons must be in top shape. I want the government to do something about the security situation in the Niger Delta. I want inflation to be minimized.

Breaking News: Naira Redenomination: Suspended?

Response to Soludo’s Strategic Agenda for the Naira:

The fact that Soludo is coming up with these policies now, barely a month after the recent currency notes and coins introduction between February and June 2007 is a clear indication of one or both of the conclusions below
1. That our policy makers are mediocre thinkers who can hardly see beyond their noses and can hardly dream up sustainable policy directions. The first move to introduce higher currencies and coins is inconsistent and contradictory with the August 14 declaration of strategic agenda. It seems our policy makers are doing trial and error and acting impulsively. That is if one is willing to give these clowns the credit of initiating these ideas. There are enough pointers to the fact that these people take instructions and are closely monitored by the World Bank and IMF.
2. That our policy makers are not truly patriotic, not taking the best interest of the nation to heart when they churn out, draft and approve policies. It can never be justified why we should introduce and print such monumental level of currencies in February – June 2007, and then barely a month later be told that there is a plane to make all that expenditure worthless within one year. If you are going to make such fundamental change on the face value of the Naira, you should have been thinking of it since 2006. If Soludo only started thinking of this strategic agenda after June 30, 2007, it surely is not time enough to reach a decision on it. On the other hand, if Soludo had already thought out this plan before the massive introduction of new currencies in February, it means that exercise was not only wasteful but an outright fraud, counter-productive to national interest and economic development. It means Soludo while engaging in the introduction in February already knew that they would be worthless by August 2008. This is a crime equal to treasonable felony on the part of all those involved. It is evident from the above scenario that the last regime of Obasanjo’s just wanted a last take of loot from the exercise just before leaving the stage. Any way it goes, Soludo played ball and is equally guilty of a serious crime.

The above apart, I want Soludo to know the challenges that arise with his current drive:

1) How is Government to ensure such an effective means of price control to compel people to exactly slash all prices by dividing by 100. There will be an initial inflation arising in the process of the re-valuation and we do not have the mechanism within our economy to tame this.
2) The economies where such strategy worked, as quoted by Soludo, had certain, factors that made it work. We have not the infra-structural base, productive capacity and technological background or institutional power to support Soludo’s schemes. Efforts should rather have been made to first re-structure the foundations of our weak economy before embarking on this cosmetic drive. Currency re-denomination on its own and as a starting point does not in itself solve any real problems. Time will tell.
3) Whatever makes SAP not to work and the refineries and NEPA not to work, in spite of so much that went down the drain, is still very present to make a mess of Soludo’s theories in the very near future. Let us do the first things first. We have fooled ourselves long enough, Or haven’t we?

ventriloquising:

The Central Bank of Nigeria (CBN), through its Governor Charles Soludo has decided that from August 2008, it will revalue / re-decimalize / re-denominate the Nigerian Naira by removing two decimal points from behind, whereby the old N100 becomes a new N1. In the same vein, a USA dollar (US$) which is currently N125 will become N1.25 in terms of the new Naira currency.



For those who agree that this re-denomination will generally have little or no effect, I would like you to consider the billions of Naira notes in circulation today and realise that to convert each to a redenominated polymer note will cost $2 per note.

Therefore, it will cost us $12 billion (our total Federation Account) to print 6 billion new Naira notes.

So why should we spend more than $12 billion on a project that will have little or no direct effect and even possibly, could have negative effects?


Besides, let's examine the indirect effect on devaluing our fixed assets.




What is wrong with Soludo? After minting billions of coins that nobody uses with our hard earned money, and after spending billions of dollars printing new N5, N10, N20 and N50 only recently, he wants to give out another contract for minting and printing so soon?

Abeg, we should use what we have till 2010 how can a country be printing new denomination of money every year?

To devalue currency is the easiest thing in the world compared to revaluing. It will most likely fail and even if it succeeds, it will make rubbish of our exports, make us more import dependent and obliterate our trade surplus.


Then there is the issue that we will be unconsciously experiencing massive inflation. After revaluing N1.26 to $1, by the time the currency depreciates a little to N2 per $1, we will not realise that what just happened is that exchange rate just went from N126 per $1 to N200 per $1 in terms of the old currency.


If a plot of land is N12 million and the new re-valuation converts it to N120,000. As a smart Nigerian, who stop "omonile" (land-owner) from selling that plot land for N125,000 (if you convert to the old rate: N12.5 million)
that's in fact 4% inflation immediately.


So revaluing the currency is actually devaluing our assets and in essence, unwittingly reducing the quality of our lives.


Not to forget that Nigerian bankers are about the smartest in the world when it comes to looking for loopholes in government policies that can be used to rip people or the government off legally.


