This will cost we nigerians a great deal but we have to adjust to it if we want our country to change for the better.

It's a good idea and will definitely pay off in the long run! But it is coming rather too quickly on the heels of the introduction of the new currency notes introduced not long ago moreso as it costs a lot to print these notes. Thisshould have been done earlier on rather than the introduction of new notes and currency denominations or didn't they think of this before

I think its redecimalisation, not redenomination(which implies currency name change- like when we changed from pounds and shillings to Naira and Kobo).

With all the points being made on this forum and everywhere else,somebody is yet to explain who will regulate the prices in the informal sector of the economy-the landlords,traders,transport workers etc.People keep saying every single product will cost exactly 100% less,i don,t think that is feasible.e.g a landlord who used to collect 250,000/y as rent might just start collecting 2,800 instead of 2,500.Who will stop him(meanwhile that 300 is 30,000 of today).I,m very skeptical about this policy.I,ll be back on this thread a year from now to see the effect on nairalanders.Hope nobody will be singing a different tune then.

a lot have been said up in here about the re-denomination of the naira.
i'm a lay man and not an economist but i'm also a business man who deals with the every day realities of life in the nigerian business environment.

prof soludo has been hailed as a guru and has world wide acclaim for his consolidation of the nigerian banking sector.
that is a good sign but one we should be careful about."tread carefully lest you fall"

if i might ask, of what benefit has the consolidation of the money deposit banks been to the nigerian economy?
1. you can be sure that your deposits are relatively safe as in the banks are not likely to fail with the N25billion. i use the term relatively because    we all know that banks like unity bank is just a sham.recently the board of directors of one of the banks was changed. are you still sure your money is %100 safe there?
2. if you have a proposal to start a fish pond or any other business that will require about N1million and you dont have any collateral.which of the commercial banks will be ready to give you a loan for that amount? what does that tell you about the fate of small & medium scale industries in the country which are necessary for economic growth of any nation?

coming around to the issue at hand now.so many people are being sentimental about how life was in 1985, some are carried away by the accolades given to soludo world wide so are ready to jump into the band wagon of N1.26 TO $1.00
1. The Japanese yen exchanges for 118yen to the US dollar and the Naira at N126 to $1.00 which country has a stronger,better economy?
2. have you heard of power outage in japan? how many hours of electricity do you have in nigeria at any given day?
3. do we manufacture cars in nigeria? mitsubishi,honda,toyota,suzuki,mazda,subaru,yamasaki etc are from which country?
4. do we have any made in nigeria(not assembled in nigeria) computer or electronics firm? think sony,sharp,panasonic etc no be japan?
i can go on and on and we all know the answers.why isn't japan re-denominating the yen so it would be at 1.18yen to $1.00?

coming back home to what effect the re-denomination would have on the nigerian economy which i believe is what is paramount and not sentimentality as expressed by the estemmed CBN governor and a lot of nigerians as expressed by the poll carried out here.
1. will it reduce inflation?
2. will it increase the value of the naira against that of the dollar or other world currencies?
3. will it bring about employment or reduce unemployment?
4. some said it will increase the standard of living.my question is how?
5. will it build refineries,make NEPA mor efficient,repair our roads or bring back the rail way?
6. will it increase agricultural imput?
7. will it increase exportation of nigerian goods and reduce importation of foreign goods?

like some one said, what soludo is doing is superficial or i think a better term to use is cosmetic.
he would certainly recieve accolades from the international community(IMF,Paris club,world bank) again if he succeeds because they know he is not adding value to the nigerian economy. instead he is adding value to their own economies by spending millions of dollar printing our currency anew in their countries after spending billions of naira on the new 5,10,20 & 50 Naira notes  and coins early this year. i dont think the N1,000 notes is up to 3 years old.

what should be the focus of president yar'adua now is how to industrialize nigeria. provide an enabling environment for industries to thrive in the country. build refineries so we dont use our foreign reserves in importing petroleum but even make more money exporting not just crude oil but refined petroleum. he should work on the power sector and even if we have to build a nuclear power plant, lets go ahead. lack of electricity is what has killed most of our industries. he should dualise our road network.from lagos to maiduguri, calabar to kano, benin to sokoto.we should have auto bahns in nigeria. he should revive the railway sector that was killed by dangote.
and something very urgent, he should get rid of soludo who is likely to cause more chaos in the country if he is left as CBN governor.

