N5000: Senate panel’s order to CBN triggers debate

Nigerians on Monday expressed mixed feelings over the directive of the Senate Committee on Banking, Insurance and other Financial Institutions to CBN to suspend the introduction of N5,000 note.

While some Nigerians hailed the introduction as within the mandate of Central Bank of Nigeria (CBN), others argued that the apex bank had overstepped its bounds.

The committee on Monday issued the directive to suspend the policy till the Senate was “properly briefed’’.

In his reaction, President of the Nigerian Economic Society, Prof Akin Iwayemi, said only a presidential directive could suspend effectively the implementation of the CBN proposal.

He observed that the law establishing CBN empowers it to undertake currency restructuring, in addition to issuance and management of the legal tender.

On whether the Senate overstepped its bounds, Iwayemi said, “the National Assembly has prerogative to make statements on their mandate, so I cannot comment on that.

“But the CBN Act gives it the mandate that covers even this currency re-denomination except the Presidency stops it,’’ he told NAN.

On suggestions that the proposed re-denomination would lead to inflation, Iwayemi said “many people don’t understand the fundamentals of inflation and they ascribe so many things to the causal factors of inflation.

“I know that there are peculiarities in the Nigeria system that if you change denomination, some of our market women will also increase their prices.

“If you do not suffer from money illusion, denomination per se, should not really cause too much of a problem’’.

Iwayemi, however, conceded that the apprehension by Nigerians was not unfounded given the CBN policy on “Cashless Nigeria” and e-Banking.

“A lot of people have questioned, why N5,000 and what do you need it for, particularly in a regime that claims it wants to emphasise e-banking? So, one could question why N5,000.

“Until the CBN gives us the full reasons, because if you do not know the full story you are likely to make statements that may not be that accurate,’’ Iwayemi.

Mr Seun Fogbonjaiye, a lecturer of Economics at the University of Ilorin, said that the Senate should not have stopped the CBN from exercising one of its core mandates.

“I do not support the Senate’s decision because the 5,000 note will reduce accounting errors and also limit the risk of moving around with loads of cash,’’ he said.

However, Mr. Chika Nwaozuzu, an Abuja-based public affairs analyst, said many Nigerians had expressed concern that the N5,000 note would defeat the aim of the cashless society introduced by the apex bank.

He also noted that the introduction of the new note and its proposed coins currency re-denomination would portend grave implications for the economy.

He, however, expressed concern on whether the CBN would comply with the directive of the Senate committee.

Nwaozuzu told NAN by telephone in Abuja that there had been several instances when `such directives’ from the National Assembly were treated with levity by the Executive arm of Government.

Dr Adekunle Olokun, an economist, pointed out that the CBN, in spite of having the power to restructure the currency, did not carry the Senate along in its decisions.

“A proposal should have been presented before the Senate as regards the introduction of the new currency denomination.

“If this had been done, the Senate would not have abruptly placed an embargo on the CBN from carrying out its plan.

“The use of the new currency will cause inflation. The introduction of the new currency will encourage carrying of cash around.

“Indeed this is a contradiction from the ‘cashless Nigeria’ that the apex bank declared recently” Olokun, a former CBN employee, told NAN on telephone. (NAN)