Then what happens with the N25 billion capital base of the Banks? Will they settle with N250 million or will they start pursuing the new N25 billion all over again?



So please Soludo should leave our currency alone. Japanese Yen is almost equivalent to the Naira yet they have not died. In fact they are doing very well. Indeed they are doing absolutely exceeding well.




This may just be an attempt to please the ignorant masses that complain everyday that our currency has no value, so Nigeria is bad.




Look at all the plenty, plenty grammar just to say we want to remove two zeros? That's when you know something is amiss.




We are currently using $40 billion to maintain the exchange rate of the Naira to the Dollar at 126.
Soludo should suspect that we would need a foreign reserve of $4,000 billion (4 trillion dollars) to maintain an exchange rate of Naira to Dollar at 1.25.

As of now, we don't have that kind of foreign reserve.


Instead of just printing money and removing 2 zeros, we should rather keep the old currency and add 2 zeros to our foreign reserves.


China uses more than $1 trillion foreign reserves to keep their currency at 7 yuan per $1.


So rather than spending more than $10 billion printing new currency at $2 per note, we should add that $10 billion to our foreign reserves and look for more money to build up our foreign reserves till it gets to $4 trillion so that we can then strengthen this current Naira to even $1 to N1.


What Soludo needs to do is RE-DECIMALIZE OUR FOREIGN RESERVES BY ADDING TWO ZEROES BEHIND IT.





And please Elumelu and Soludo should stop touting stories that the Naira has made gains on the dollar due to high earnings from Crude Oil. The Pound that made gains too, is it due to their high earning from crude? Every currency in the world has made gains against the dollar in the past 6 months, even the CFA, due to poor economic policies in the US.




And now, we're hearing examples of other countries that have revalued their currencies. The fact that Bolivia, Ghana, Angola and Afghanistan did something crazy, we too should meddle into it.

Look at his mention of Germany and you will realise it was after World War I and World War II that Germany revalued their currency. Afghanistan and Angola too, after Wars, South Korea was after War.

Argentina that tried it during peacetime, all the revaluation led to total economic collapse, Ghana he mentioned just revalued their currency this year and we're yet to have enough time to see the benefits or effects.


Brazil is the only stable country that revalued its currency during periods of stability and has continually revalued and will continue to revalue.


This man should not throw us into chaos. And waste billions of Naira printing fancy notes. In fact, I suggest that the company printing Nigerian currency should be investigated and even changed because this regular printing of money backed up by big big grammar is getting really suspicious.




But of course I support the CBN withdrawing from forex trading so that banks can stop roundtripping and start making money by giving out loans.



generally, I believe Soludo knows more about economics than myself but on some specific issues such as the recent minting of N2 coins?!! Please. I said it from the first day that it was rubbish. How many times has the average Nigerian transacted business with the N2 coin? Even beggars are rejecting it.




Imagine that this project which will cause massive suffering and waste billions of dollars is just to boost confidence, psychology and bring back that nostalgic feeling of shopping sprees of the 1980s when Nigerians could travel to the UK with N20,000 and do so much. It's absolute rubbish.




I just confirmed my thoughts that this redenomination antic is going to encourage cash transaction and reduce cashless or ecommerce transactions. Because it is going to make cash easier to carry. If cash becomes easier to carry, most people would prefer to collect new N40,000 (the current N4.5 million) during a car sale than use come bank transfer that will charge an interest.

If I can take N20 safely and conveniently to a fast food joint with little cousins, why use an InterSwitch card?




This plan is evil. Let us not sit and watch it pass into law. The older generation that sat back while the Naira was being devalued are responsible for our 20 years of suffering. Let us not be responsible for another 20 years of suffering.


This plan is straight off the table of one of those crazy schemers at the IMF. The same people that brought us almighty SAP. Nigerians Learn, Learn, Learn!





We must resist this sham actively. We cannot continue to sit down and watch IMF use one man to ruin the lives of 140,000,000 Nigerians. Russia kicked IMF out before their economy started growing, South Korea kicked IMF out before their economy started growing. The only people that carried IMF matter on their head, consistently following every step over 20 years was Argentina and their economy collapsed.


Please, if it is their $18 billion that they used to buy a controlling stake in the Nigerian economy so that they can crumble it, please, let us pay them their 18 billion back and let them go.


This Soludo guy, where has he hard of a country that spends billions of dollars printing new currency designs every single year? Are we mad? Or is it because of the back slash he gets for every contract he gives out. The printing and minting company that handles Nigerian currency will soon get tired of us. EVERY SINGLE YEAR?!!


Some say Soludo is a genius, end of story! Is Alan Greenspan not a genius? That he used his low interest rates in the USA to cause all the current Stock Market woes in the world today and gradual death of the dollar as a stable legal tender?