what soludo is seeking now is another term as governor and is prepared to make as much noise as possible to look relevant. recently he has been trying to sell his fss2020 program to the country and went as far as printing a special edition on the program and giving it out for free in tell magazine(how much was spent on that?)

soludo may have certain solutions to the many problems of naija but certainly, he can't do it alone. i personally do not believe that re-denominating or re-decimaling of the naira will solve anything.

let us look at our production sector, is anything significant happening there to strenghten the naira? to me, this is just another cheap political gimick! of the present administration to remove the minds of harpless nigerians from the real issues of poor infrastructural development. tell them to give us electricity, roads, water, working hospitals etc rather than scrathing the surface.

just imagine my monthly salary of 36,000 naira changing to a miserable 360 naira a month! what if prices do not change by the same factor in the unregulated but dominant informal sector. i swear, somebody go die o

Quoting Tushman - "Yaradua should dualize our road networks from Lagos to Maiduguri, Calabar to Kano, Benin to Sokoto."

Old boy, if you become the President of this country you will marginalize South East. I did not see dualisation of any road in the South East in your post and you didn’t even add etc to show others remain. Na wah for you o!

[b]looks like it will not happen afterall, soludo did not let his masters know b4 announcing to the whole world, he has been summoned[/size][size=8pt][size=8pt][/size]

So, lu, do, carry on jare i strongle belive in you.Dont mind some nigerians with thesame mouth there are critiseing they will use it and praise you, CONGRAT

This currency change will actually better reveal (not change) the true poverty stricken conditions in Nigeria in the League of Nations.
What I mean is if the average Nigerian graduate earns about N4800, a year when compared to other nations outside, take the Uk for instance where the currency will still be much stronger than ours. Minimum wage earners earn as much as E18,000 (pounds not Euro) a year, while Graduates do a lot better than that.

I wonder how much our multinationals will be willing to pay expatriate personnel in Naira equivalent.
We is some poor as mutha8#$$@@%%      shut ur mouth

[size=18pt]CON-SOLUDATION is the opposite of CONSOLIDATION
Please Define SOLUDORIZATION: It is the process of converting 1000 Naira to 1Naira[/size]

Proshare Articles
How The CBN Announcement Will Affect You
Posted Wednesday, August 15, 2007



How will the new monetary regime rolled out by the CBN 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’s billionaires may be downgraded to millionaires, its millionaires will now occupy the ‘thounsandnaire’ spot, while the latter will now become ‘hundrednaires.’ 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’s 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’s 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. - Thisday

i will keep my finger crossed until then, Can't really be pessimistic about the new concept since soludo has a reputable anticidence in nigeria banking sector.

ebos,
Old boy, if you become the President of this country you will marginalize South East. I did not see dualisation of any road in the South East in your post and you didn’t even add etc to show others remain. Na wah for you o!

abeg no vex, i was taking the roads from the coastal cities to the extreme north. i'm not sure any eastern town is by the coast

I feel it is a good concept though. But we really need to cut a good niche about our economy in order for the whole process not to be fruitless.

Of the numerous advantages, i specifically see the following from the micro perspective

1) There will be more food for us in Nigeria, cos all the unnecessary export of Garri and the basic food stuff to earn USD will become unattractive, so local market will have more food stuff
2)Cost of production will reduce and other things being equal, it should reduce the prices of commodities in the market


However, my greatest question is with salary earners, are the salaries going to be reduced as they reduce the zeros in the naira. if yes it means someone earning NGN475,000 now should see his salary as NGN4,000 by then. and if no, such person will see himself as earning USD400, 000 by then. This will make nigeria the highest income earners in the world, i laugh.
Can people give their understanding from this perspective

Please tell us more info that we need to know, all the brilliant people of Nairaland

swiftycool:

This currency change will actually better reveal (not change) the true poverty stricken conditions in Nigeria in the League of Nations.
What I mean is if the average Nigerian graduate earns about N4800, a year when compared to other nations outside, take the Uk for instance where the currency will still be much stronger than ours. Minimum wage earners earn as much as E18,000 (pounds not Euro) a year, while Graduates do a lot better than that.

