N5000 Fallout:You Are A Good Farmer,But Bad Economist..CBN Gov Tells Obasanjo

FORMER President Olusegun Obasanjo is a successful farmer but he is a bad economist. This is the view of Governor of the Central Bank of Nigeria (CBN), Sanusi Lamido Sanusi, yesterday at the opening of the 6th Chartered Institute of Bankers (CIBN) yearly conference in Abuja.

All critics of the planned N5,000 note are in the same category of bad economists, according to him.

The CBN Governor made the assertion while reacting reacting to statements credited to former President Obasanjo recently  that the planned introduction of the N5000  by the CBN will fuel inflation and affect production in the Nigerian economy. He argued that there was no correlation between the introduction of a higher bill and inflation. He also recalled that President Obasanjo was the man who introduced new higher bills in the country, beginning with the N20 bill while Head of State and President.

Sanusi’s defence came on a day President Goodluck Jonathan gave the apex bank a marching order to develop a robust Monetary Policy that could guarantee a low lending rate in the country, describing the current situation where rates range between 25 per cent and 27 per cent as unacceptable and a dis-incentive to entrepreneurs, particularly those in the agro-allied sector.

Jonathan who was represented at the ceremony by the Minister of State, Finance. Dr. Yerima Lawal Ngama, also appealed to banks to refrain from the hot chase for deposits.

He said: “ Please take it easy with your staff because now the emphasis is on how much deposit your staff can mobilise which is also the yardstick with which promotion is assured and not on sound banking principles or on how much credit paper they can write. This is very dangerous because the implication is that banking is now for all comers, irrespective of background, in as much as one can mobilise deposit. It is time our banks rekindle their focus by creating products that would help the economy grow. You should look at how to tackle the high interest rate to make it accessible particularly to those in the Agric value chai  to enable them expand their operations.”

On the currency restructure plan of the CBN, Jonathan said the Federal Government was fully in support of the initiative, particularly the bit aimed at checking the dollarisation of the Nigerian. Economy.

Sanusi, who was guest speaker at the event explained that the N5000 note idea came about after the apex bank realised that 60 per cent  to 70 per cent of the Dollar currency bought from the Bureaux de Change (BDCs) in Nigeria were for local transactions and not for oversea trips  and declared that the development poses very dangerous threat to the Nigerian economy.

His words: “I know President Olusegun Obasnjo to be a very successful farmer. But he is a bad economist. President Obasnjo is also known to have the record of the President under whose tenures the highest bills have been introduced. And their introduction didn’t cause inflation because of tight monetary policies. That is why I find it difficult to believe that former  President Obasanjo made those statement. I still believe that he was quoted out of context or his speech was written for him by somebody, because there is no correlation between a higher bill introduction and inflation.

“We have realised that 60 to 70 per cent of the Dollars people walk into the BDCs and purchase are for local transactions and not for oversea trips. Someone walks into a BDC and purchase Dollars worth N3 million and pockets his $20,000 and walks away . The Dollar has now become the second currency in Nigeria .Now if a currency has lost its function as a store of value it makes economic sense to produce a higher Bill,” Sanusi further posited.

Earlier the   Chief Executive Officers of Banks and Finance Houses in the country had also supported the decision of he CBN to introduce a higher bill saying that the initiative would save cost of transaction and ultimately lead to lower interest rate in the country.

This position was adopted at the end of the Bankers’ Committee Meeting, which held at the Corporate Headquarters of the apex bank in Abuja.

The Managing Directors and Chief Executives of: UBA, Mr. Philip Oduoza; Fidelity Bank , Mr. Reginald Iheajiahi ; Standard Chartered Bank, Mrs. Bola Adesola ; Director, Banking Supervison of the CBN, Agnes Tokunbo Martins and the apex bank Director of Corporate Communications, Mr. Ugo Okoroafor, at a press briefing told reporters that the banking industry was in support of the initiative and was ready to partner the CBN in the effective implementation because it was complimentary to the cashless programme of the apex bank which is aimed at checking the use of cash in the country.