Also I have come across a gang of thought that says the costmetic strengthening of the Naira will bring in Foreign Investors, boost Export, increase productivity, thereby creating more jobs and also improve standard of living and reduce Poverty. I refuse to refer to these people as a school of though because I don't believe they went to school.

A STRONG CURRENCY HURTS EXPORTS AND FAVOURS IMPORTS. A WEAK CURRENCY DOES THE OPPOSITE.

Or why would all the producers in the UK and USA run away to China? And the BBC had the audacity to start spinning hare-brained tales about how this will make us the China of Africa. How can we become the China of Africa by doing exactly the opposite of what China does, which is, consciously keep their currency weak. Anyway, our ancestors said it: "when your enemy begins to sing your praises, your downfall will be fatal".


I advice all Nigerians to actively resist this move. If we fail, the system fails. All we have suffered under Obasanjo will be a waste, our future a woeful tale.


However, for those of you who strongly believe in this move, God help you.



I'm going to build my own foreign reserve over the next 3 years. Every N100,000 I make from now to August 2008, I will convert to Chinese Yuan and save in a bank in China. From August 2008 every N1,000 I make in terms of the new Naira notes, I will immediately convert to US Dollars and save in a bank in Europe, ready for conversion to the Euro.
Then when the system collapses, we will see who will lose and who will gain.



This is not a matter of National Pride and Nostalgia of how great it would be to go on a shopping spree with N200, it is about crumbling an entire country with fantastic looking IMF ideas designed to keep poor countries poor, and rich countries rich forever.


Where are people like Professor Abhulimen Anao when you need them to talk now?


Thank God this project has been suspended.

REVALUATION OF NAIRA THAT WILL COMPLETELY DEVALUE THE LIVES OF NIGERIANS.


NO TO COUNTERFEITING AND FORGERY BY THE CBN!

NO TO CURRENCY AND EXCHANGE RATE ILLUSIONS!!

LONG LIVE NIGERIA!!!

mordebe:

--- banter --- banter---
REVALUATION OF NAIRA THAT WILL COMPLETELY DEVALUE THE LIVES OF NIGERIANS.

Oh Dear God. Where are you guys getting this rubbish from?

Nigerian suspends currency redenomination plan

http://www.africasia.com/services/news/newsitem.php?area=africa&item=070824160939.alsc6b16.php

Good move to bad rubbish.

ventriloquising:

@Mariory

don't worry, we're all lucky that more intelligent people have intervened and this project has been suspended and it will most likely be cancelled.

Thank God for that if not, our lives would have been hell!


What that dull headed Soludo doesn't know is that as soon as George Bush Leaves office, Iraqi war will mellow down, venezuelan, Iranian and Saudi tensions will ease and Crude Oil prices will fall to about $30, and from 2009, our Crude Oil Revenues will reduce by 50%. That is when we will need to reach for savings we made during the windfall. But lo and behold, Soludo would have spent billions of dollars of it printing and reprinting money for no good reason.

Please we should either save or invest our Trade Surpluses rather than be printing billions of notes of N5, N10, N20, N50, N1000 and minting coins of 50 kobo, N1, N2 at a unit price of $2 each. This madness, carelessness and recklessness must stop!

a bi o

For me personally i buy the idea of Re-Donomination of the naira. Because it will now give our naira a face, value. But what i don't agree with its the taking of the highest denomination to 20 naira. Atleast the highest denomination should be 1 hundred naira or atleast a Hundred naira to a Dollar. One thing that i know for sure is that most of our politicians that have foreign account will do everything within their power to make sure that the plan does not work. They prefer to have Hundreds of Millionaires and Millions of POVERTY striken masses. What a shame to those We call leaders.

it is goooooooooooooooooooood, i am going to be paying N20 - N50 Nepa Bill Monthly!!!

[size=16pt][center]===WAZOBIYA.COM===[/center][/size]

And you will also be earning 250 naira monthly.

Seun:

And you will also be earning 250 naira monthly.

rili? let me calculate

Thank you President Yar'adua for rescuing us from Profs Soludo's calamity

slimnike:

For me personally i buy the idea of Re-Donomination of the naira. Because it will now give our naira a face, value. But what i don't agree with its the taking of the highest denomination to 20 naira. Atleast the highest denomination should be 1 hundred naira or atleast a Hundred naira to a Dollar. One thing that i know for sure is that most of our politicians that have foreign account will do everything within their power to make sure that the plan does not work. They prefer to have Hundreds of Millionaires and Millions of POVERTY striken masses. What a shame to those We call leaders.

Giving the naira a face in terms of decimalization or giving the naira a face in terms of true economic value. What is not plain to see. This is just a disaster. This has done it that has done it. How exactly it has improved their economy is what we want to listen to.