Mr. Swiftcool, could please confirm your source of the above highlighted information please?  

i think this is pointless. i understand what soludo is trying to do but the cost of doing all this is not exactly what needs to be on the top of naijas priority. like has been said earlier, the yen is 118 to 1 dollar and they aint redenominating.
and it isnt as bad as the cedis whose conversion is simply absurd so there really is no need for this right now with so many other pressing issues

swiftycool:

This currency change will actually better reveal (not change) the true poverty stricken conditions in Nigeria in the League of Nations.
What I mean is if the average Nigerian graduate earns about N4800, a year when compared to other nations outside, take the Uk for instance where the currency will still be much stronger than ours. Minimum wage earners earn as much as E18,000 (pounds not Euro) a year, while Graduates do a lot better than that.

oh boy, i must be in the wrong country

[quote:dezzle]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


[size=18pt]se na u go force me make i take N4190.00 abi na soludo. The problem with this kind of radical monetry policy is how would you force the informal or black market economy to conform with the new rates.[/size]

I THINK THIS WILL ENCOURAGE FOREIGN INVESTORS THEREBY INCREASING EMPLOYMENT OPPRTUNITY IN OUR ECONOMY, AND AS WE ALREADY KNOW THAT AN ECONOMY WITH LARGE NUMBER OF FOREIGN INVESTORS IS PRONE TO ECONOMIC GROWTH.

SECONDLY, IF THIS POLICY IS EFFECTIVELY IMPLEMENTED, IT MAY LEAD TO PRICE STABILITY I.E. PRICE WILL REMAIN STABLE IN NIGERIA SINCE INCREASE IN FOREIGN INVESTMENT WILL LEAD TO INCREASE IN PRODUCTION OF OUR GOODS AND SERVICES THEREBY CAUSING DOWNFALL IN THE PRICES OF THE PRODUCT PRODUCED.

ANY REFUTATION WITH PROOVE PLEASE!!

I am not an Economist and sometimes, i get confused when pple start talking about all these policise and all.
I want to share my own thot about this phenomenon, excuse me if i might seem shallow or naive.
With the new "value" to the currency, I am sure that there will be a concommitant drop in the value of consumables we always buy with our monies. For black market operators, the viability of their business is on the verge of dying because they will be forced to conform to the new regime.
my question is this. Can anyone please tell me the downside to this proposed development cos honestly, i see it as a good thing really cos we will have more value on our currency but am sure there is a bitter taste to it as well.
Cheers

The CBN Gorvernor Charles Soludo who is planing and preparing to reduces the foreign money in other to let our naira have value in capital market. i support his courage and i pray that may God will empower him to suceed. So that we nigerians we stay in our country not to be runing here and there for Dollars. More so the nigerians dollar flasher at the party they will put an end to their madness.[/b]

e b like say dis people are confused.when did they change to new naira notes that they are now talking rubbish.

but e b like say dis new stuff go work 4 our economy.make we stilld ey look sha.

notin do us

tola babe  Re: Naira To Be Re-Denominated
« #250 on: Today at 12:02:45 PM »  

--------------------------------------------------------------------------------
I THINK THIS WILL ENCOURAGE FOREIGN INVESTORS THEREBY INCREASING EMPLOYMENT OPPRTUNITY IN OUR ECONOMY, AND AS WE ALREADY KNOW THAT AN ECONOMY WITH LARGE NUMBER OF FOREIGN INVESTORS IS PRONE TO ECONOMIC GROWTH.

SECONDLY, IF THIS POLICY IS EFFECTIVELY IMPLEMENTED, IT MAY LEAD TO PRICE STABILITY I.E. PRICE WILL REMAIN STABLE IN NIGERIA SINCE INCREASE IN FOREIGN INVESTMENT WILL LEAD TO INCREASE IN PRODUCTION OF OUR GOODS AND SERVICES THEREBY CAUSING DOWNFALL IN THE PRICES OF THE PRODUCT PRODUCED.

