one thing i'm glad about is that the CBN recognises the risks involved and are trying to prepare before time to make the changes.

There are many positive aspects in the overall policy, but as people have rightly said, I am not completely certain that this re-denomination is going to be as beneficial to us considering the huge costs that will be involved.

the issue of people being against it because of changing dollars and pounds into huge naira amounts is laughable, no right thinking person will harbour such a thought as justification for opposing this action. The value of goods/services you get with the money/medium of exchange will remain the same, so in that sense there is no loss there, but will the dislocation and disruptions caused by this mass currency change as well as the massive re-education of the illiterate masses on the effects of the change be managed properly? those are the pertinent questions.

we are not revaluing the currency Denex, it is a REDENOMINATION. get that into your head. the exchange rate is not the key issue here, but the intrinsic value of the currency- how much goods/services you can obtain with it!

standard of living will improved to better living.

I agree with you 100%

Mariory:

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.

I beg to differ on this, please see my previous posts. I believe the truth is the opposite. I am a strong believer in the future of Nigeria and I pray always on this. I don't care if this action will erode the value of my bank balances both in Naija and where I am now, which I don't really forsee in real terms. What matters to me is Nigeria's lost glory being restored. Can someone tell me we won't benefit economically if Naira becomes an African Union legal tender? Of course there will be more demand for Naira.  Let's not forget that this is NOT about revaluation of naira or devaluation of dollar, but increasing the face value.

Fair enough, this will cause confusion initially, but then haven't we dealt with worse confusion in Naija and come out better? This "confusion" is not a negative one but one that will bring about a better tomorrow in terms of Nigeria's image.

The combination of things happening now including the new International Passport  and EFCC etc, will bring more respect to Naija's image and encourage foreign investors. I wonder how people will feel in the coming years when they are no longer harrassed outside the country because they carry a passport issued in Africa.

It has it pros and cons. I believe the cons outweighs the pros. Can u imagine how confused iya alatas and epa will be? I know it would mean, we'll not be sprayin money anyhow, we'll keep the notes cleaner and all, but it does not improve the life of the average nigerian.

I am for and against it. Maybe we shld think of this after we have gone thru three handovers and send corrupt leaders to jail, then the impact would be felt more. The same amount, still buys the same things.

denex:

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!

I think this guy is just delibrately trying to wind people up. This issue is so easy to understand that a pry school pupil who can divide 100 by 10 will understand it. Abi na lie Denex??

Bhola:

It has it pros and cons. I believe the cons outweighs the pros. Can u imagine how confused iya alatas and epa will be?

There is no reason for traders to be confused as long as the CBN embarks a proper enlightenment campaigns. The Naira will not be freed till August next year. That's plenty of time to inform the general public.

ordinary fuel price increase causes extreme scarcity for the 4 week period before and after the change, it is only imagined the kind of madness that will engulf the country if this re-denomination is not handled properly.

that is my primary fear for this thing - not the benefits and even the bankers headaches, but the ordinary people who may suffer untold hardship during the changeover if its not done in a well thought out and systematic fashion.

i can remember when N20.00 naira notes where introduced just after the death of Muritala, my father's driver salary at the time was N40.00 naira a month. When he was given 2 notes as his salary, he declined d offer, telling my father, oga i beg give me N1.00 notes, he could not understand the concept, so i fear for the illetrates in nija.

Mariory:

There is no reason for traders to be confused as long as the CBN embarks a proper enlightenment campaigns. The Naira will not be freed till August next year. That's plenty of time to inform the general public.

"Told" them jare, my brother. Nigerians panic a lot over nothing creating a mountain out of no hill. Me I am waiting eagerly o! Thank God CBN would not need to consult some people on this forum to make decision.  

