I hope govt will be able to tell market woman while she should sell her basket of garri she sold N250 yesterday N2.50k. I mean as result of our commodity price indiscipline, how can we ensure commodity price obey divide by 100 rule.

We must not let them try any such rubbish!

Were are all those economic students self

will this improve the economy?
are accountants having problems with calculating the Naira as it is?
Is this to ease the weight of cash in our wallets?

as it is people hardly use the N1,N2 coins, Nigerians love huge currency and reducing the 'number' will be a psychological blow to some people

Correct me if I'm wrong but this is what I understand:

If you had N300,000 in the bank you will now have N3,000 but it can buy you exactly what you would have bought before as the intrinsic value of the Naira has not changed.

A bag of rice for N5,000 will now be N50

N5,000/300,000 x 100 = 1.67% of your savings going on rice before
N50/3,000 x 100 = 1.67% of your savings the same as before, so basically, everything will be exactly as it was before but with a different name.

There may be some economical benefits as people have said but I doubt it will have much impact on that.

One thing it will be good for though is safety, carrying around N50 to the market for your rice is easier to handle than N5,000 and easier to hide so people will probably not be able to scout you for money. If however, this is all the benefit it brings then you probably won't see the benefits in the short term as the money used to do this will be alot. In the long term it seems better though. The intrinsic value of the Naira can only increase if the economy improves. Perhaps the minister of economy should have concentrated on that aspect first!

The intrinsic value of the Naira can only increase if the economy improves. Perhaps the minister of economy should have concentrated on that aspect first!

Yup!

Dr. Biodun Adedipe, former consultant to the World Bank. "The policy shift was done for the re-alignment of the economic fundamentals. Generally speaking, this kind of policy shift is adopted by an economy that is a net importer because the demand for foreign currency is always high.

"The market is erratic and the currency needs to be strengthened and that was why the custodian of the currency, that is the CBN will have to adopt an appropriate policy.

"But everything will have to depend on the value adopted after revaluation as so many things will have to be considered. For instance, capital account derivation."

Lawson Omokhodion of the defunct Liberty Bank Plc said: "It is nonsensical. It won't work. This is sheer prevarication because, they will go up and go down. Was it not Soludo that introduced the N1,000 bill?

"Even in the U.S. we have $1,000 bills and in the UK (United Kingdom) there are �50, �20, �10 and �5 bills, not to talk of Nigeria where cash is King. N20 note the highest denomination in a country where they do not honour cheques?

He said that the economic implication theoretically is that people will be forced to spend less.

Whereas in reality, he asked how would that stand taking into consideration the cost of production as seen glaringly in dilapidated infrastructure, among other sundry problems we were currently facing.

"The CBN should be planning to take us to the status of America and other advanced economies of the world instead of relegating us to the levels of Ghana, Malaysia and other lesser economies," he said.

guardian

cool, this is the main reason i came to the politics thread 2day.

see people, me thinks its a good idea if our govt can manage the possibilities and maximise the opportunities.

me also thinks the main problem would be explaining the concept of re-denomination to the average nigerian.

the whole thingi got me thinking too, am wondering is this simply a re-denomination of our naira or would this [in any way] lead to the revaluation of d naira.

because,

as it is, the value[ie,the purchasing power ] of the dollar in the nigerian economy wouldnt be affected at all

THANK YOU ALL FOR THE COMMENTS.
I AM NEW GUY TO YOUR FORUM AND I IMPLORE YOU ALL
TO "JUST BELIEVE" WE SHALL GET TO THE PROMISE LAND.

THANKS

I believe the re-denomination of the naira is quite a wonderful exercise and a move in the right direction. Given my points below:

1 When the Government of IBB devalued the naira with his SAP (Structural Adjustment Program) that government forgot that Nigeria as country was mainly export dependent and that nations that enjoy less valued currencies like Japan do so to make there goods and services not only attractive but cheap, this led to untold hardship on Nigerians who woke up one day to find out that there liquid cash and properties now amounts to nothing, look at it like this, if ur father had a property then and wanted to do business abroad and required a loan, even if u got this loan, if u take it to the international market just because the loan was given to u in Naira it had no value, cos what u were going to spend the money on would be rated in dollars.

