The CBN Governor listed the proposed currency as one kobo, two kobo, five kobo, 10 kobo and 20 kobo coins, while notes will now begin from 50 kobo to one naira, five naira, N10 and N20. He noted that from then, all naira assets, prices and contracts will be re-denominated by dropping two zeroes or two decimal points to the left. It means if you were earning N100, 000 before, your salary now will be N1, 000 and now we can buy a car for N5, 000, N10, 000 etc
The biggest shocker is that from August 08, the Naira will be put at N1. 25k to a Dollar...is this crazy or what? So if you live abroad and send money home to family...from August 08, that money won't be such a big deal. I mean if a dollar which is around N130 now, is put at N1. 25k, whats the point living abroad? Most of y'all are coming back home...yeeeeeh! This country is about to get betteeeeeeeeeeeeeer!!! This was how it was over 30 years ago, until the Naira depreciated drastically in the early '80's.
Is this feasible? Who thinks this is good news?
40 comments:
This is scary. I better move some cash home asap!
it doesn't really change anything from an economic perspective, though what I can't figure out is why they went through all this trouble to introduce new notes this year only to replace all of them next year.
The one really good thing about all this is that in January 2009, all the capital controls on the naira come off. Which means that there will be no more need for black market
No you are joking aren't you? This is the funniest thing I have read in a long time. Have not seen the Naira in a long time but even I know that this is just plain stupid.
Suby
I am not sure you get it. Whilst the amount actually becomes lower, the value rises. So 1naira will be able to buy more things although it sounds small.
It is like how 1 pound is of tremendous value and you can buy a car in London from about £1000 and above. My 2 cents.
The Naira Note.
I am not a good student of Econs but I think the announcement by the CBN is a welcome move in reforming the weak and worthless naira. What’s the purchasing power of Naira? Nigeria is one of the few countries in the world whose highest denomination bank note cannot buy a loaf of bread.-Maybe am blowing it out of proportion? Prices of essential commodities have shot up cos of the HYPERINFLATION in the country. Ordinary citizen now only have money for the very basics. A lot of things have become so ridiculous in Nigeria that they would be hilariously funny if they were not so deadly serious and causing so many of us to die unnaturally early. The word ‘ Billion” and "trillion" has been added to our basic vocabulary, because that is the monetary figures government departments,corrupt imbeciles politicians, shady businessmen alike are now working with.
The proposed dropping of two decimal places of Nigeria's currency will better manage inflation, cut back on production costs and promote the use of small-denomination coins.Millions of Nigerians currently carry bundles of often-filthy naira bills to purchase goods, with the highest note worth 1,000 naira and coins rarely used. The country’s overall economy has shrunk and the standard of living of its 140 million people declined steadily since independence, to the extent that the World Bank now ranks Nigeria as one of the world’s twenty poorest countries. Today, in a country that pumps roughly 2 .5million barrels of oil a day and has the distinction of being the world’s seventh-largest oil producer, 60 percent of the people live on less than $1 a day. And that percentage rises to 70 percent in the Niger Delta region where the oil is being stolen from ..sorry commandeering from. . Even gasoline, which should be cheap and plentiful, is instead almost entirely imported from abroad at great cost, thanks to the near-total collapse of Nigeria’s refineries.
If the CBN doesn’t change the current denomination of naira I see the current level of inflation in Nigeria would rival that of Argentina or Brazil in the 1980s.
I think it is high time for the CBN to stabilize the exchange rate, reduce inflation, reform microfinance, restructure the lower denominations of our currency and re-introduce coins, as well as promote the efficiency of the payments system to ensure economic prosperity of Nigeria, and for Nigeria to become the Africa’s financial hub. Milk tastes good with Ovaltine/Bounrvita. We would prefer the old days when we had milk we could afford.
this has no effect on the economical, political or security issues, opportunities and lifestyle of Nigeria that has pushed many abroad...its all currency change and not the value of the money....So, it make me wonder why those living abroad would be coming home.....They are just trying to deal with inflation in the "wrongest" way...its all in the name...why don't they scrap 3 zeros so that w'd be higher than dollars...God help Africa!!!!!!!!!
heard the plan on the naira too.if it works then theres gonna be a mass return.im sooooooooooo excited.meanwhile how come soludo just thought of this?
I am excited and i hope it does come to reality.
i think its great news. just look at it like this, if you earn 200k, u'll be earning 2k!!! puts thiings in perspective dunnit!!!
I love it!!
hmmm indeed.. what is the point of living abroad?