How The Big Bang?Will Affect You
From Paul Ibe in Abuja, 08.15.2007

THISDAY NEWSPAPERS

How will the new monetary regime rolled out by the CBN yesterday affect Nigerians is the million Naira question resonating in the minds of its citizens and foreigners alike. Although the new monetary regime will be effective August 1, 2008, the days and months ahead will be crucial. A picture of how this new regime will impact on the lives of Nigerians, and how individuals, organisations and the system will respond to the challenges of this revolutionary policy will soon begin to crystallise.
However, one thing is certain: the Naira will shrink, but the value will go up one thousand per cent. On August 1, 2008 all currencies and coins will change with the highest denomination of currency being N20. All prices for goods and services including those for labour and food will move two decimal points to the left.  What this means is that on that date, if you go to the bank to change N50,000, you will get N500. If you earn N200,000, your salary will translate to N2,000 while your house rent of N419,000 will now be N4,190. Your plate of meal at a restaurant, which used to be N2,000 will now be priced at N20 while the N130 price tag for your favourite loaf of bread will now sell at N1.30k.
A consequence of this is that the nation抯 billionaires may be downgraded to millionaires, its millionaires will now occupy the 憈hounsandnaire?spot, while the latter will now become 慼undrednaires.?nbsp; Effectively, Nigerians will be spared the ordeal of bulky sums, which before the advent of bigger denominations have been transported via all manner of means including cartons.
The new CBN policy will usher in a new regime of pricing of goods and services. By ensuring that the Naira becomes a currency of value and a currency to hold, the likely scenario is that people will stop pricing goods and services in US Dollars. Those goods and services that will be affected may include hotel room rates, house rents, airline tickets and a number of others things.
An immediate impact on the forex market is a run on US Dollars, as most people in the hope of getting more value for their money will begin to trade in their US Dollars. So, in the days ahead, the Naira may begin to firm up against the US Dollars. In the new order, if you store value in US Dollars, you will certainly lose value. In the same vein people who price goods and services in US Dollars will continue to get lower quantities of Naira. But may be we should have read CBN Governor, Prof. Chukwuma Soludo抯 lips last year when he said that Naira is the currency to hold. He had made the prophetic(?) saying against the backdrop of the convergence of the parallel and the official markets.
This will no doubt spell the final death knell to parallel market operators otherwise known as black market. It will no longer be profitable for them to trade in forex as the margin will not guarantee any meaningful gains. With time, CBN will gradually withdraw from its interventions in inter-bank market and proper trading in forex will evolve between banks and dealers.
Because the new currency regime will be simple to exchange, simple to denominate, simple to store and above all have value, it will become a reference currency to which other currencies can be benchmarked in the African region. To this end, the dream of making the Naira the currency of the West African sub-region may yet be realised.
There is no doubt that the Naira has for several years been insulated and shielded from all of these things that would have ushered a new dawn. But the realignment of the value of the Naira, the deliberate attempt to ensure its stability and convertibility would in great measure facilitate global integration.
On the take off date of the new policy, the Naira will nearly be at par with the US Dollars. N1.25k will exchange for US$1. This was what the exchange rate was before the advent of the Structural Adjustment Programme. It means that in nominal terms, nothing will change, but with inflationary targeting, the Naira will gain value.
But there may yet be a downside to this new monetary regime, as it concerns budgets for all tiers of government. Assuming the Naira appreciates so much against the US Dollars. The price of the nation抯 crude oil, which is still a major component of its earnings, will become expensive. If the product is too expensive, buyers may be forced to source for it elsewhere. Consequently, there will be less income and less money for the Federal Government, the states and local governments to share. This situation will certainly make nonsense of their budgets. So what is the way out of this scenario: recourse to internally generated revenue (IGR) and taxation. These two elements will not be subject to the volatility of the forex market and the demand and supply of crude oil. Experience has shown that in the new world order, taxation and improved fiscal regime and not recourse to export proceeds is the way forward.
The consequence of this new monetary regime on investments is that it will further attract foreign direct investments (FDI), as Nigeria will become a preferred investment destination following improved value on the Naira.

