Nigerians worried over introduction of N5000 note by CBN

Photograph courtesy of notegolddiamond.blogspot.com

It is surprising that the Mr. Sanusi Lamido Sanusi, Governor, Central Bank of Nigeria (CBN) can announced the intention of the apex bank to introduce N5000 notes into the Nigerian economy. This is in view of the flag-off of a Cashless Economy Initiative by the same CBN with Lagos State as pilot scheme. 

The apex bank also disclosed plans to convert 5, 10, and 20 Naira notes to coins.The redesigned N50 and new N5000 notes will be launched early next year. When introduced, the naira currency structure will become 12, six coins and six bank notes denominations.

The CBN governor told reporters in Abuja on Thursday that the plan is will enhance the quality of banknotes, incorporate a more effective feature for the visually impaired as well as reduce the cost of production, distribution and disposal of banknotes.

“Under the newstructures, the existing denomination of N50, N100, and N200, N500 and N1000 will be redesigned with added new security features,” the CBN governor said.

According to Mr. Sanusi, the N5000 note will bear the faces of three prominent Nigerian female activists. They late politician and social mobiliser, Margaret Ekpo (1914 – 2006); the late politician and activist Hajia Gambo Sawaba (1933 – 2001) and late politician and women’s right activist Funmilayo Kuti (1900 -1978), will have their faces featured on the new note.

A worried nation?
Every day Nigerians are expressing misgivings about the introduction of the high denomination currency in view of the attempt by the CBN to transform the economy from its cash dependence nature into a cashless economy.

Commenting on the development, Dr. Chukwuma O. Nwaonicha said this may be the worst business decision to be taken by Central Bank of Nigeria since independence because of its mix implications. According to Nwaonicha, "the Nigerian economy is not strong enough to handle this type of harsh economic policy since the economy depends solely on the stability of oil price. Also, the timing of this policy is wrong due to the worrisome economic developments of the nation".

Photograph courtesy of notegolddiamond.blogspot.com

Nwaonicha, who is based in the United States of America,  advised the Central Bank to put into consideration the issue of counterfeiting as well as the high inflation rate this decision may cause. Quoting the Wikipedia on high-denomination notes, Nwaonicha said: "High-denomination currencies were prevalent from the very beginning of U.S. Government. Interest-bearing notes of $500, $1,000, $5,000, and $10,000 were issued at different time. However, the U.S. Federal Reserve began taking high-denomination bills out of circulation in 1969. As of May 30, 2009, there were only 336 known $10,000 bills known to exist; 342 remaining $5,000 bills; and 165,372 remaining $1,000 bills. For the most part, these bills were used by banks and the Federal Government for large financial transactions. However, the introduction of the electronic money system has made large-scale cash transactions obsolete."

Far lower denomination than Zimbabwean, Herzegovinan currency

On May 5, 2008 the Reserve Bank of Zimbabwe issued bank notes (or "bearer cheques") of ZWD 100 million and ZWD 250 million. Subsequently, on August 1, 2008, the Zimbabwe dollar was redenominated by removing 10 zeroes. ZWD 10 billion became 1 dollar after the redenomination. On 16 January 2009, Zimbabwe issued a ZWD100 trillion bill (100,000,000,000,000 ZWD).

Bosnia Herzegovina, which declared independence from Yugoslavia in March 1992, use the Dinar currency with 100 million Dinara as the highest denomination.