Governor of the Central Bank of Nigeria (CBN) Sanusi Lamido Sanusi has berated former president Olusegun Obasanjo for his stand on the planned introduction of N5, 000 note, saying he was a very successful farmer but a very bad economist.
Sanusi, who defended the proposal to introduce the N5,000 note next year, said Obasanjo as head of state introduced more high-currency denominations than any other leader in the history of Nigeria.
Obasanjo had, last Thursday, stated that the introduction of the N5, 000 note would kill production and affect small businesses negatively.
The CBN governor, while delivering the keynote address at the 6th Annual Banking and Finance Conference of the Chartered Institute of Bankers of Nigeria (CIBN) in Abuja yesterday, pointed out that Obasanjo introduced the N20, N100, N200, N500 and N1,000 notes, yet inflation was low during his tenure.
Sanusi said: "I like General Obasanjo; he is a very successful farmer but a very bad economist. He has introduced more higher denominations in Nigeria than any other head of state. He did the N100 in 1999, N200 in 2000, did N500, I think, two years later and, in that period, inflation was low because it was accompanied by very tight monetary and fiscal policy reforms.
"So for somebody who has gone through that to stand up and say that introducing higher denomination will cause inflation... I don't know if somebody wrote the speech. I am trying to see him, or maybe he was misquoted. Because if he actually said that, then, he must be the single most important determinant of inflation in our history, given the number of notes he has introduced."
According to him, simply producing higher denominations cannot cause inflation if it is not accompanied by an increase in money supply. "We all know that you cannot have inflation simply by introducing higher denomination if you don't increase money supply, and yet we keep repeating the opposite."
The CBN governor said that the apex bank had reduced the cost of cash management from N49 billion in 2009 to N32 billion in 2011, adding that it planned to bring it further down to N25 billion by 2014.
"We started a project, over two years ago, aimed at reducing the overhead in the Nigerian banking industry by at least 30 per cent in a two-year period. That project involved shared services and cash management and cash production and data control and operations. It involved an increased use of technology; so you now have PoS terminals, ATMs, mobile banking, NIBSS transfer, the clearing days have been shortened," he said, adding that the CBN had looked at how it could be more efficient in the management of cash. "In 2009, we did a survey and saw that, of all the cash transactions done in banks, only 20 per cent were for more than N150,000, and that 10 per cent accounted for over 70 per cent of the value of cash. So a very small number of customers are the heavy users of cash and we pay a lot of money printing paper for them," he stated.
The CBN governor said the accounts were there for the record: the total cost of printing and minting all denominations of currency in Nigeria in 2009 at N47 billion, in 2011 at N32 billion and 2014 at N25 billion. He said that 50 per cent of the total cost of procurement could be saved.
Malam Sanusi said printing of the N5, 000 notes could not cost more than N2 or 3 billion.
He noted: "In the 1970s when the N20 note was introduced, N20 was the equivalent of $30. In 2013, when we introduce the N5, 000 note, N5,000 will be the equivalent of $30. It's the statistics. If we could buy $30 with one N20 bill in 1978, you now need 250 N20 bills to buy $30 and we have to print the whole250 notes, pay for the paper, pay for the ink, pay for the security features, for the transportation, for insurance, for clearing, for the bullion van for the ... processing, disposal..."