i think this revaluation thin will not affect da economy positively or negatively for now, i think its just what someone rightly calld "decimalisation" ie moving digits 2 paces left. u have N1000 which u exchange for N10 and every other person does the same and so what?
any way someone has alredy said it may just be a waste of resources!!

well i dnt c how dat is going t improve standard of living: cause as d cureency is slashed down prices will also slash down, i think the only difference is goin to mk is wen u hear the amount u see it as a small money meanwhile  u dnt have enough,it doesnt make any difference to me

It's obvious that a lot of people stop at reading the headlines and then go ahead to criticize. The fact that we have spent a large amount of money on changing the naira notes does not mean we can't implement a decent policy. I've always said it that the economy is too cash - sensitive. I  worked as a teller in a bank for a year where people come in to withdraw 1 million naira in cash. People need so much cash on them for simple transactions. that's why ist's impossible for us to use coins. No vending machines, no phone booths, no one naira candies. all we know is "3 for 5 naira"
 
The logic is simple. Come 1 aug 2008,  #500 becomes #5.  Therefore whatever was #500 e.g recharge card becomes #5. and for those of you who think the coins cannot work in our economy, think again. whatever was #5 e.g pure water will become 5kobo which is a coin.

Nigerians, embrace this. The value of our naira is becoming ridiculous. Those collectors of #20 (e.g agberos) will have to look for another profession unless they love coins because 20naira will become 20kobo unless you're generous enough to let them have a whole naira note.

the policy is not devaluation or revaluation. it's redenomination. read it up in economic text books before criticizing it dear nairalanders. It's a good policy. if it does not work, it's not Soludo's fault. It's your fault.

The exchange rate is also the same thing. it also makes for easier and more sensible camparison. think of our banks declaring billions of naira in profit and what it translates to in dollars.

KnowAll:

i can remember when N20.00 naira notes where introduced just after the death of Muritala, my father's driver salary at the time was N40.00 naira a month. When he was given 2 notes as his salary, he declined d offer, telling my father, oga i beg give me N1.00 notes, he could not understand the concept, so i fear for the illetrates in nija.

Sir I know you are "Mr. know all"  , but be assured that the level of illiteracy at time was not the same now. Many of the so-called traders now are more educated than those then. Tell me, how many Hausas trading in Forex are graduates Some of them despite this can teach some of us about Forex trading very well, despite our "big" degrees, or would Forex trading not involve maths?( May be arithmentic).  

That many unemployed graduates are doing buying and selling in Naija, even though some "paid" to get their degrees, but they still can divide 100 by 10. No be so

This pure nonsense and a cheap shot at renewed economic "gurualization" on Soludo's part. Many people are wont to follow blindly on the premise that his initial economic measures were a success (I don't dispute that). But truth be told. remove one thousand zeros or not without real measures to shore up the economy and the standard of living, what the CBN helmsman is proposing is merely redecimalization i.e a change in the number of zeros that is used in tabulating figures without ANY CHANGE IN THE REAL VALUE OF SUCH FIGURES. For want of something more apt to equate it with, Think about the change of the color of the police uniform, and the fact that it is only the upper cadre of the force that has access to the new uniform; In the same vein, the removal of zeros (ehen, that is what it is!) from the naira will only be useful to accountants and cashiers (add cash registers) when the are recording values. The value of the naira, like the police, will always be the same!

Anointed:

It's obvious that a lot of people stop at reading the headlines and then go ahead to criticize. The fact that we have spent a large amount of money on changing the naira notes does not mean we can't implement a decent policy. I've always said it that the economy is too cash - sensitive. I worked as a teller in a bank for a year where people come in to withdraw 1 million naira in cash. People need so much cash on them for simple transactions. that's why ist's impossible for us to use coins. No vending machines, no phone booths, no one naira candies. all we know is "3 for 5 naira"

The logic is simple. Come 1 aug 2008, #500 becomes #5. Therefore whatever was #500 e.g recharge card becomes #5. and for those of you who think the coins cannot work in our economy, think again. whatever was #5 e.g pure water will become 5kobo which is a coin.