ANY REFUTATION WITH PROOVE PLEASE!!

my questions to you.
- how will it increase or encourage foreign imvestors?
- how will it lead to price stability?
the reasons why there is decreased production in nigeria is because of factors such as irregular power supply, lack of pipe borne water, official corruption which leads to high cost of production which leads to nigerian products being more expensive than than foreign products of the same quality or even better quality.
chinese currency exchanges for over a 100 to the dollar.recently, the US government was trying to force them to increase the value of their currency so they could sell less products to the western world and they refused threatning to sell all their dollar reserves which could crash the US economy.
china because of their high exportation are being begged to increase the value of their currency.we are not even increasing the value of our currency,we are just removing 2 decimal points.of what use is that?

Naira redomination will only make the naira acceptable in foreign/currency exchange. Agreed.
My doubt is,if the same problem/economic crisis that plunged the naira downward continues to linger, what happens? do we redominate again?
Redomination will not affect the average nigerian.
Will redomination increase foreign investors when theres still problem in the niger delta? how will redomination help if there's still no power supply, will redomination increase our agricultural produce or increse industralization? will redomination put regular food on the table? redomination will not improve our life in anyway.
I think Nigeria should take the bull by the horn, improved economy will appreciate the value of the naira and better the life of the average nigerian.
Our currency has been abit stable and if emphasies are made to better the economy, the naira will 'smile'

Even a fool knows it is goin to improve our economy,

[size=14pt]Case of re-denomination - Ghanian view see extractsn: [/size]

In an article titled “Does the new Ghana Cedi have a higher value than the US dollar?” (ghanaweb, August 9, 2007), I argued that the redenomination of the cedi had no effect on its purchasing power. My inability to acknowledge a very trivial fact may have led some commentators to miss the substantive point of my article. Based on public and private reaction to my article and the interest generated thereof, I have decided to write this follow-up article.

In this article, I shall argue that there are trivial facts and there are important issues and that we should focus on the latter. Indeed, the focus of my previous article was on an important issue (i.e., what is the effect of redenomination on the purchasing power of the cedi?).

Let me begin with an analogy. A mile is longer than a kilometer. Before Ghana switched from the imperial system to the metric system, the distance from Accra to Nsawam was 22 miles; actually it still is, if you are an American. After the switch, the distance was changed to approximately 35 kilometers. Did that change the cost of traveling from Accra to Nsawam? Did it increase or decrease the physical distance from Accra to Nsawam? No, it did not. So while it is a fact that a mile is longer than a kilometer, it is a very trivial and unimportant fact because it has no effect on the much more important issue of whether the distance from Accra to Nsawam is longer or shorter. Similarly, while it is true that we have relabeled our currency to make it worth more than the dollar in Ghana, it is, nevertheless, a very trivial fact because it has no effect on the more important issue of whether the stock of goods and services has changed. As explained in my previous article, it has no effect on real income. Just as measuring distance in miles or kilometers will not change the cost of travel, so will measuring all incomes and prices in old cedi or new cedi have no effect on real variables (e.g., the real income of the Ghanaians) unless, as explained in my previous article, people suffer from the psychological framing effect known as money illusion.

Indeed, if redenomination could have suddenly increased the true value of our currency, then the governor of the Bank of Ghana, Dr. Paul Acquah, must be fired immediately for gross incompetence. He could have done much better by adding, at least, one more zero to the new cedi-old cedi conversion rate. For example, the current exchange rate of the new Ghana cedi to the dollar is approximately 0.95 Ghana cedi = $1 or 1 Ghana cedi = $1.05. So if Paul Acquah had set the new cedi-old cedi conversion rate at 1 Ghana cedi = 100,000 cedis instead of 1 Ghana cedi = 10,000 cedis, the exchange rate today would have been approximately 1 Ghana cedi = $10.50 instead of 1 Ghana cedi = $1.05. Should he be fired for not adding an extra $10.5 – $1.05 = $9.45 to the value of our currency? No!! But why not? Because any such increase in the value of the cedi is spurious. It is artificial. The redenomination of the cedi does not affect what we really care about (i.e., real income).

