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The Lagos Chamber of Commerce and Industry (LCCI) has called on the Central Bank of Nigeria (CBN) to coin N100 to N500 notes, rather than redesign them, as presently planned.
The business advocacy group, in a statement signed by its Director General, Dr. Chinyere Almona, on Sunday, argued that coining those notes, which it described as long overdue, would save the nation from the monumental waste involved in continuing to print pieces of low-value notes with a short lifespan.
Describing redesigning the N100 to N1,000 notes as a waste of resources, and in consequence, should not be given priority, for now, the Chamber, instead, called for the replacement of the coined notes with over a billion pieces of larger denominations that would be more in line with the value of denominations of currency notes circulating in other climes.
The Chamber stated that though the N100 (equivalent to US 20 cents) to N500 (equivalent to USD1) are due for replacement with Naira coins of the same denominations, to make room for the introduction of higher denominations, it, however, argued that embarking on a such project should not be a priority for now.
LCCI also described fixing the deadline, two to three weeks ahead of Christmas/New Year festivities, and two months ahead of the general election, as the apex bank is currently planning, as disruptive and insensitive.
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The group argued that redesigning the naira notes, at this time, would also compound the challenges of the organized private sector, already confronted with a lot of disruptions, ranging from local forex supply, exchange rate, and interest rate shocks.
This, the body stated, had continued to aggravate food and energy shocks.
“The organized private sector deserves to be spared the needless disruption from the wild goose chase proposed by CBN so close to the yuletide and the polls,” it stated.
The Chamber faulted the apex bank’s claim of persistent hoarding of banknotes by the public; since ‘over 80 percent of currency in circulation ( N2.73 trillion out of N3.23 trillion) exists outside the commercial banks.
Describing the claim as ‘not sufficient evidence’, the Chamber noted that the only reason currencies are printed is for them to be put in circulation, and not to be kept in banks’ vaults.
“That is why it is called currency in circulation, which is usually broken down into two components: currency outside banks and vault cash, the cash that banks keep aside to honour requests for cash by their customers.
“Only a negligible fraction of currency in circulation should ideally stay in banks’ vaults because it only stays in the vaults when in transit. The ultimate destination of every printed currency is outside the banks so that it may circulate from hand to hand for years,” it stated.
The Chamber also argued that the fact that currency in circulation had more than doubled since 2015; rising from N1.46 trillion in December 2015 to N3.23 trillion in September 2022, as claimed by the CBN, should not necessarily be seen as a problem; since the nation’s GDP had also increased from N95 trillion to N210 trillion over the reference period.
It, therefore, called on the apex bank to be more innovative in its policies, and strengthen the value of the naira, adding that going on with the proposed plan could further put more exchange pressure on the naira, and weaken it against major currencies, if more people decide to use foreign currencies as an alternative store of value.
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