2. Now the re-denomination of naira does not actually raise the value of ur fathers property as mentioned above, but if that property after august next year is used in securing a loan, ur sure that the value ur getting in naira however small it might be gives u the same value anywhere in the world. With that being said the major concern of the CBN is to anchor inflationary expectations, strengthen public confidence in the naira, such that if u as a Nigrian that has worked all ur life abroad decides its time to head home, ur sure of two things. If I invest my hard earned $10=N12.5 in Nigerias ecomomy for the next ten years I will be getting back $20=N25, which has the same value all over the world. But the fact is that u can only make this long term plan if only u know that Inflation is well managed such that a by the time ur selling ur shares or properties ur getting 25 naira and ur 25 naira still has the value of 20 dollars.

All that being said am just trying to look at how this change would affect ordinary citizens of the nation. But for the Government to achieve this goal to the fullest the issue of security in that nation must be well looked into.

I hope I explained myself succintly if not pardon me.

oell:

THANK YOU ALL FOR THE COMMENTS.
I AM NEW GUY TO YOUR FORUM AND I IMPLORE YOU ALL
TO "JUST BELIEVE" WE SHALL GET TO THE PROMISE LAND.

THANKS

religion is the opium of the people, yeah

but i think it is high time we started taking practical, strategic and well thought out decisions.

its not about  faith or believe, its about reality.

its not even neccesarily about getting to the promise land[wherever that is] it is about attaining economic relevance in the world.


anyways, oell, nice to meet ya.

Honestly, this seems to be the worst news I've heard about Nigeria in recent days. Fighting with dollar is not the solution to the economic travails of Nigeria. Like someone said, if it's such a wonderful idea, why is 1.00 USD=7.5Cy? Why is 1.00 USD=116.---JY? why is China with all its economic growth not taking such a drastic step? I remember hearing the news about Thai bhat appreciating against dollar recently and it affected them so much they quickly had to clip the wing of their currency.

I know Soludo and the people involved have done their homework(I'm not so sure) but I still don't think removing 10 or 1,000,000 zeros is the long awaited solution to our economic woes. I believe we'll only plunge even deeper into crisis and before we know it, we'll reach rock bottom and we'll start diging!  Why waste all the money invested in the old denominations? maybe they'll sell them as second hand  sha  Really,I should be weeping!

For those who are happy to hear this news, we seem to be forgetting so soon that whatever goes up in Naija doesn't come down and that includes price of goods and commodity! I wonder what the so-called 20naira will buy then.
The best thing for those of us abroad is to invest our hard earned money abroad!

So much for economic recovery. . . !

There is no direct economic benefit to the move from the average Nigerian point of view, as a matter of fact for all intents and purposes the move became necessary because the African Union is thinking of having African Central Bank in Nigeria and thus Naira as the common currency. Thus their was need to make the exchange rate of Naira and those of other world recorgnised currencies reasonably comparable.

However if the move sails through and Naira becomes the common legal tender in the African region, it will do us more good in the foreign exchange market as their will be more demand for Naira and thus we will have a stronger currency.

But like some economists rightly pointed out that what improves a Nations's economy is local production and manpower development not the number of zeros in the currency. However I think the CBN under Soludo should be given a chance, when he talked about Bank Consolidation no one liked it cause it was a difficult decision but today we are all happy it happened.

While I can not prove scientifically that there is any benefit to this but I am out of hindsight tempted to think that its a good move. Cause I have seen the Naira go from bad to worse whenever a higher denomination was introduced, so when the reverse happens you can only expect a reverse effect.

Even in Britain (though not particularly sure) it looks like there is a Government regulation on High Street stores to put the value of products as £1.99, £2.99, £3.99
You begin to wonder why £1.99 and not £2. Because they want lower denominations of 1p, 10p, 20p, 50, to remain in circulation.
One can not explain the very essence of this, but their is sure a reason for it. Hence I am in total support of Professor C.C. Soludo.

Wow. . .that will be amazing. Sorry, I didn't read the rest of the pages, but if that happens, then how will they go about exchanging the money? Wouldn't some keep it because they would be richer. . .or will they be printing out new notes?

McKren:

There is no direct economic benefit to the move from the average Nigerian point of view, as a matter of fact for all intents and purposes the move became necessary because the African Union is thinking of having African Central Bank in Nigeria and thus Naira as the common currency. Thus their was need to make the exchange rate of Naira and those of other world recorgnised currencies reasonably comparable.

However if the move sails through and Naira becomes the common legal tender in the African region, it will do us more good in the foreign exchange market as their will be more demand for Naira and thus we will have a stronger currency.

But like some economists rightly pointed out that what improves a Nations's economy is local production and manpower development not the number of zeros in the currency. However I think the CBN under Soludo should be given a chance, when he talked about Bank Consolidation no one liked it cause it was a difficult decision but today we are all happy it happened.