The reader will notice that in international financial news, the focus is not on one whether the pound has a higher value than the yuan or the dollar has a higher value than the yen and vice versa. What one typically hears is ‘the dollar weakened against the yen’, ‘the cedi fell in value against the US dollar’, ‘the pound opened weaker today, losing ground against all the major currencies’, ‘the dollar has been depreciating against the euro for weeks’, etc. If the pound has increased in value relative to the dollar, that is not the same as saying that the pound has a higher value than the dollar. It only means that the value of the pound today is higher than what it was yesterday.

Given that any domestic currency (e.g., the cedi) can be relabeled (i.e., redenominated) such that one unit of the new currency can buy more than one unit of a foreign currency (e.g., the dollar), it is meaningless to use this as the basis for comparing the value of one currency to another. Therefore, if one Ghana cedi can buy more than one dollar in Ghana, it is nothing to be excited about in any meaningful sense nor should this be used as the basis for judging the inherent strength of the cedi. A meaningful comparison is the value of the Ghana cedi today relative to its value tomorrow. Suppose that today, the exchange rate is 0.95 Ghana cedi = $1 or 1 Ghana cedi = $1.05. If the exchange rate tomorrow is 0.9 Ghana cedi = $1, we can say that the Ghana cedi has increased in value relative to the dollar.

When we talk about the relative levels of inter-country macroeconomic variables, we focus on things like the per capita GDP, unemployment rate, rate of inflation, etc. So, for example, it is meaningful to say that the USA’s per capita GDP is higher than Ghana’s per capita GDP. Similarly, a comparison between the unemployment rates in Ghana and the USA is meaningful. In contrast, we do not focus on the relative values of the currencies because that is actually meaningless (i.e., a trivial fact). What is meaningful is the movement over time in the relative values of these currencies. For example, what matters is how the new Ghana cedi appreciates or depreciates (in value) over time which is ultimately a reflection of the changes in the real value of the goods and services (i.e., GDP) that Ghana produces. Therefore, we are back to square one: GDP.

As a trivial and vacuous statement of fact stemming from relabeling the cedi, we could amuse ourselves by saying that the Ghana cedi has a higher value than the US dollar in Ghana. But in matters as serious as nation-building, we should not focus on simplistic and trivial statements that tell us nothing about economic fundamentals. A meaningful aspect of the redenomination exercise is the fact that it reduces transactions costs and eliminates the inconvenience of carrying money in plastic bags. If at all, this is what we should focus on and indeed, the Bank of Ghana has made this point clearly and admirably. But ultimately, we have to focus on increasing the productive capacity of our dear nation. With sound macro-economic management and good leadership, the redenomination of the cedi will be a step in the right direction.

*The author, J. Atsu Amegashie, teaches economics at the University of Guelph, Canada.

I think this re- denomination thing is crap.We should work towards improving the economy and not trying to compete with developed countries like the u.s.[/color][color=#006600][color=#770077][/color]

florababy2:

I think this re- denomination thing is crap.We should work towards improving the economy and not trying to compete with developed countries like the u.s.[/color][color=#006600][color=#770077][/color]

actually thats the motive behind the redenomination
-to improve our economy.


its all too soon to tell, i just think it is wise for peeps that are shareholders or have stock in companies should keep a close eye on the trends.so as not to find themselves at the losing end paradventure there is a crash in stock prices.

certain economists are of the view that the process of re denomination would have little or no PHYSICAL effect on the nigerian economy.because the value of the naira with regards to foreign currencys wouldnt be affected

but the fact is this, no one seems to be sure of anything now, too many conflicting opinions from renowned economist, hence.
like the afrobeat icon said in his song,

we must SIDON LOOK.


god bless naija.

florababy2:

I think this re- denomination thing is crap.We should work towards improving the economy and not trying to compete with developed countries like the u.s.[/color][color=#006600][color=#770077][/color]

And how do you improve your economy without making it competitive with that of the West? Are you going to wait for "Fair Trade"?
Plus I do not believe the move to 'free' the N is so as to compete with the USD.

one thing i know is that to improve your currency, you have to do something similar to what is been done in most asian countries. i.e. improve production capacity, transportation(trains and stuff that are cheap means of going about), electricity e.t.c. if this is done things will take its course and there will be no hardships in the country.
even with the redomination, things will still remain how they were in the country (difficult and corrupt) except maybe we will all be ringing bells in our pockets with the so many coins that will be made available to the populace. lmao