Femi,
Your commentary is appropriate, quite well-informed. I read the Agbaje OAIC paper, the arguments against the 5,000 naira-denominated note are cogent, with lots of useful examples drawn from comparative studies. What the paper lacks are substantive data drawn economic modeling of how the introduction of the 5,000-naira note could further accelerate Nigeria's hyper-inflation. We certainly have sufficient historical data from the Nigeria experience to now show much more persuasively how the rapid devaluation of the naira and massive public sector spending have consistently fueled runaway inflationary cycles ever since the Udoji Awards of 1973 and Babangida's SAP-inspired programs post-1985.
It is tragic that it now takes 160 naira to exchange for 1dollar as opposed to my 1Nigerian naira that exchanged for 1.85 US dollar when I first came to the U.S. in 1975 or for 1.70 when I returned in 1980. We need our public policy institutes like OAIC to use much more solid data drawn from their own economic modeling to show why the course being pursued by the CBN does not in any way serve the interest of the Nigerian state or it's people. It seems to me that as rational theorists and practitioners Malam Sanusi and the brainiacs at CBN are more likely to engage with other intellectuals of differing viewpoints only if we produce compelling data to dissuade them from their ruinous course.
All the best
Folu
Folu Ogundimu
Sent from my iPad
Sent from my iPad
Ikhide,Please read the report posted by Professor Adigun Agbaje on this matter yesterday and get informed on this yet, another neoliberally informed policy. As an appendage of the US government with its double standard on free market economy, our government will not have the political will to redenominate the naira, even if that is the best decision. You may wish to know that the dollar as the main currency for international transactions remains the pride of the United States of America. As much as they are able, they will try to ensure our currency remains weak in exchange to dollar. When you compare the proposed policy to the various advice by the IMF that naira is overvalued and that it should be further devalued, you will know that this is a decision that is not purely based on economics. My worry is that we may actually not be able to get the government to rescind the decision. The CBN Governor as we all know thinks Economics is a rocket science that only people like him can understand, forgeting that in any discipline, there are always divergent schools of thought and that the relevance of a policy and the knowledge that informed it, is to what extent it impacts positively on the lives of people. You may wish to ask: what proportion of the population has access to this dollar that you claim people carry around in their wallets? The poor farmers in the village? The jobless and frustrated graduates on the streets? The civil servants with #18000 minimum wage? The retired civil servants with a meager pension, which even remains unpaid for years? Your argument as well as those of the CBN remind me of the debate over the fuel subsidy and the spurious claim by Mallam Sanusi and his co-travellers that the subsidies only benefits the rich people. My question then and now remains is it the rich that use buses to convey goods from the bush to the towns? Are those buses using fuel or water?To me, the introduction of the #5000 at this time, given the current rate of inflation is another misguided policy, which must be resisted through all lawful means.On Sun, Aug 26, 2012 at 7:17 AM, Ikhide <xokigbo@yahoo.com> wrote:
I have been following the mini brouhaha regarding the soon to be introduced N5,000 currency note. I am perhaps illiterate when it comes to economics (I did teach micro and macro economics at the college level for three years, so I should understand these things...) but I remain unconvinced by the arguments of those agitating against it. I must say that I have been appalled by the near lack of analysis on both sides. I have asked several people for evidence that the government has done a real communications outreach and have come up empty handed. The CBN's website is innocent of usable substance.
The opponents have responded with nothing but fury, Any attempt to ask questions that threaten their own beliefs has been shot down. This is of course understandable. We do have a Nigerian government that has no credibility, is widely derided by all and sundry and so nothing that comes out of them is taken seriously. Having said that, we all know that the unofficial currency of Nigeria is the dollar. People walk around the place with $100 notes (about N15,000). They are portable and easier to hide. I don't understand why the equivalent of $20 is giving my friends heartburn. And I do think comparisons with Zimbabwe etc are wholly inappropriate.
I personally do not have enough information one way or the other to weigh in on the matter. And it is the fault of both sides.- IkhideStalk my blog at www.xokigbo.comFollow me on Twitter: @ikhideJoin me on Facebook: www.facebook.com/ikhide
From: "orelikesdat@yahoo.com" <orelikesdat@yahoo.com>
To: usaafricadialogue@googlegroups.com
Sent: Sunday, August 26, 2012 9:29 AM
Subject: USA Africa Dialogue Series - Let's stop this together
It is no longer news that CBN plans to introduce N5,000 note by January 2013 .
The crux of the matter is the implication that this will have on our individual lives and national economy. One of the indices of a GROWING INFLATION, is the creation of Higher Local Currency Bill, NO matter what CBN or the Managers of our economy say, they know too well in their minds.
Ask them in Zimbabwe!
We will soon be buying things now sold for about N3,000 - N4,500; for N5,000.00!
It is terrible!
Why are we not emulating Ghana where they just re-denominated their currency? Why can't we do same to manage our economy?
The answer is clear; if we redenominate THEY will lose the money already stolen and kept abroad. For instance if we redenominate by cutting down two zeros, N1,000 becomes N10 while N100 becomes N1. In a similar way one dollar will exchange for N1.55k. Therefore $100m will be N1.5m. Naira will become stronger against many currencies and stealing money abroad will become unattractive.
Why are we going for higher denomination when CBN is spending billions to promote a cashless economy?
Join to say no to introduction of higher denomination of naira . Let's save our economy. Please tell others until it gets d necessary attention. If we have 2 re-occupy Nigeria or CBN (this time), let's do it....even if not for ourselves then let's do it for d future of our children and their unborn children!! Before they turns us to millionaires that can't buy bread.
Sent from my BlackBerry wireless device from MTN
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