by Isi Esene
The governor of the Central Bank of Nigeria (CBN), Sanusi Lamido Sanusi, yesterday stood in defence of the apex bank’s currency review policy saying the widespread arguments against it are not based on sound economic logic.
Reports say he also took on the former president, Olusegun Obasanjo, describing him as “a good farmer but a bad economist”. Obasanjo was recently quoted to have said the planned introduction of the N5,000 note would precipitate inflationary trends and cause further hardship for Nigerians.
Sanusi, who said this at the 6th Annual Conference of the Chartered Institute of Bankers of Nigeria (CIBN) in Abuja expressed his shock at comments attributed to the former president noting that most of the high denomination currency in circulation today was introduced during his administration.
He said:
“This is an interesting country because my uncle or my father, our former head of state, General Obasanjo, you know he is a very successful farmer but he is a very bad economist and he stands up and says that this higher denomination will cause inflation and improve hardship. General Obasanjo did N20, he did N100, N200, N500 and N1,000. He introduced more higher denominations in Nigeria than any former head of state.
“Obasanjo did N100 note in 1999, he did N200 in 2000, he did N500 two years later and in that period, inflation was coming down because it was accompanied by prudent fiscal and monetary policy,” he explained.”
The CBN governor posited that the high currency introduction would lead to efficiency of the country’s payment system since the policy is targeted at a small number of Nigerians handling huge cash.
He explained the rationale behind the planned re-introduction of coins into the financial system saying it is cost effective given that paper currencies need to be replaced regularly unlike coins.
According to him;
“The CBN is working on a hypothesis that the reason Nigerians do not accept the coins is because they couldn’t buy anything with them and maybe if you give them coins that have value as a medium of exchange, they would accept them.”
The CBN recently announced its planned currency review which would see the introduction of the N5, N10, and N20 coins and the N5,000 high denomination note, a decision which has continued to attract widespread opposition from various commentators.
what other sound economic logic do u require other than d reality of the market? we base our arguments too often on theories that don't match up with our situation. the major market participants have stated that they would reject the new currency! only a foolish economics student would go ahead with such rejected policy only to blame his tutor when his expectations go wrong…Am yet to get d point sanusi was tryng to make regarding OBJ? are they in competition of who made the highest currency? these dudes just don't knw when to crack a joke… and leave OBJ to explain d prudence of his fiscal and monetary policies, after-all u weren't involved.