Nigerians, embrace this. The value of our naira is becoming ridiculous. Those collectors of #20 (e.g agberos) will have to look for another profession unless they love coins because 20naira will become 20kobo unless you're generous enough to let them have a whole naira note.

the policy is not devaluation or revaluation. it's redenomination. read it up in economic text books before criticizing it dear Nairaland users. It's a good policy. if it does not work, it's not Soludo's fault. It's your fault.

The exchange rate is also the same thing. it also makes for easier and more sensible camparison. think of our banks declaring billions of naira in profit and what it translates to in dollars.

May your "oil" never run dry.

N20 will be equivalent of 20k
The nigerian police should brace up for the challenge.

I am not surprised that this new idea is being misinterpreted and criticised by those i expect to first understand the concept before prophesising its failure. I am disappointed in seun and some other people who have not found out the economic implication of the plan.

My own opinion on the issue is to wait and hear from analysts that understand the economic benefits viz a viz its implication via the dollar.


I will hold my comments

edetcnn:

This pure nonsense and a cheap shot at renewed economic "gurualization" on Soludo's part. Many people are wont to follow blindly on the premise that his initial economic measures were a success (I don't dispute that). But truth be told. remove one thousand zeros or not without real measures to shore up the economy and the standard of living, what the CBN helmsman is proposing is merely redecimalization i.e a change in the number of zeros that is used in tabulating figures without ANY CHANGE IN THE REAL VALUE OF SUCH FIGURES. For want of something more apt to equate it with, Think about the change of the color of the police uniform, and the fact that it is only the upper cadre of the force that has access to the new uniform; In the same vein, the removal of zeros (ehen, that is what it is!) from the naira will only be useful to accountants and cashiers (add cash registers) when the are recording values. The value of the naira, like the police, will always be the same!

The whole effect of the redenomination is not instant. it is something that will make more sense in the long run. it is also more of an economic concept. It's to affect pricing in the long run which is very key to inflation. If after production your good is to be priced at 3.75, you won't round it up to 5.00, you'll sell it at 3.75.  and if there's a unit increase in the price of your good. that unit increase, say a kobo, can stay at what it is. it does not have to be rounded up there by pushing the prices of goods and services higher. this means that in the long run, inflation is being strategically slowed down. you cannot run away from not spending coins now because it will make up about 50% of the economy's currency. this is just one of the pros. there's more to the removal of zeroes mr edetcnn. read between the lines. pretend you know a bit of basic economics and do a bit of economic forecasting.

azorjiu:

N20 will be equivalent of 20k
The nigerian police should brace up for the challenge.

and if they and the agbero refuse, do you have any choice?

My own opinion on the issue is to wait and hear from analysts that understand the economic benefits viz a viz its implication via the dollar.

if you read the papers, some 'experts' also have issues with this policy

azorjiu:

N20 will be equivalent of 20k
The nigerian police should brace up for the challenge.

20kobo at checkpoints? Don't worry they will be ready

Anointed:

The whole effect of the redenomination is not instant. it is something that will make more sense in the long run. it is also more of an economic concept. It's to affect pricing in the long run which is very key to inflation. If after production your good is to be priced at 3.75, you won't round it up to 5.00, you'll sell it at 3.75. and if there's a unit increase in the price of your good. that unit increase, say a kobo, can stay at what it is. it does not have to be rounded up there by pushing the prices of goods and services higher. this means that in the long run, inflation is being strategically slowed down. you cannot run away from not spending coins now because it will make up about 50% of the economy's currency. this is just one of the pros. there's more to the removal of zeroes mr edetcnn. read between the lines. pretend you know a bit of basic economics and do a bit of economic forecasting.

I totally agree with you, may be that explains the earlier puzzle I put up.

