The Senate this evening (Monday August 27th) directed the Central Bank of Nigeria to halt plans to introduce a single N5000 note with immediate effect. The Senate, in a press conference in Abuja today, said that CBN had no right to embark on a matter that has ‘far reaching implication on Nigeria and Nigerians’ without first consulting the Senate and other stakeholders, adding that “until this is done the CBN must stop action.”
The following statement was issued by the Chairman, Senate Committee on Banking, Currency, Insurance and other Financial Institutions, Senator Bassey Otu.
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.
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. 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 have seen 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 it’s costs to the Nigerian taxpayers and the extent of the benefits and in that 2005 coinage, I think it did not work at all because both the goldsmith and the blacksmith converted the coins to molding bangles, earrings and so on 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. So, 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.
So, 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.