CBN, lower denominations and the commonman

The planned introduction of the N1,000.00 denomination this month by the Central Bank of Nigeria (CBN), the scarcity of the lower denominations of the currency, the directive to banks to accept only driving licence or International Passport from their customers for identification in any form of transaction, and other unfavourable measurers by the apex bank demand that we turn our searchlight on the objects of this bank, popularly called the banker's banker.

But first, should the N1,000.00 note/polymer be? Although the CBN boss is reported to have said that "nothing will halt the move" I sincerely believe that man's action must be reviewed from time to time since man is imperfect, and that reasons must at all times prevail. In any case, is it not correct that man's action is right or wrong depending on when it is made? Introducing the N1,000.00 denomination now will worsen inflation and poverty in the land. The media has been awash with news of the pains of high cost of living. Prices of even common garri, not to talk of staple rice and yam has been going beyond the reach of ordinary Nigerians who constitute over 70 per cent of our population. The sick cannot afford the cost of treatment, and the lonely like widows are further marginalised. This is evidenced by the United Nations Human Development Report which recently placed Nigeria 152nd out of the 175 countries, judged by life expectancy, educational enrolment, adult literacy and per capital income. Against these facts and background, is it economically prudent and humane to introduce the N1,000.00 denomination now, which would (from experience) lead to further rise in prices of goods and thereby pauperise more the already weary Nigerians? Does the CBN desire more sorrows, deaths and burials? What would the common man do? Where does the common man run to? More night vigils?

Again, introducing the N1,000.00 denomination now would be a direct opposition to the recently reconstituted National Payments System Committee. The committee which was inaugurated by Obong Ufot Ekaette, Secretary to the Government of the Federation has the burden of ensuring that Nigerians embrace the use of cheques in their daily transactions. Trust our traders (and they must be factored always), a good number of them compelled to patronise banks for their transactions would deplete, as it would be much easier to carry cash around and they would avoid the many bank charges some of them dubious and made due to their perceived ignorance. The planned introduction (if it holds) would therefore further discourage saving and development of banking culture. Is it not clear that introducing the N1,000.00 denomination now would worsen the cankerworm of bribery and corruption which has been decimating development and the society? How correct was The Guardian in its editorial of Friday, July 8, 2005 titled "Towards a modern national payments system" when it inter alia stated that "corruption is rife but corrupt transactions are executed using cheques. Corruption swims in rash cash." So the battle of the president, the Economic and Financial Crimes Commission (EFCC), the Independent Corruption Practices Commission (ICPC) and the Police against corruption and crime will be made more difficult. Fortuitously, our brother country Ghana would be saved the oft-employment of the sobriquet "Ghana must go bag" to describe the packaging and delivery of huge bribes in Nigeria, as in the case of the dismissed former Education Minister, Prof. Fabian Osuji. The ghost of the Buhari/Idiagbon evacuation of Ghanaian illegal immigrants would then be laid to rest. Because, it would no longer be necessary to use such huge bags as the biggest brown envelope (sorry again to the members of the fourth estate) would suffice, or even needlessly the bribes could well be tucked in suits or our usually overflowing agbadas and delivered without any suspicion. Unfortunately thieves and robbers will resort more to direct attacks and stripping of persons to achieve their purpose, as there will be reduced carriage of money in bags. And sorry if you don't have much on you! With N1,000.00 note/polymer added to the family of N500.00, N200.00 and N100.00 of the higher denominations and now in preponderance it would further deplete and worsen the scarcity of N50.00, N20.00, N10.00 and N5.00 of the lower currency in circulation, the group of currency most vital for the daily survival of particularly the commonman who constitute over 70 per cent of our population.

