The Central Bank of Nigeria has been a getting a lot of (deserved) heat for its decision to 'restructure' the Nigerian currency announced on 23rd August 2012.
But what I found most interesting in the press release by Governor Sanusi Lamido Sanusi is on the 2nd page of the document. The bit I am particular about is reproduced below
As a first step towards this routine exercise, the CBN carried out a review of the existing currency series in 2010. The exercise threw up several challenges and revelations such as the following:
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Public apathy toward the usage of the 50K, N1 and N2 coins, introduced in February 2007
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The varnished lower denomination notes failed to adequately meet expected longevity
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Significant difficulties associated with the processing and destruction (briquetting) of the polymer banknotes. It is important to add that this situation has largely constrained the realisation of the benefits expected from polymer banknotes over paper notes.
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The tactile feature for the visually impaired has not been as effective as desired
I read that and went 'wow'. I dont know about you but those 4 points above look like a lot of failure for one policy. I mean, failures 3 and 4 above effectively mean we shouldnt have bothered with polymer notes at all. The CBN is telling us that not only did it cost more than they thought it would, it also ended up to be even more rubbish than was expected. Failure 2 is particularly scandalous because at the time the idea was being sold to us, it was touted that the new notes would be 'stronger, more durable' and possibly cure cancer and respiratory diseases.
Welcome to the Anyhow Republic where the Central Bank buries a major failure, casually, in a document touting another grand plan. It is a characteristic of 'anyhowness' that when government officials come up with some big plan, 99% of the time, they havent thought of the very thing that will scupper the whole plan and render it a waste of time and money.
It is also a characteristic of anyhowness that these same people always want to do 'big things' and have no time for the small incremental stuff. This is despite the fact that they repeatedly fail at the big stuff. To them, failure is simply an invitation to do the same thing again on a bigger scale.
Were these failures really neccesary? Couldnt we have avoided them? How is it that the cost of 'briquetting' the polymer notes was not anticipated to the point where it eroded the gains we were supposed to derive from the notes? If one of the benefits of the new notes was to aid the visually impaired, goodness gracious great balls of fire, were these notes not tested on the er, visually impaired before they were unleashed on the public at great cost?
Now, in response to what it called 'false rumours on currency restructuring', the CBN came out with another press release (with no date). Once again, on the first page it says
The new currency notes will have tactile marks to aid the visually impaired
Will they test the new notes with the visually impaired this time around to ensure it is fit for purpose or will the next CBN governor declare it a failure when the next 'review' comes around in a few years time?
Another characteristic of anyhowness is that once government officials have decided on a half baked policy, there is nothing too ridiculous for them to say to justify it. See a sample of choice quotes for members of Nigeria's 'Economic Management Team'.
Dr Shamsudeen Usman, Minister for 'National Planning' (what is this man planning by the way?)
There is absolutely no link, I am an economist, I had been Deputy Governor Operations of the Central Bank," he said. "The last review of the introduction of N1000 note and the various coins, I was deeply involved, it was my responsibility at the Central Bank.
So, obviously the discussion today was basically to endorse. Mr President had already approved, that is the only requirement by law. The CBN is to propose and Mr President is to approve. And since Mr President has approved, really what is important is to just explain. I personally had some concerns about the coins but since some discussion with the CBN Governor, he has actually clarified that even the media didn't get it well. The coins are being introduced on an introductory basis so that if people accept them and are using them, then gradually they will withdraw the other notes but they will run concurrently together with the notes.’’
Usman also said the introduction of the note was not at variance with the cash-less economy policy; and stressed that it would not encourage corruption. "A $100 bill is N16,000 while N5000 note will be $30, so which one is bigger to carry if you are doing corruption? So, I do not think it is necessarily going to increase the level of corruption. Those doing corruption will probably find that too small than 100 dollar bill, which is still bigger than the N5,000 note," he said
The bold bits are my emphasis. Here is a Minister, perhaps unwittingly, tying himself to a policy that has been declared by the CBN to be a failure and yet he is boasting about it as the reason why he knows what he is doing this time around! You cannot make this stuff up.
Look at the other emphasised bit; because they know it all, there is no need for anything other than explanation. In any case, Mr President has banged his gavel on it and that is the end of the matter.
The rest of his comments dont make any sense so no point wasting time with it. Let's move on to another 'Economic Manager', this time Atedo Peterside.
If I were the CBN Governor, I will prefer to print N10,000 notes," he said. "Last year, Nigeria spent N47 billion to print these small notes.
If we were printing bigger denominations, we will print fewer number and you make a phenomenal savings. Secondly, money is a store of value, all these thieves, rogues and vagabonds running around in various states and all over the country, when they steal money, they will want to keep it outside the banking system.
This statement is a cause for thanksgiving. We should celebrate the fact that Mr Peterside is not the CBN governor based on his comments above. Mr Peterside has run StanbicIBTC for many years now in a manner that suggests he appreciates the value of stability in a financial institution. At 33 he became CEO of the bank (when it was founded) and only 'stepped aside' in 2007 when he was 'elected' as its Chairman. Presumably he'd like it if we forced the bank to change its Chairman every 2 or 3 years as an example.
He also says that 'last year', which can be taken to mean 2011, the CBN spent N47bn printing 'these small notes'. One can understand that wealthy people have no time for 'these small notes' but between the CBN and Mr Peterside, we have to believe somebody because in that same document the bank released to address false rumours, it clearly stated that in 2011 the cost of printing all notes (and coins) was N32.6bn.
Should we take any of these 'Economic Managers' seriously? Or to be more precise; can we afford to take any of these people seriously given the potential cost of this restructuring? As we can see from Dr Usman's testimony, there is no penalty for failure in Nigeria and failure is in fact something that can be worn as a badge of honour. Ultimately the cost of failure is passed on to hapless Nigerians and the people who promote the failed policies are rewarded with promotions and Chieftaincy titles. Sometimes, they narrowly miss out on being Governors of their state.
The worst thing about this currency restructuring business is that it's a 50/50 policy. Chances of failure or success are about equal and even the touted benefits will hardly be worth the hassle at the end of the day. Nigeria shouldnt have time for 50/50 things at a time when we have so many pressing needs. There can be no debate about the benefits of a 2nd Niger Bridge. Build that and leave the currency. It's not a toy to be fiddled with every 5 years. There might be benefits to the introduction of the N5,000 note but there are also many downsides to it.
Take a random example from the United Arab Emirates after the reintroduction of the 1000 Dirham note in 2000. This led to a 'change crisis' and forced banks to start charging customers 1% for giving them smaller bills. Given that the CBN's aim of printing higher denomination notes is to reduce the cost of currency management, it is reasonable to expect that they will reduce the amount of small notes they print, otherwise what would be the point? If Nigeria then has a scacity of change, who are the people who will feel the brunt of any rationing or charge for change? I can tell you that it wont be people like Mr Peterside who doesnt like 'these small notes' anyway. The N5,000 note will create an even bigger need for change because it wont automatically make people richer. The person on $1/day will still be on $1/day.
This is the final point to make about anyhowness - people are quick and willing to recommend policies for others that wont affect them in any way. Just dish it out, if it fails, it's not my problem and wont affect me. If it succeeds, I will put it on a powerpoint as an achievement.
This is another anyhow moment for Nigeria and those in charge of the country are behaving true to type.
Expect the usual casual failure.
FF
P.S A friend of mine, Debo, introduced me to the concept of 'anyhowness' in Nigerian government and leadership going right back to the time of Murtala. He's been threatening to write a book on this Nigerian characteristic. The idea isnt mine, I have merely borrowed it.
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