Senate vows to stop N5000 note

The National Assembly on Monday said it would stop the Central Bank of Nigeria from introducing its proposed N5, 000 note.

 

While the Senate said only a major currency crisis could warrant a review as proposed by the CBN governor, Mallam Lamido Sanusi, the House of Representatives said the proposed review as far as it was concerned did not exist.

 

Sanusi had announced last Thursday the CBN’s proposal to roll out new N5,000 notes early next year and to convert to coins the present N5, N10 and N20 notes. There are already 50k, N1, and N2 coins in circulation which Nigerians had largely rejected.

 

Addressing journalists in Abuja, Chairman, Senate Committee on Banking, Insurance and other Financial Institutions, Senator Bassey Edet Otu, said that it had become imperative for Senate to put a halt to the new CBN arrangement because a project of this kind required parliamentary approval, adding that the upper legislative chamber was never briefed prior to the announcement of the soon-to-be introduced note.

“As a committee, we should do our work. This morning there is a burning issue that is going on in our country and there is need for us, as a committee, to comment on this topical issue. I am the chairman of the Senate Committee on Banking, Currency and other financial institutions.

“We have also read in the papers just like you about the currency restructuring that the CBN embarked on. I believe that a project of this nature requires parliamentary approval because there are numerous and fiscal implications on the entire economy,” Senator Otu said.

The CBN governor had on Thursday, last week, announced the introduction of a new currency series where the existing denominations of N50, N100, N200, N500 and N1,000 will be redesigned and a new note of N5,000 introduced.

According to Sanusi, the front face of the new highest denomination will be adorned with the pictures of three women activists – late Margaret Ekpo, Funmilayo Kuti and Hajiya Gambo Sawaba, while the back side would have the National Assembly structure.

Speaking further, Senator Otu warned the CBN to be very careful in taking some decisions that would worsen the nation’s economy and send wrong signal that Nigeria’s currency was valueless. He stressed that the country did not deserve this policy since the nation was not in a major crisis.

According to him, “this type of action is only taken where there is a major crisis and the CBN must be very careful in order not to send a wrong signal or message to households, domestic sector and even the external ones that the Nigerian currency is valueless, which I believe it is definitely not, and that for every unit of value they need to carry a large quantity of cash.

“The CBN in 2008 and 2009 came up with a proposal to re-denominate the currency, that was even to take off the zeroes. This was just 2008 and 2009 and here we are in 2012 we are seeing a kind of policy somersault even though we understand the dynamics of the sector very well. I believe that we have to be well briefed on this.

“Also in 2005, the CBN undertook a major currency restructuring which ran into billions of Naira.
“Till date, a proper value has not been done to know its costs to the Nigerian tax payers and the extent of the benefits and in that 2005 coinage, I think it did not work at all because both the goldsmiths and the blacksmiths converted the coins to moulding bangles, earrings, etc.

“So, we believe that the coinage works very well where there is infrastructure to take it like a half, probably like a parking where you go and put it, etc. We have not developed that real basic infrastructure and those coins, most of them, are nowhere really to be found.

“The CBN will have to prove that the policy is not a clear contradiction or at variance with cashless society, which they are even yet to justify and whether this is the popular economic way to go. We are asking and we are sending a letter to them to stop all further actions on this until the senate of the Federal Republic is properly briefed.”

Asked if the CBN informed the Senate prior to the decision, Senator Otu said: “Well, we have not been properly briefed yet, so I would not know. We do not know the reason for it, even though at the moment we do know that inflation is a problem, but I don’t think that they have used all the mechanisms to tackle it and it is not really out of hands.

“There has not been any meeting with the CBN yet. This is a major policy issue and there is no way this kind of thing can go on without us knowing everything about the details in order to know how it will affect the people of Nigeria.”

On what section of the constitution the Senate was relying on, he said: “We are not really going to rely on laws per se, what we are trying to do here is what is best for the Nigerian people. The Senate is not really against the independence of the CBN, but what we want in place is proper check and that there should be checks and balances in all these things that we do.

“So, I believe that at some point we will be able to sit down together and look at the merits and demerits, but till date we do not know anything about it and we do not know what the people stand to gain and until that is properly put through, we say everything about it must stop.”