Okay....so I still waiting for the part of the post where you say "and I hit my head on an electric pole or something.....and it was a scary dream." But seriously though, is that for real?
wow i hope the news is true. that is good news to my ears.
then my dad can send me 100,000 naira which will be $100,000.
This makes me realise that the news may not be true.
Unfortunately for Soludo, banks and governments do not determine the value of a currency, market forces do, no matter what is achieved initially with his plans, market forces will subsequently determine the true value of the Naira. In general, if corruption and poor and inefective policies continue to be the order of the day in Nija, then this grand master plan will hurt Nija even more than Nigerians are impacted at present. Y'all, please don't get me wrong, i am for a Greater Nija, but we need to sort out the basics first, the underlining issues that have plaqued our blessed country, until adequate security, portable water, efficient electricity, improved hygienic conditions are norm, then every other effort by any Government to stem the "Fall" tide of our currency will fail. I am sure I speak for a lot of diasporans (dont even think that word is right to describe us)when I say, it is the absence of those infrastructures that hold the social fabric and conciousness of a society that really is keeping us away from coming home to stay put, by my account we have a lot of us who are (naira) millionaires but yet want to be Nigerians from afar. So, even achieving the favourable rate exchange (initially) will not see a flock of Nigerians rushing home in a hurry.
Pete
This is really good news -
1.) Our external reserve of $40 Billion dollars now equals N50 Billion Naira
2.) 1 barrel of oil for 75$ now equals N93.75 Naira
As per that Ogbonge' heard Tola that says his dad N100,00O naira will translate to $100,00 dollars, sorry dude...you dad N100,00O naira will convert to N1,00O Naira 1st before it equals $1000 dollars(same as before)!
If you have 1 million Naira in you bank account, they will convert it to 10,000 Naira!!!
I hope that bread, milk, sugar and other food staples will go down to about 10kobo or so.
As per those living abroad, you can easily afford to make $40,000 plus/per year, whereas as per those working in Naija, if you make 1 million Naira/per year, that your 1 million Naira now translate to N10,000 Naira/per year
(Me I still deh kampe for abroad).LOL!
So, do the maths Linda!...that your small millions in Naira will soon convert to 10k or 20k Naira. (that's what we call shrinkage economics and pray that they do not revert back to the old system...you know Naija now, which bank you think say after dem don shrink you millions to thousands will now increase it back to millions, but me abroad...I am safe with my dollars without all these manipulations)lawl lawl lawl!!!
so if u earn N10000 a month you will now earn N100 a month?
Even if we all rush back home as Linda soooo desperately wants us to do, are we guaranteed jobs that will pay us in thousands of Naira? Let's wait and see how things unfold before we start drawing different conclusions!!!
I agree with Pete, its the economy that determines the value of the naira and unless our economy improves pronto, the naira will do down but we'll still be paying top price for products.
Nwanyi Ocha
I think the value of the naira has stabilized already over a reasonable span.
This move does many things one of which is reduce the insane amount we spend simply printing money cos we have to use such large amounts. Using coins will now work. It also discourages people(the rich and expatriates) from carrying dollars every where cos of less bulk. Its also easier to use the naira across west africa cos its closer to the dollar and easier to exchange. Things wont be cheaper from start but it makes plenty sense when done with all the other reforms. China, Germany, Brazil and even Ghana(this 2007) did it so its not some madcap scheme plucked out of the air. Of all the reformists I trust Soludo the most...
lol @ tola sorry ur dad cant send u 100,000naira coz then he would be sending u 10,000,000..rather he would be sending you 1000naira which is equivalent to 1000$$,the change would just remove the two zeros from our currency,like someone pointed out,even though the currency is low..its value would rise,everywhere in nigeria,100,000naira wud now b 1000naira,wot u wud buy with the 100,000 u can also buy with the 1000naira..but i tink there would be less millionaires now ohhh..lol
I studied economics and work was an investment analyst in diaspora (LOL). To clarify CBN's proposal in layman's terms (pls other Economists can chip in):
1) This is a DECIMALIZATION and not a REVALUATION of the Naira. Decimalization means that NEW prices will be two zeros less than OLD prices---N1000 will be N10. REVALUATION however will not happen (immediately sha)as value remains the same i.e. OLD N1000 good will be bought at NEW N10.
2) CBN hopes that somehow DECIMALIZATION will lead to Revaluation upwards. How?
a)$1.25= N1 will make import more expensive and unattractive as
b)Export (domestic production) will be cheaper and a better option
c) It will become easier to trade the Naira on the international currency board
d) MAY curb corruption as everyone has to exchange old currency for new one...