The above now leads us to the main concern of this piece -- the dearth of the lower denominations of the currency and the agony of the commonman. Go round the marks, shops, bus stops, etc., whether at Onitsha, Yenagoa, Kano, Lagos or Ibadan and you will appreciate the sufferings, agonies, inconveniences, delays, and troubles the ordinary man has been enduring as a result of the scarcity of the lower denominations of the currency. Avoidable quarrels, fights, losses, delays, frustrations, breach of contract, police cases and even hospitalisations are common daily consequences of this lack. In the past, only new notes were hoarded and sold mainly to party freaks (owambes) and those who want to either impress women or the rural folks, but not anymore. Both old and new notes (if the new ones can still be seen) are now commonly sold particularly at motor parks and occasions, not only to the above group but also to traders/sellers. The problem is very serious. It is a basic principle of marketing and trading that the customer is king. It also conforms to common sense and our custom and tradition that the seller has a duty to give the buyer change. Today, this hallowed tradition is fast dying as many sellers due to the scarcity of the lower denominations expect the customer to always come with change. Listen! You may even be hearing that conductor shouting "Oshodi Oke Oshodi Oke!! wole with your N20.00 change o!!!" The damage and danger to the economy and general insecurity in the country can be appreciated. It can even spark off a tribal row. Dr. Shamsudden Usman (a Deputy Governor of Central Bank) bemoan the high cost of printing currency during a recent Nigerian Television Authority (NTA) documentary on CBN further heightens our fears. Dr. Shamsudden Usman emphasised repeatedly that the cost of printing N1,000.00 note is about the same as N20.00. Should we be hopeful that the present scarcity of lower denominations of the currency would soon be a thing of the past? Your guess as they say, is as good as mine.

Against this background and with ongoing rationalisation, lay off of workers and implementation of the many IMF/World Bank induced policies by the Federal Government, it is important we make a cursory examination of the objectives and duties of the Central Bank of Nigeria. I agree that the CBN must not indulge in waste, but equally the banker's banker was not established for profit making. And it is not waste to make available the lower denominations of the currency. Section 4 of the Central Bank of Nigerian Act states inter alia that "the principal objects of the bank shall be to issue legal tender currency in Nigeria...to promote monetary stability and a sound financial structure in Nigeria" whilst Section 19(1)a of the same Act compels that "notes and coins issued by the bank shall be in such denominations of the naira or fractions therefore as shall be approved by the minister" Section 19(1)b dealing on forms and designs would approve the planned introduction of polymer notes. From the above, it is a dereliction of duty for the CBN to permit scarcity of the lower denominations of the currency and therefore the bank owes Nigerians particularly the poor (the group most adversely affected by the dearth of the lower denominations) an apology and immediate reversal. I am further emboldened in these submissions by sections 16(1)b & (2)b of the 1999 constitution which directs governments and all its organs (including the CBN) to "control the national economy in such manner as to secure the maximum welfare, freedom and happiness of every citizen on the basis of social justice and equality of status and opportunity" and to ensure "that the material resources of the nation are harnessed and distributed as best as possible to serve the common good" Thus from the above, it is important for government and all its organs (including the CBN) to ensure that its policies and actions meet the above prescriptions at all times.

The recent directive by the apex bank to commercial banks to as from hence accept only an international passport or driving licence from their customers for identification in any form of transaction places the bank and the government in opposition to the ordinary Nigerians and shows clearly that the CBN is insensitive to the plight of ordinary Nigerians. How many Nigerians can afford to buy cars and are able to travel abroad? How many even of those who own cars, use them? The apex bank's directive is also a clear disincentive to saving and banking, judged by the level of our development. This directive will also promote corruption in our licensing/passport offices and road accidents as those who must bank, may not exercise the needed patience/tests to acquire the identifications and the temptation to drive once one acquires the driving license may worsen our accident records. It is therefore compelling that this directive be reversed. What the CBN should even do is to direct banks to accept identifications from prominent community leaders/elders, organised churches/mosques in their areas of operation. This will not only promote the much desired banking and saving culture, but also encourage behavioural changes and respect for our elders, culture, laws and traditions.

If one was still in doubt that the CBN is running anti-people policies, the recent writing off of N82 billion indebtedness of eight commercial banks to assist them meet its re-capitalisation requirement despite the hunger, poverty and sickness ravaging the land should clear that doubt. Talk of robbing Peter to pay Paul (sorry, robbing Obi to pay Okey). You mismanage your bank and I now use public money to pay off your debts in the name of enduring stability in the economy! It is rather rewarding and encourging malpractices, misdemeanours and mismanagement in the banking sector. If the CBN had been adequately supervising and regulating the banks, should the debts have risen, at least to that extent? To add insult (or it is salt) to injury as it is said, the apex bank has called for public support of the initiative. We certainly do not give our support but demand a reversal. It is therefore suggested that the Central Bank of Nigeria should concentrate in regulating, supervising and sanctioning of commercial banks timeously including community banks to eliminate cases of failed banks and frauds, thereby preventing depositors and investors from loosing their hard earned money and engendering confidence in our banks and real development in the country. This to me, as section 4 of the CBN Act demands, will be promoting "monetary stability and a sound financial structure in Nigeria." It is well.