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N5000 Note: ICAN goes to town on Sanusi, says initiative will cause Nigerians hardship

By on September 6, 2012

CBN Governor, Sanusi

The Institute of Chartered Accountants of Nigeria (ICAN) has said the proposed introduction of the N5000 note and the general currency structuring exercise will cause Nigerians hardship.

In a statement released by the apex accounting body the introduction of coins into the system by replacement of the N5 to N50 notes will lead to the extinction of the dominations from circulation and negatively impact the purchasing power of Nigerians, therefore causing them undue further hardship.

The statement read, “In our view, the introduction of N5000 note will eventually alter the pricing structure of products in the market leading ultimately to the permanent disappearance of the 5, 10, 20 & 50 Naira notes (and even the proposed new coins) from circulation. The extinction of these smaller denominations will negatively impact the buying capacity and habits of low-income earners and the poor as goods and services will be priced above their levels. Sustained increases in prices may the unintended consequence.”

They also noted that the CBN could work towards other methods of strengthening the Naira, such as by introducing good policies consistently.

They said, “We strongly advocate that the CBN should work towards strengthening the purchasing power of the Naira through policy consistency. The steady slide in the value of the Naira in relation to other currencies like the USA dollar, British pound sterling, etc As an import-dependent nation, when Nigeria converted to Naira and Kobo in 1973, the exchange rate was GBP£1=N2.00 and USA$0.30=N1.00. Today, the exchange rate is now GBP£1=246.31, USA$1=N157.50. From the literature and empirical experience, devaluation benefits export-oriented economies. As a mono-product and import-dependent economy, we are most unlikely to benefit from the resultant devaluation that this initiative may unwittingly cause. Since the Naira is not convertible, increasing the denomination will not check the perceived trend towards dollarization.”

2 Comments

  1. Tammy Fiberesima

    September 6, 2012 at 6:43 pm

    ICAN, your comment is just fantasy,no substance;please stop deceiving the ignorants;just proffer solutions

  2. bigsam

    September 6, 2012 at 6:55 pm

    Before we reach conclusions, let’s ask our selves the rationale behind this move. Is the idea better than anything or does it have anything good for Nigerians?