In April 2019, CBN made good it’s over a year old promise, to tackle the acute shortage of lower Naira denominations by flooding the market with fresh supplies of N50, N20, N10, N5 POLYMER denominations, to facilitate settlements and restrain compelled higher off-the-shelf prices in millions of retail outlets, nationwide. It is not clear, if the N100 paper denomination, which is alleged to bear an offensive religious symbol, was included in the fresh currency profile.
However, according to Priscilla Eleje, CBN Director, Currency Operations, who spoke at a sensitization programme in Abuja in February 2018, “all you need to do is to take your higher denomination currencies to your (Market Association/bank) and exchange with mint fresh lower denomination polymer equivalent.” It is remarkable, however, that polymer, which has a modest lifespan of about 2 years is preferred to traditional lower denomination hard wearing coins with over 30 years lifespan.
The article “Redenomination of Ghana’s Currency”, (see www.lesleba.com and www.betternigerianow.com), which was first published, on 15/01/2007, discussed the imminent redenomination and promise of a successful return of primary coins (pesewa) in Ghana. The Ghana pesewa is counterpart to Nigeria’s kobo and one pesewa at inauguration in 2007, was about US$0.12 cents. Thus, one new Ghana cedi GH¢1 (i.e. 100 pesewa=$1.2 or N192, when $1=N160). Thus, while a Nigerian may forego change of N1, his Ghanaian counterpart would be reluctant to forego one cedi change because of its over 160 times higher purchasing power than Naira! Nonetheless, Nigeria’s Central Bank, under the erstwhile leadership of our ‘all is well’ erudite Governor, obviously failed to recognize this commonsense observation with regard to currency value and proceeded in 2006 to release the almighty N1000 note (less than $8 at the time) and also released new 50k, N1 and N2 coins, because the existing note forms of these denominations were cumbersome, unhygienic and unsightly, and were generally rejected by even lowly beggars on our streets!
However CBN, in its ‘wisdom’ ignored this reality that the existing 50k, N1 and N2 paper notes were not rejected on grounds of material of construction, but as a result of their negligible purchasing value! Instead, our Professor ascribed rejection to the material of construction and therefore speedily embarked on production of coins for clearly valueless currency denominations! That decision must have been motivated by other factors other than related professional knowledge! Not yet done, and as if to force commonsense out of nonsense, Soludo directed that all banks must accept at least 2 per cent coin component for every batch of currency supplied from CBN! Furthermore, in addition to actual production cost, in an action akin to throwing good money after bad money, CBN recklessly spent over N10bn of tax payer’s money on massive enlightenment and media campaign for the public to embrace the worthless coins!
In another article on 26/02/2007 titled “Hurray! The Coins are Back, But…” this column noted that “the economic wisdom in coin production is in their long lifespan (as coins can last over 50 years)… and that initial production cost can therefore be profitably amortized over its lifespan, if coins retain their purchasing power and remain in use”. “If, however, coins disappear because of their inherent purchasing power, and receive undue patronage of makers of jewelry, gift items, modern art, etc, the effective lifespan of coins will be truncated and our CBN may also unwittingly end up funding or indirectly subsidizing the cost of the finished products made from melted and recycled Nigerian coins! Consequently, the latest currency profile, which includes coins may die a premature death while our expectation for restrained inflation or the facilitation of change for consumer purchases may become unrealized, despite the significant expenditure of tens of billions of Naira to production and public acceptance.
Regrettably, however, less than three years after, CBN Governor has since admitted that the introduction of coins was misguided; consequently coin denominations were withdrawn and offered for sale, at a heavily discounted price!! Oh my country! In October 2009, as if in demonstration that CBN had not learnt its lesson with regard to profligacy with public funds, N5, N10 and N50 denominations which were earlier released as new paper note issues, were again re-released, this time, with much more expensive polymer material, which has barely 3 years lifespan.
Meanwhile, inexplicably, the advantages of cost-effectiveness and currency security which were touted as the object of billions of naira expenditure on refurbishing CBN controlled “Nigeria Mint and Security Co.” were jettisoned. The promise that the new mint could supply over 80 per cent of Nigeria’s currency issues (with the exception of the then newly introduced and very expensive N20 polymer note) became an empty boast! The introduction of imported N5, N10, N50 polymer notes in October 2009, to complement the existing N20 note of same fabric, probably now means that, CBN’s newly refurbished mint will produce far below installed or efficient capacity! Again, what waste! Worse still, some Nigerians will invariably, lose their jobs to a Security Printing Company in Australia! Incidentally, (see Punch editorial 8/10/2009) Securrency, the Australian beneficiary printing company for polymer notes was lately accused of bribing, the proxy of some top Nigerian Government Officials, with over US$6m to win Nigeria’s 2006 polymer printing contract! It is not clear whether the new polymer notes of N5, N10 and N50 were part of the 2009 contract or if the alleged bribe relates only to the first batch of N20 polymer notes released in 2006!