Tell them jare!

As far as I am concerned, the people who should be really jittery over this are those of us outside Nigeria and that's if we were not enlightened enough about the grand idea behind this issue. Even Seun doesn't seem to understand. I am really disappointed for the first time.

[quote:]backnbetaThe best thing for those of abroad is for us to invest our hard earned money here o!
 Yet another failure!!! [quote][/quote]

if u want to invest your money abroad best of luck to you, i have been abroad for 15 years, i never see 1 million pounds in my account b4. the good thing when d money is at par with the dollar, is for u to invest in a developing economy, a growing economy rather than already saturated economies abroad. I went to an indian man house in west london, St John's Wood, one of the posh part of london, marble staircase. u name it, I asked this man how did u make your money, he told me, i made my money in nigeria in 1979, when N1.00 was $1.00.  He told me nigeria use to be sweet, if u invested $10,000.00 u could turn your money round over night, so i wish u best of luck with your investment abroad.

Are you telling me 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?


@ell77


you just confirmed my thoughts that this redenomination antic is going to encourage cash transaction and reduce cashless or ecommerce transactions.




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!

I have been going through responses to this issue with complete amazement.

In fact, it is very interesting that we can conduct this kind of discussion about such a very important decision of the CBN.  At least everyone is able to voice their opinion and hopefully we all learn more about the whole issue.

This is my opinion about the matter.

1.  It is a step in the right direction, though it is a risky adventure. Particularly, considering the cost and logistics involve in pulling this off, and I am still trying to convince myself if the 'anticipated' benefit can actually outweigh the cost and if some unforeseen issues won't scuttle the whole adventure.

2.  Contrary to what many people believe, there are actually some benefits to this step which include:

a.  Inflation control:  For example, items in Nigeria hardly jump from N1000 to N1014.  Under the new regime with the use of coin, such an item will cost N10 and can easily be N10.14k.  The point is prices of things change but the increment is actually tied to the currency denomination available.  Items can now change from 5k to 6k (that is N5 to N6 as of now which not possible, it will rather jump to N10).  This is a very positive development because with low inflation, you get a stable economy, with stable economy a lot of good can follows.

3.  Making Naira a reserve currency:  Though I am still contending about whether the only way to make Naira a reserve currency is by re-denomination.  Many of us will agree that Nigeria ecomomy is growing and Naira is getting stronger.  If this trend continue, the strength of naira can actually erode the value of our hard earned foreign reserve.  For example, if Naira is N50 to $1, getting N200 from our foreign reserve will require $4.  If naira become N40 to $1, we will then need $5 dollar to get the same N200. So this step give more value to what we do locally and make the country itself,  goods and services a good value for money in the international market.

4.  Compact Economy:  With manageable amount of currency in circulation, it actually enhance compact economy management on the part of the regulators, the effect of which definitely filter down to the other arms of the system in line with policy and decision of the economy regulators.  It is not just about removing two zeros.

5.  Improved Currency Span: Once we start using coins, life span of our currency will definitely increase reducing how much we spend on the long run on printing and replacing old notes.

6.  The Percieved Value & Strength:  Holding N1 coins definitely gives it more perceived value.  More like hold a pounds coins.  This psychological effect is good because it tends to equate N1 coin to N100 and actually help in achieving better purchasing power for the N1.

I believe there are economist out there who can analyse the issue in more detailed but this is my opinion.

Denex

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.

it does not get any easier figuring out when you are serious and when you are kidding. If you think the devaluation of Naira brought about 20years of suffering why are you opposing the reverse of devaluation??

I so much embrace the idea if it will make naija better.
I font want to really argue about this but let it not be a move sponsored by all the bad eggs to loot more money abroad and thereby beating the money laundary laws.
With the money small in number but big in value, its easier to loot.
Abeg help remind them to still amend the money laundary laws.
i really pray it works out if not! i tell una reall yawah don gas for naija ohh.

i dont support the idea soloudo came up with.

@seun you are correct, what abou the stardard of living?

backnbeta:

Honestly, this seems to be the worst news I've heard about Nigeria in recent days. Fighting with dollar is not the solution to the economic travails of Nigeria.

It has absolutely nothing to do with "fighting" the US dollar. In this thread, the main argument against this move appears to come from people who are used to changing pounds and dollars into large amounts of Naira.

N1,000/N100 equals N10
N10*N100 equals N1,000
.
.  . Everything/N100 = Everything*N10

Inference
It all boils down to same thing.

@MacKren

because the world is not that simple.

