CBN’S INCOSISTENCIES IN MONETARY POLICIES

The Central Bank of Nigeria is constitutionally saddled with the responsibilty of ensuring the economic growth of the country through the policies it introduces. Overtime different CBN Governors have come with different policies they believe will aid the enhancement of the economy, some have been effective while others turned out to what could be termed “policy somersault”.

Sanusi-led CBN have introduced series of policies which one could say have left the banking industry unstable. He came up with the idea of the enforcement of the use of the coins a couple of years back, but Nigerians did not buy into that idea. Sensitization of the public was high, the threat of prosecution was made for those who refused to accept the coins as a medium of exchange, banks were made to force people to accept these coins across the counter when people went to banks for withdrawals, all these did not work. Then, again came the banning of the spraying of the naira notes, people still did not adhere to the law.

The announcement of the advent of the 5,000 naira note and the changing of the five, ten,twenty naira notes to coins was received by Nigerians with mixed feelings. Some of the arguments against the change of these naira notes currencies to coins include- most commodities would now be raised to the price where naira notes would be their sole medium of exchange. This automatically leads to inflation worse than the country is experiencing presently. Some have argued that 5,000 naira note would further aid corruption and bribery on a large scale. It is believed that it would now be easy for politicians to engage in the act of bribery because large sums of money can be moved around with without much hassles. It contradicts the cashless policy earlier embarked upon. While some proponents have compared Nigeria with a country like Germany which has high denominations like that, saying that it is not new.

It is expected of the CBN to carry out a survey on the acceptabillity and workability of any policy it wishes to introduce. It is meant to consider the pecularity of the Nigerian society, and fashion out what is applicable within the Nigerian economic system. If comparisons are being made with Germany, it is a very wrong comparison because the German economy is a manufacturing one while the Nigerian economy is a consuming one, which goes to show that ingenuity is needed to be able develop policies which would be relevant within the Nigerian context.

By now, the CBN should have an idea of how people think by virture of the failure of the re-introduction and enforcement of the coins a couple of years ago. Where is the nexus between the cashless policy and the introduction of 5,000 naira note? I would advice the CBN to be consistent with her policies as this ensures confidence of investors in the economy, which encourages stable economic growth and development.