The superiority of polymer notes is canvassed, in ongoing CBN adverts, as being user-friendly; they look better and remain crisp over a long period; and that they do not stain, rumple or tear easily. Furthermore, CBN also claims that polymer notes will save the nation huge sums of money used for reprinting. What, the adverts do not say, however, is that the polymer notes are multiple times more expensive than paper notes; furthermore, coin denominations are exceedingly more cost effective, because they can last upto 50 years, despite any rough handling or harsh climate. However, as noted in our article “The Putrid Mess Also in CBN – 1-3” of 28/09/08, (see www.lesleba.com and www.betternigerianow.com), the Nigerian public, recognize that polymer notes fade and peel easily, especially when they are wet or folded; polymer notes will shrivel when they come in contact with any heated object and they are less amenable to the abiding Nigerian culture of folding notes…”
But much more importantly, polymer note denominations, will also fail because of their insignificant purchasing power! I recall that eight months after this column’s admonition to CBN to emulate our Ghanaian brothers in an article titled “Redenomination of Ghana’s Currency” - 15/1/2007, Soludo emerged with his Strategic Agenda for the Naira in August 2007. The Professor’s agenda also included redenomination, which once again entailed the production of another fresh set of currencies!! Indeed, our eminent Professor displayed incredible courage in floating this kite, especially in view of the fact that he had, in the same year (2007), produced and lavishly promoted note and coin denominations, with a structure which went against the grain of wisdom with regard to value being essential to currency acceptability; notwithstanding, Soludo subsequently, issued the N1000 note and also changed the design of all other note and coin denominations, at oppressive public expense. It will be a big tragedy if current CBN Governor, Lamido Sanusi, also hopes that Nigerians won’t notice this inexplicable folly! Truth is, the Economy needs coins (including one kobo) with value! Shikena!
POSTSCRIPT 2019: The N1000 is regrettably, now less than $3, from over $8 in 2007! Coins have virtually disappeared from use. Predictably, with subsisting double-digit inflation rates and self-inflicted Naira depreciation, the latest issue of low denomination polymer notes will also be rejected. Despite the colossal waste of public revenue, the promoters of polymer notes will surely smile to the banks!!
BY HENRY BOYO
In The Spotlight
The hailstorm of public condemnation that trailed media reports of the outrageous plan by the National Assembly to spend over N5.5b on imported Sports Utility Vehicle (SUV) has once again appropriately refocused public attention on the contentious issue of the emolument of Nigerian legislators. While Nigeria labors for breath under bureaucratic overweight, corruption, a shaky economy and an Islamic insurgency, the nation has been asphyxiated by the huge of cost of governance, especially the jumbo pay and perks of lawmakers. The disclosure by the ad hoc Welfare Committee of the Ahmad Lawan-led Senate of plans to embark on the purchase is coming barely four years after some senators staked about N6.6b on imported brand new luxury vehicles. It is pathetic that while the average Nigerian buckles under the yoke of poverty; unemployment and the failure of government to discharge its statutory responsibility to the populace, elected lawmakers would have so much leeway on profligacy and the mundane, which the SUV issue represents. The nation’s political leaders need to walk the talk; and must understand that service to the nation demands personal sacrifice devoid of self-aggrandizement.
President Buhari must bring the pressure of his office to bear on these “legislooters” to cancel what unarguably is an insult on the collective sensibilities of Nigerians. This is more so at a time government revenue is said to be dwindling. When juxtaposed with an economy in free-fall; and the rising insecurity and government’s failure to ensure safety of lives and property of Nigerians, the extent of government’s contempt and disdain for its citizens becomes obvious. It is just as well that over 7000 Nigerians have sued the Senate over the unsavory development, and the refusal by the lawmakers to opt for cheaper means of transportation or ploughing the funds into the local automobile industry, thereby preventing such a hefty amount from leaving the economy.
Worse even, the squandermania is a blatant breach of the All Progressives Congress (APC)-led Executive Order Three, which mandated patronage of made in Nigeria goods and services. According to stakeholders expending such a humongous amount of money on cars would further affect investment drive into the country, especially in the automobile sector and leave wrong signals for public servants at a time that concerns are being expressed against the high cost of governance in the country especially at a time that government is relying on borrowing to finance the budget and pay workers’ salaries.
In so many ways, lawmakers conduct themselves as if they were above the law to the detriment of public service ethics. This pathetic phenomenon has bogged down the nation, as lawmakers would rather serve themselves than serve the Nigerian people who elected them. It is unacceptable that Nigerians don’t even know the remuneration package of their lawmakers, let alone explain the source of funds for their conspicuous consumption and ostentatious lifestyles. Even from the little information available, there is nowhere in the world where people who do so little get so much pay. This is not part of the attributes of statesmen; rather it is a huge disservice to the nation.
That Nigeria cannot sustain the high cost of governance is incontrovertible. The planned N5.5bn expenditure is unnecessary, insensitive and a flagrant betrayal of the expectations of Nigerians. While the majority of Nigerians wallow in abject poverty, their elected representatives treat themselves so sumptuously that it rankles. This waste in government and the extravagant lifestyle of state actors, especially legislators, constitute such a drain on the treasury that it is impossible for any country carrying such a burden to make progress. This is further compounded by the annual budget; about 70% of which is appropriated to recurrent expenditure. Indeed, the emerging consensus is that lawmakers and their executive counterparts take so much from public coffers, with no such corresponding policy outcomes as could justify the squander; that it even borders on criminality.
