Opinion - CBN Governor Sanusi Lamido Sanusi's Trap By Kingsley Omose

The announcement by Sanusi Lamido Sanusi, governor of the Central Bank of Nigeria (CBN), that the CBN is to introduce a new N5,000 note and ...

The announcement by Sanusi Lamido Sanusi, governor of the Central Bank of Nigeria (CBN), that the CBN is to introduce a new N5,000 note and make changes to the security features in all the existing denominations has been attracting many negative comments.
The Nigerian Senate Committee on Banking coming out with a directive to the CBN to halt the policy, while the House of Representatives has summoned Sanusi to come and brief it further on the move.
To begin with, to introduce a cashless policy limiting individual cash withdrawal or lodgement in banks to N150,000, and then initiate changes in features of all currencies in circulation while introducing a new N5,000 note means a deadline will be given within which hoarders of cash outside the banking system have to trade their old currencies for the new ones, which they can only do through banks, and the cashless policy will be waiting for them. Sanusi’s objective, I think, is to bring all the cash outside the banking system to the deposit money banks, thus effectively forcing the informal sector of the Nigerian economy to embrace banking and merging the formal and informal economies.
To be mostly affected will be hoarders and dealers of huge cash outside the banking system who will now be forced to bring their cash to the deposit money banks, and when they are restricted by the cashless policy to depositing only N150,000 a day, we are going to witness a mad dash to the banks by holders of huge cash that will be more chaotic than when Buhari/Idiagbon effected a currency change policy in 1984. The currency restructuring implemented by Buhari/Idiagbon and the short timeframe given for the exchange of the old notes for new ones caused massive disruptions to the economy, as companies and Nigerians rushed to banks to beat the deadline, and we witnessed massive naira flowing into Nigeria from different parts of the world, including briefcases from Saudi Arabia.
Also to be severely affected will be millions of Nigerians in the informal sector – over 60 percent of the Nigerian economy – who do not have bank accounts or have never done any banking transactions before, and whose fate will be sealed unless conscious and deliberate efforts are made by the CBN and deposit money banks to mobilise them to embrace banking so as to avoid being cut off from the new singular Nigerian economy that is soon to emerge.
With the massive inflow of cash into the deposit money banks that the trading of old currencies for new ones will engender, the introduction of a new N5,000 note is to ensure that the banks are not buried under mountain loads of cash and to moderate the cost of handling cash so as not to introduce another demon that will shackle the banks while attempting to solve an existing problem.
It is not difficult to imagine what changes the cashless policy and the new policy on changing all our currencies and introducing a N5,000 note will make, especially when the formal and informal sectors of the economy have been merged, all the cash outside the banking system have been deposited with the banks, Nigerians of 18 years and above now have bank accounts, and the cashless policy is fully implemented across Nigeria. Guess who already has access to view banking transactions and details of bank customers! CBN, EFCC and ICPC, meaning that it will now be easy to track down those with huge bank deposits who cannot explain why they have such huge funds in their accounts (elected politicians and public/civil servants); it will also be easy to track banking transactions of dubious nature and to have records of financial infractions, making it easy to prosecute wrongdoers.
Federal, state and local government tax authorities and agencies will also have access to the banking records and transactions of Nigerians and their businesses, effectively making it easier to access their true net worth for taxing and other purposes that will in turn generate trillions of naira for government at all levels. This explains why the policy on issuing tax identification numbers to all eligible taxpayers is already in place.
My counsel to those who are sitting on mountains of cash in their respective homes or offices is to begin immediately to pay in their money into their various bank accounts so as not to be caught with their pants down when this new policy is implemented, despite the protestations and the best efforts of the National Assembly to halt, limit or slow down this train that has already left the train station. And, to the tens of millions of Nigerians in the informal sector of our economy, they should begin immediately to open accounts with deposit money banks, or better still, register business names and incorporate companies to give recognition and identity to their businesses and make them more compliant for the inevitable changes that are coming.
Ultimately, the gains of these new policies being implemented by the CBN outweigh the pains. Increased accountability and transparency is injected into the Nigerian economy, which signals our desire to be key players on the world stage. However, great effort must be made to carry all stakeholders along, especially Nigerians in the informal sector, to reduce to the barest minimum the pains of transiting to the formal economy.
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  1. By far the most balance and objective analysis I have read so far...

    1. Of course it is bcos you have not sat down and tried to see d faults in what the fellow has said. Did he think about the possibility of all those people chaniging their money to forex. Why would all d corrupt pple not start buying forex and storing in deir rooms like dey do wit the naira.

  2. Very convincing about d introduction of d new 5000naira note. I believe 60% of d financial transactions in Nigeria are unaccounted for

  3. The problem of dollarization of the naira is a greater threat to inflation than new currency introduction, The CBN under the leadership of Sanusi Lamido Sanusi has engaged a stringent reform in the foreign exchange market in a bid to foster transparency and check the menace of dollarization. You will recall that CBN also suspended the wholesale dutch auction system in place of retail dutch action system in a bid to fish out genuine foreign exchange demand. Also this policy will compliment the efforts of Ngozi Okonjo-Iweala as she attempts to tame government expenditure and reform the public sector.

  4. Hahahahhahaaa to all ur comment,how does all this analysis bring food jobs and security which are d immidiate problems of the common nigeria

  5. This writer has not talked about the over 80% common Nigerians who have no Naira to hide but will have to buy a sachet of pure water for N50 because Nigerians accepts no coins. Those who stock cash do not do it in Naira but in Dollars which is a better movable currency. Again, CBN says there will be no time limit for the exchange of old naira but a gradual phase-out. So there is enough time to exchange whatever has been put at home. N5,000 is a killer of the ordinary Nigerian. We do not need it. Better to go cashless.

  6. those guys are not humans, can't they implement this without Introducing 5k note. this policy will affect the poor ilitrates. it is an opportunity for the efcc and Atherton track unnecessary customers account. n.a. me get my money, no be govt make am for me. No be the work Weymouth we send unable be that oh. If the policy will be genuinely done then there is no problem.

  7. Don't be deceived... Its important that both formal and informal economies are brought together. Like the writer said "Ultimately, the gains of these new policies being implemented by the CBN outweigh the pains. Increased accountability and transparency is injected into the Nigerian economy, which signals our desire to be key players on the world stage"

  8. dear JIde, are you balanced? most corrupt goons sitting on billions already have thier cash in foreign currencies by now. who is fou(o)ling who? The writer is one of them! if dollars collected by farouk lawan is nowhere to be seen.... pls can sanusi prevent obasanjo or dimeji from changing their loot?
    our leaders problem is similar to ; 'bcuz everybody calls him bAba, he feels he is the wisest'
    the waiting game doesn't kill anyway.

  9. Stupid write up! Who's talking about naira when d loots r in foreign currencies! Nigeria is sinking deeper. God pls save us

  10. The problem with this policy is the "COINAGE" of N5;N10;N20 respectively.
    We are averse to coins. The inflationary point is where N5 sachet water will be increased to N50 i.e. about 900% price increase.
    CBN can forget the coinage of these small denominations; and still introduce N5000 note.
    Besides, cashless concept works faster where there are so much notes and coins to carry about.
    For example, if all N100 becomes the highest denomination, the transacting public will definitely protest for "Cashless Transactions"
    This is no rocket science theory.



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