The naira is the only legal tender in the country but in most parts of Nigeria, Lagos and Abuja in particular, lands are sold in dollars, prices of some products are denominated in dollars, school fees are quoted in dollars and hotels charge and collect dollars for rooms and other services.
In Japan and other developed countries, payments for any local transactions are done in the local currency unit; their nationals insist on payment for goods and services in local currency.
Reacting to reporters question on the use of dollar in Nigeria local market, CBN Governor Mallam Sanusi Lamido Sanusi said that the dollarisation of the Nigerian economy is of serious concern to the President, the Central Bank of Nigeria, the Economic management team and every body and that the CBN is coming up with a policy to stop the practice.
He said that as a first step, the CBN will soon stop the cash sale of dollars to Bureaux De Change, where members of the Nigerian public usually make their purchases of dollars in cash to make transactions within the country.
Mallam Sanusi Lamido Sanusi at the joint briefing to mark the end of the 2012 IMF/World Bank Annual Meetings with Dr Okonjo-Iweala in Tokyo Japan said that the idea of introducing the N5, 000 note was to check mate the practice of the movement of huge funds around the country in dollars.
Sanusi whose proposal to introduce the N5, 000 currency note into the Nigerian market was halted by the federal government following heavy criticism against the move, said the introduction of the N5, 000 note was to check the dollarisation of the Nigerian economy by providing Nigerians with heavy cash transaction and a higher denomination.
His words, "The dollarisation of the economy is a big problem for all of us and it is something that we are going to walk towards taking stopping. One major plank of solving the problem of dollarisation was the N 5, 000 note, because that is one of the reason people go for dollars, and that is the reality; if you have inflation over a long time; if you have had devaluation over sometime; your currency, because the naira is not just a medium of exchange but also a store of value, if your currency loses its position as a store of value, you have a problem.
"People carry $10, 000, that is N1.5 million in their pockets. Seventy per cent of the dollars people buy from the BDCs is not for transactions outside Nigeria. They move dollars from one part of the country to another. In fact, from one part of Abuja to another.
"In a brief case, you can carry a $100, 000. That is about N15 million. Now part of the logic for introducing higher denomination is to provide genuine high-value cash users with a note that is a store of value as a first step towards our attempt to eliminate the use of dollar to move cash around because the dollar has became the second national currency".
The CBN boss who revealed that even President Goodluck Jonathan was worried over the development said that under the new policy to be announced shortly, transactions between the apex bank and BDCs, on the one hand, and between BDCs and their customers would be done online.
He explained further that those who honestly need to make payments outside the country would have the recipients paid directly from the bank accounts of the BDCs or take the option of buying travellers' cheques.
According to him, "we are worried about it. The president is worried about it. We are all worried about it and we are coming with a fresh policy to stop selling cash dollars to BDCs.
"We will credit their accounts. If you want to pay for medical bills abroad, you give the hospital account. If you want to pay school fees, you do transfer like everybody else. If you want to travel, you buy travellers' Cheque or get money on your cards, instead of people moving around with dollars.
"But what is happening now is that if you want a N2 million transaction, you have to carry bags of naira cash. And this was part of the logic of bringing in a higher denomination for people who do high-volume cash transaction to reduce the amount of paper money they carry along.
"I am glad that you asked that question because you are now beginning to think about some of the concerns that we have as managers of the economy because you have to print so much paper money and it is because people don't want to carry so much papers in cash that they are carrying dollars and we cannot let it continue to happen. In America you cannot transact business with Pounds Sterling. You cannot and we will deal with it. It will stop".
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It is a pity that the custodian of Nigeria economy will talk like this.
ReplyDeleteThis man has not done anything to improve the economy since he was appointed as CBN governor but has as a matter of fact killed the economy.
His policies are not coherent and are always contradicting each other. Take the cashless society policy and the policy to restrict ATM to banking premises, people go to the bank to withdraw large sum of money because there is no ATM close to them which contradict cashless. And please how can his dummy excuse of introducing N5,000 note compliment the cashless policy?
This country or any other country that operate like ours is done for; where you are appointed based on your affiliation with the emirate or relationship with those on the corridor of power.
Sanusi only has a BSc in Economics from ABU and a Diploma in Islamic law. CBN is not a Sharia court where we need an Islamic lawyer to man.
Liars! If you want to stop people from paying in dollars you have to make the naira strong. 5K note is not the answer for high volume transactions so stop looking for excuse to reintroduce your failed plot. Meanwhile why would someone want to move around $100000? What happened to cashless policy? Abeg bring another story and stop looking for excuses to introduce 5K note.
ReplyDeleteAnonymous- People r no longer rated by high degrees or qualifctns but on wealth of experience. Sanusi has got d experience 2 head any financial isttn in Nigeria.
ReplyDeleteI think u shld criticise d intrdctn of 5k which most Nigerians rejcetd. D World is turning 2 a cashless society n he (Sanusi) still talks about carryn 15m in a briefcase. He has his reasons but they will not help Nigeria consdering our present economic situations
Just curious! Is N5000 = $100? ... This policy or your excuse is failed! Pls find another excuse!
ReplyDeleteI totally agree with u stynex...............wat does anybody even the president wants to do with a $100,000 cash if not to launder it.............wen will our Government be truthful for once.............come 2015, Electric cars will soon be rolled into the market which will make the price of crude Oil to drop and let's see where dat will lead us to...................Nigerians shld wake up and not just chase after money but the sustainability of this Nation called Nigeria............I rest my case.
ReplyDeleteElectric Cars?That will be nice one.The problem of Nigeria(OIL) will come to an end.80% of the problems stem from OIL.
ReplyDelete