I wonder why some of us are so pesimistic
Given Soludo's antecedents, I back 100%
I ve always expected it at d back of my mind
Mind U pple, our little broda Ghana, has done same
I think thatz the next phase of our economy's economic evolution
Lets collectively try and ensure it works
Hey afterall, when Soludo came wit the recapitalization stuff
They all said it was impossible even wit the time range then
Some so called seasoned bankers thought the guy was crazy
Alot of young graduates 2day have Soludo to thank because of their jobs
Comon pple
See the light

How will this affect my stocks? does this mean my Dangote stock thats currently 39Naira would now be 39Kobo? how about land prices would 1million Naira land now be sold for 100k?

why the heck do people keep making silly comparisons with 'our little brother' Ghana?

Is it now a thing of pride/national prestige or competition to re-denominate your currency?

there is no light to be seen from this, the fact is that the the value of a single cedi had grossly dropped to the point where you needed thousands of cedis just to buy a bottle of coke - in such an economy with extremely huge physical currency transactions for even the smallest purchase, currency re-denomination is necessary and essential. We are NOT in that situation so there is no need to copy or 'be like' Ghana

this is a completely different ball game from recapitalization, this involves each and every naira note being spent from Kaura-Namoda to Kaiama, from Maiduguri to Molete. Total, complete currency change out is a messy and difficult process, if poorly managed, will distort the economy for MONTHS and cause severe loss of productivity. those are the issues meriting discussion, not whether Ghana with its tiny population compared to ours did it or not,

well,this sound to be a very nice policy,but my problem with Nigeria which has been bothering me for d past years is d 'CONTINUITY', this is a country where everything is politized.lets wait and see,

will there be N1 notes or it will be coins? i guess bank will have to re-programme all their ATMs

@anointed
well said bro,well said!!!


This is absolutely a great steppin stone to lovely thingz to cum to our country.y'all shud stop thinkin bout the fact dat billionaires wud become millionaires nd all dat, itz great.if u had a thousand naira,it'd become #100.nd itz nt lyk itz only u dat'd be lyk dat.errone wud be in d same shoes.the amount yu buy would also be low so itz not lyk wen u buy,u'd pay more.so d currency wud be revaluated nd not devaluated.devaluation is wen d value of currency is low compared to anoda currency.so we dnt hav to bite our tongues before exchangin for a dollar.this way,exports would be more expensive than imports.imports would become cheaper cos u dont hav to spend more to get some.and u know how it'd improve our standard of living?when importers bring in goods at cheaper prices,it is only fair dat they sell at cheaper prices too.dat way,the cost of living(i.e the amount goods and services are procured),would reduce thus increasin the standard of living(the ease at which individuals can meet their needs in a country), so yu see everyone,ITS GOOD NEWS,

Mariory:

20kobo at checkpoints? Don't worry they will be ready

when the policemen take 20kobo,they can still buy four biscuits(example)as they use to wen they had #20.so for God's sake,itz still the same.the 20kobo nd the #20 wud well be the same,

You know. this is the best news concerning nigeria i have heard in years.

Soludo proves to be the only man that uses his education among the govt crew.

As an economic analyst, this is a positive step into taking nigeria to higher places.

Kudos Soludo

Dear Annointed, u see,  d problem with u is that like most of us (before we become wiser) is that we belive in the infallibility of "gurus" like Soludo. I hate d masking of simple concepts in academic jargon. Forget decimalization or denomination, and all other "tions; and honestly answer this question: will the N100 today that will become N1 tomorrow buy more than what today#100 will buy? I don't even what to draw your attention to the(do I need to Put "Obscene cost" because "Huge" will be an understatement" Implications of effecting this new regime. Abi you want tell me say your logic is based on pretending that you you know basic economics? ( I dey joke o).

Good News!

Let him do what he thinks will work. If it doesn't work, well too bad, but atleast he tried. But if it does work, we can move to doing other things to strenghten our economy.

By "work', i mean if the transition is smooth.

And if we successfully strenghten our economy, do you know what that means? Naira will then be of more value than dollar on a "N1 = $1" basis!

The thing we should be concerned about is how to improve our economy. If you have a genuine opinion or way, I'm sure Soludo would be glad to hear you out.