N5000 bill and others

Quick thoughts on the new currency series.

First the new N5000 note. Think about how much you had in your wallet in 2005. The number of notes you needed to get by everyday in 2005. Now think about how much you need to have in your wallet to get through today. I bet your wallets are a lot fatter even though you may not be necessarily richer. The fact is with inflation at about 10% every year you need about twice as many notes than you did in 2005. Its easier on every one from people to businesses to banks to push fewer notes with the same value. A N5000 note makes things easier for everybody. Certainly a lot easier than  taping 5 N1000 notes together. Will the new bill make things more expensive? Probably just as much as exchanging 5 N100 notes for 1 N500 note does. Doesn’t make a difference unless you are at a wedding.

Bottom line is as long as we have inflation of around 10% a year then we will need higher denominated currencies every few years and maybe even a currency re denomination at some point. The cashless policy might make all this redundant but that hasn’t really taken off yet.

Will the new bill promote corruption by making it easier to move cash around? It will certainly increase the amount of money that can be hidden in caps. I don’t think it will make a difference though. Corruption has already mostly gone cashless.

Second thing is the redesign of the old bills. This is a pure security measure, I think. You always want to stay one step ahead of counterfeiters. It is a smart thing to redesign the currency every few years. The $20 bill is tweaked every 7 – 10 years for the same reason. Nothing to worry about here.

Finally the coins. I do not understand the logic here. Nigerians do not like coins. Coins have not been successful since… Perhaps it is an admission that anything below N20 is useless. Even the police do not accept N20 bribes any more. If it is useless then it might as well be fazed out. There is still technically a N1 coin after all. Will this also nudge prices higher? I don’t think so.

Overall there is nothing to criticize here ( sorry twitter folks). Perhaps we can argue about who should be on the N5000. Margaret Ekpo? Just put Don Jazzy on the bill and get it over with. I joke.

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8 thoughts on “N5000 bill and others

  1. Much as I want to agree with you sport, I would beg to differ!
    I remember when the highest denomination was the N20 naira bill and inflation went higher than 10%, prices went up and we had to carry a lot of naira bills to pay for anything….. Yea it was burdensome but the mindset still held value for money. Therefore we saw better that inflation was our problem, but to make for ease of carting d naira around, the N50 was made still we had issues so they made the N100 bill, then the N200, N500 and finally N1000. But Nonso tell me u did not figure out that with each new higher denomination introduced, a new price floor was introduced? The mindset of the illiterate public was that lower denominations were now valueless! And lemme point out that the illiterate public decide a lot of price floors and ceilings in Nigeria. For example if the farmers and farm produce merchants decide to double the price of tomatoes and pepper or beans and yams which are staple foods in Nigeria, nobody can do anything to stop them! And the simple fact that there is a higher denomination, in their minds means we have more money to spend! Taxis will disdain anything less than a higher denomination! The fact that its there is a threat cos the minds of the people is that of spending, what’s in vogue and what’s fashinable! Before we realise it bread will have gone up to above N2000 pa loaf! Have you never heard people say ‘we no dey spend that kain money again’? RE Valuate the Naira!now that would make sense!

    1. I agree with the Author and disagree with you Obadina. First, of all it is hard to say, without statistical or similar evidence, that it was the introduction of higher bills that led to the formation of new price floors. I feel that this inflation, as the author has pointed out is something that has happened by itself (driven by other factors but let’s not get into those), and introducing higher denominations were merely a means to cope with this inflation!
      It is also hard to agree that it is merely the whims and caprices of ‘illiterate’ people that determine the cost of things in the market. Nobody simply ‘decides’ to increase prices especially as there isnt a monopoly or a significant union in these matters. Many many many other factors lead to this e.g increase in the price of fuel, a dependency on importation (especially for staples like again fuel, and flour, and clothing, and cars and almost everything) means the price of a dollar affects many things as well. An increase in prices in one sector will cascade to other sectors.

      1. Oche while i have not agreed or disagreed with the author’s opinions, i will state here categorically that the only misguided notion that most educated Nigerians make is to think that the Nigerian economy still has a semblance to theoretical models of economics!
        2) its only urban Nigeria that is really dependent on importation, rural Nigeria doesn’t give a hoot!
        3) urban Nigeria is wholly dependent on rural Nigeria for most foods! even groundnut oil is and has always been produced locally in the North! need i mention that it is a very suitable alternative for Veggie oil? do u think that biscuits and cornflakes or bread is really staple? flour till today can be milled locally using mules and grinding stones…………. guy i know i work deep in rural Nigeria.
        finally being a commodities trader i can give first hand infor that really the only way urban Nigeria effectively influence rural Nigeria is in extravagance and vice! they look at this new bill and they say up! there is new money the ‘old’ lesser bills r no longer in vogue!

  2. D advantages wud be less wit introductn of d note. It wud only favor d rich. I sugst they look more in2 job creation.

  3. This is the point where I need to let u know that people are still spending 20N , 10N and 5N . As soon as these notes become coins, all the stuff that we buy at those price will no longer be available . We might stay on the Internet and argue frm now till eternity the good that the introduction of the N5000 notes will bring but the truth is that the rich will keep getting richer while the poor will keep getting poorer. Pure water will no longer sell for 5 or 10 Naira becos we don’t use coins so will will find a way of phasing out the coins . 50kobo and one naira notes were phased out that same way.
    There is absolutely no sense in the introduction of the N5000 note, sanusi should hav just stick wit the cashless policy and try to make, it work. If we are worried about how our pocket and wallet is going to bulge then we should also wonder why the highest denomination in the UK is just 50 pounds.
    I rest my case.

  4. There is 1 thing to criticise: the policy jumping! For all intents and purposes if the ‘cashless society’ bid had taken off by now, this N5000 might not have been necessary for the next couple of years. All these policies just for one aim in the same year, everytime one policy starts to fall apart, they just bring up a new one. It is unnecessary if u ask me.
    And what pple are complaining abt isn’t exactly inflation, it’s a nigerian thing, once u ‘break’ a N1000 note, there’s no going back. that’s the sentiment, it will now be easier to ‘blow’ N5k!

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