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