Ex-President Olusegun Obasanjo is a bad economist, although he is a successful farmer, Central Bank of Nigeria (CBN) Governor Sanusi Lamido Sanusi said yesterday.
Sanusi took on the former President while defending the planned introduction of the N5,000 banknote – a plan which many Nigerians including Obasanjo, have criticised.
It was the first time the CBN governor has publicly defended the introduction of the banknote.
He spoke at the 6th Annual Conference of the Chartered Institute of Bankers of Nigeria (CIBN) in Abuja.
Obasanjo last week said the introduction of the new denomination will cause inflation and increase the hardship people are going through.
But Sanusi said Obasanjo’s comment came to him as a surprise because most of the higher denominations were introduced during his regime.
Sanusi said the monetary policy measures being undertaken by the CBN were intended to stabilise the financial system and enable it to play its catalytic roles as a major source of pooling funds to grow the economy.
He said: “This is an interesting country because my uncle or my father, our former head of state, General Obasanjo, you know he is a very successful farmer but he is a very bad economist and he stands up and says that this higher denomination will cause inflation and improve hardship. General Obasanjo did N20, he did N100, N200, N500 and N1, 000. He introduced more higher denominations in Nigeria than any former head of state.”
He described the reported comments by the former President and other analysts that printing the N5,000 notes would exacerbate the inflationary trend of the economy as not premised on sound economic logic.
To him, if printing the N5,000 notes will trigger inflation as being insinuated, Obasanjo should be seen as the greatest factor responsible for the high inflation in the economy, having printed five of the existing denominations during his tenure.
Sanusi added that Obasanjo “did N100 note in 1999, he did N200 in 2000, he did N500 two years later and in that period, inflation was coming down because it was accompanied by prudent fiscal and monetary policy.”
The CBN governor said those opposing the N5,000 note were ignorant of the benefits of the currency restructuring. He explained that its introduction would lead to efficiency of the country’s payment system since the policy is targeted at a small number of Nigerians handling huge cash.
Sanusi explained that contrary to the widespread rumours about the cost of printing the N5,000 notes which the public has been informed will cost a N40 billion, it will cost between N2 billion to N3 billion, but with the potential of saving the government at least N7 billion yearly.
Defending the restructuring plan, Sanusi said when the N20 bill was introduced in the 1970s, the bill was equivalent to $30 noting that by 2013 when the N5, 000 bill comes into existence, it would also be equivalent to the same $30.
He said: “If you could buy $30 with one N20 bill in 1978, you now need 250, N20 bill to buy $30 and you would have had to print those 250 bills, pay for the paper, the ink, for the security features, for transportation, for insurance, for clearing, for the bullion van and processing and these are cost to the economy.”
Sanusi said the CBN was introducing coins for various reasons, first as part of cost management since the N5, N10 and N20 note have very high frequency and have to be replaced every three months but the coins last longer. “Secondly we are working on a hypothesis that the reason Nigerians do not accept the coins is because they couldn’t buy anything with them and maybe if you give them coins that have value as a medium of exchange, they would accept them,” he said.
The introduction of the N5, 000 he pointed out, will enhance the store of value function of the naira.
The CIBN President, Mr Segun Ajayi, restated professional bankers’ commitment to ensuring that banks continue to play their financial intermediation roles in the economy by standardising the practice and collaborating with key stakeholders, including development partners and other financial institutions.