If a mosquito sucks your blood and you get malaria, you can't simply get well by withdrawing blood from the same mosquito and injecting it back in your body.

If you drop a piece of burning coal on a bush and cause a wildfire, you can't just reverse things by picking up the same piece of burning coal. That is insane.



In the past 6 years, what the IMF has been doing is trying as hard as possible to chase away foreign investors from Nigeria.

1) they know that foreign investors like cheap labour, they made the government increase wages by 1,000%.

2) they know that foreign investors love cheap fuel, they made the government increase fuel prices by 300%.

3) they know that foreign investors like a weak currency, they're making the government strengthen the currency by 10,000%.

Can you imagine this policy hasn't even touched the ground yet and the BBC is already hailing it. When did the BBC ever celebrate anything good about Nigeria.


Nigerians have been idiots for long enough! Wetin sef?!!

it will be very hard on market women.
Hope Nigeria will be in good shape with this kind of idea?

Its a good idea, but the timing is dangerous.  This is another "Awolowo", for proposing a good idea at the wrong time.  

Does anybody know how the redenomination can improve our electricity and water supply that 95% of people living in Nigeria badly need?

Can we trust all the other governmental bodies to effectively implement this change?  I am just wondering how the local artisan will react or the bus conductor accepting N1 from you instead of the old N100. Chaos awaits at the local food market come 1st August 2008.

Can we tell CBN to shift the date to  1st August, 2009 thus allowing everybody (including companies) time for implementation.  One year is damn too short, this is Nigeria.

Can you imagine this policy hasn't even touched the ground yet and the BBC is already hailing it. When did the BBC ever celebrate anything good about Nigeria

Well I was skeptical about that too, but Soludo is no fool. We can only make his policy work by supporting Government innitiatives.

@Denex

-------------
If a mosquito sucks your blood and you get malaria, you can't simply get well by withdrawing blood from the same mosquito and injecting it back in your body.

If you drop a piece of burning coal on a bush and cause a wildfire, you can't just reverse things by picking up the same piece of burning coal. That is insane.
-------------

Its not the the blood the Mosquito sucked from you that gives you Malaria, its the Malaria parasite that it injected in your blood in the process.

Burning Coal?  Coal don't burn by itself.  It needs oxygen and heat (coal  is fuel).

What do I mean - Using the above example does not capture correctly what you are trying to put across.  Re-denominating the Naira is what CBN is talking about not re-valuing it.

Denex you are a raving lunatic, you've just confirmed it

so it is wrong that government increased wages by '3000%' because investors like low wages?

how much are the increased wages? 7,500 a month minimum wage - $70 dollars a month, wow how incredibly high!!


cheap fuel? Fuel you were not producing at all and were importing at a loss, wow, the govt should subsidise the 'investors'


cheap currency? dude you're obviously off your rocker, the currency may be redenominated, but it doesn't change the INTRINSIC value of the currency, which is what is the most important factor

Denex should not be taken seriously, he has the proven ability to take an otherwise intelligent discourse down into the pits of garbage and senseless allegories.

a. Inflation control: For example, items in Nigeria hardly jump from N1000 to N1014. Under the new regime with the use of coin, such an item will cost N10 and can easily be N10.14k. The point is prices of things change but the increment is actually tied to the currency denomination available. Items can now change from 5k to 6k (that is N5 to N6 as of now which not possible, it will rather jump to N10). This is a very positive development because with low inflation, you get a stable economy, with stable economy a lot of good can follows.

when the N1,N2 coins were introduce, i'm sure the CBN said the same thing, goods will be priced N71, 66.50k and so on at the moment people don't do this, since they introduced it they should follow it up with 'pricing' ( i do not know if they are responsible for this though)

5. Improved Currency Span: Once we start using coins, life span of our currency will definitely increase reducing how much we spend on the long run on printing and replacing old notes.

they just introduce the coins and N1000 early this year or last year citing the US model as well. the governor said something like if a cashless society like the USA can have $1000 bill i don't see any reason why we shouldn't'

$100 today = N12500 today = N125 august next year = $100 august next year.

How then will nigerian in diaspora be the ones to suffer the effect?

This policy is bad O! May 1st 2008, let's massively protest against it O! I have told you people my own.

We are an export based country. A weak currency supports export. That is why China has refused to let it's Yuan rise against the dollar.


E bad O! E bad well, well!

azorjiu:

$100 today = N12500 today = N125 august next year = $100 august next year.

How then will nigerian in diaspora be the ones to suffer the effect?

the money is the same just the zeros are different