In order to kick start his now comatose slugfest with corruption, President Buhari must reduce the high cost of governance. This was a key campaign promise. He promised to cut his own salary but failed to do so during his first term; he wouldn’t be the first to do so. Late President Yar’Adua cut his by 20% in 2009. French President Francois Hollande cut his by 30% in 2012; US President Barack Obama took a 5% cut in 2013 while Russia’s Vladimir Putin cut his by 10% in 2015. Kenya’s Uhuru Kenyatta had a 20% pay cut. The President honoring his promise to cut his salary might have humbled the present legislators and nudge them into taking similar measures. Unfortunately, with legislators seeing themselves as the repository of sovereignty, and not the people; the desired next level change can only be elusive.
Corruption is one of the main reasons lawmakers have failed to perform their duties creditably and dutifully. Their oversight functions – a crucial part of their legislative duties – has been transformed into avenues for rent-seeking as lawmakers “shake-down” Ministers and Heads of parastatals for bribes during budget and committee hearings. The 7th legislature took this obnoxious practice to asinine levels, and went the distance to settle scores with officials who “refused to play ball.” The legislators fought a long-running battle with SEC chair, Arunma Oteh after she openly accused the Chairman of the House Committee on Capital Market of demanding a bribe from the Commission. This allegation culminated in the arraignment of the committee chairman on corruption charges. There was no love lost as the Reps mounted sustained pressure on President Jonathan to sack her. Not getting their way, the legislators refused to allocate funds to the SEC. Of course, this was blackmail carried too far, which did little credit to the image of the House and that of its members.
Legislative powers in all civilized democracies are not deployed to gratify the ego and whims of the legislature or its members. The last legislature was known to pick on anyone who takes it to task even when there is justification for doing so. For example, former Central Bank of Nigeria (CBN) Governor, Lamido Sanusi’s comment on the emolument of lawmakers put him at loggerheads with the legislators. In a brazen show of megalomania ostensibly to teach Sanusi a lesson, the Reps embarked on amending the CBN Act purposely to curtail the powers of its governor, disregarding the fact that Sanusi’s term as governor of the apex bank was near its end. This shows the extent to which the legislators could go to deal with perceived “enemies”.
Nigerian lawmakers remain bitterly opposed to disclosure of their salaries and allowances. Their emoluments have always been shrouded in darkness, like backroom dealings among the Mafia. The authoritative London-based magazine, The Economist, in a recent report, ranked Nigerian lawmakers as the highest paid in the world. The report revealed the annual salary of legislators in several countries, which include USA, $174,000; Ghana, $46,500; Indonesia, $65,800; Thailand, $43,800; India, $11,200; Italy, $182,000; Bangladesh, $4,000; Israel, $114,800; Hong Kong, $130,000; Japan, $149,700; and Singapore, $154,000. The Nigerian federal legislator’s annual earning was put at about $189,000 (N30 million) annually. This amount, scandalous as it may seem, is nothing compared to what they get from the system through other means. The sensibility of the people may be further incensed when the various allowances ostensibly for running their offices which include oversight allowance, recess allowance, wardrobe allowance and the bizarre constituency allowance, among others, are computed.
Nigerian lawmakers are quick to dismiss such figures as not factual, but it is instructive that each of them has always dodged questions about the actual salary and corresponding allowances suggesting that there is something to hide. Legislators are representatives elected by the people to create and pass laws, represent the people who elected them and also do oversight functions. They pass the budget and through the public accounts committee, scrutinize the financial transactions of government and through the approval of the report of auditor-general of the federation. It is an irony that the National Assembly, which ought to be the legislative gendarme of the treasury, has derailed in its function. Instead, it constitutes a drain pipe on the same treasury.
Nigerian legislators have subverted their role of ensuring transparency and accountability in government through self-enrichment and primitive accumulation. Lawmakers draw salaries on first-line charge on the federation account. There is nothing evident in their activities to suggest they are in office to represent the people who elected them and who desire the dividends of democracy. Nigerian legislators have not only lost their moral authority, they also have by their dealings transformed the National Assembly into an infrastructure of corruption. The matter has gone past the caution threshold.
The National Assembly has itself become part of the problem of the nation’s democracy and needs total restructuring. In the developed world where cost of governance is coterminous with concrete deliverables and not on padded emolument of public officers, the US spends 21% of its budget on running the government; Netherlands (47.7%); Sweden, (42.8%) and England (37.8%). Senegal scrapped its Senate in order to free resources for development. In Nigeria’s case, the bi-cameral arrangement is not only expensive and unnecessary, legislative business must be made a part-time activity so that it is only those Nigerians desirous of public service will seek public office. Amidst the abject poverty in the land, Nigerians can no longer tolerate a situation where a legislators feed fat on the commonwealth. The planned expenditure of N5.5bn on cars smack of a massive moral deficit on the part of the Senate President and should be canceled immediately as a sign of respect for the suffering people of this nation. If the NASS hopes to get away with this, it will not get away with the harsh verdict of history.