Next, Federal/state allocation will be in dollars. This is expected to boost the Naira. How?
a) State govts will collect their funds in Naira, but such funds will be dollar backed, thereby strengthening the Naira.
b) Our commercial banks will be stronger as they will be the administrators of these dollar backed monies.
c) Easy inflow (& Outflow too) of investment funds
Good initiative if
a) Our commercial banks can resist 'outflowing' money for politicians,
b) People like pepper-sellers agree to reduce prices as planned
c) Other sectors of the economy will/can grow like financial sector has done
Bad initiative in terms of
a) Greater Inflationary pressure---any small price increase will now have more impact
b) Somewhat bad precedence: Brazil, Argentina, China, & Bolivia's attempts at decimalization were RELATIVE failures
In summary the commercial banks will be the immediate biggest winners, other winners will follow. This is my .02kobo; other Economists pls chip in...
One more thing, currency-value is fundamentally driven by your relative export (i.e. goods produced using Nigeria's resources/money compared with those produced using other country's e.g. China's resources)
This means that SUSTAINABLE upward revaluation is likely to occur only if other sectors (power, transportation, energy, manufacturing) are developed and are, at the bearest minimum, meeting local demands (eliminating the need to import====if we do the math: export > import)
Alas we do not have Soludo(Soludosolution) leading other sectors, it will be interesting to see how this policy will pan out.
so so talk and no action.
na today.......
Err . . . . for whatever reason, I hope this doesn't cause a crash in our economy. I'm just not sure how I feel about it. I can't remember what country it was that tried this same thing in the late 80s or early 90s or so and it hurt their economy BAD!
@ekwitok tank u o! i tink i understand small.
so basically, dis is a psycology thing right? Abeg plz, economist help simple minds understand.
always the first with breaking news. well done Linda. As per the re-valuation, knowing Soludo, it is feasible and as soon as that happens, i'm heading back home.
The value doesn’t change.
If you earn =N=125K now per month (i.e. $1000), in 2008 you will earn =N=1,250 (which still will equate to $1000)
If I send $1000 to my folks now, they will get =N=125k, which sounds a lot, and maybe will buy them a couple of Agbadas. In 2008, if I still send them $1000, they will get N1250, which doesn’t sound a lot in numbers, but they will still buy the 2 agbadas. So it’s all about numbers. ‘Millionaires’ will become ‘thousandaires’ and so on. A Nigerian billionaire will now be almost at par with her counterpart in the states. They hype will die a slow death.
dunno much about economics but wat i do know is that i'd rather not have my salary decimalized or reevaluated!!
whos with me?
Naira Note:
I think one of our economists has made some vital points here. For me, i wholeheartedly support Soludo's crusade to arrest our worthless Naira. I don't think Soludo is playing LUDO with our naira. some of us should bring our senses into Applied Economics!!!
Let's fold our arms and see the outcome.
I pray for the division of this country so that those who want to return to the cave will be free to do so and leave those who want to go to the moon to try their luck.I don talk my own Linda...
This is definitely a bad math equation on Soludo's part.I'm up for a better Nigeria but I'm not quite sure he's quite explained to the people how this really works. You won't see the value overnight. Market forces determine the value of any currency and as long as global markets aren't trading in the naira....ok, let me stop here so I don't totally burst some people's 'naira' bubbles.
So while our naira becomes 'valuable' how does that address the underlying issues or PHC, overall mismanagement or resources and public funds, unenforced policies to govern social rights etc?
....beats me.....
phew i guess i didnt read the part about moving two decimal places.
This is good news although I'm not sure about the moving back to Nigeria part. Hope it comes to pass.
:)
The new currency structure thing is just bull crap,it's not gonna work in just one year.
i think this was a very good idea that soludo is implementing.
i'm not sure how this is going to work but from what i've heard it sounds like a good idea. Apparently, this is to help raise the value of the naira and of course the cost of things will decrease to match the naira as well as ur salaries.
We all know Nigeria is all talk and no action but if this is for real and it helps the economy in any little way then i'm all for it.
NIGERIA IS CHANGING 4 THE BETTER.GOOD NEWS.
kai people una sef
To think folks on here are educated, if we are talking like this what of the villagers at home.
CBN will issue all new curreny!! u wont be able to stash away nothing, new currency, with new dates, everyone will have to go and exchange their old money for new money at the bank!
for those getting paid N100,000, u'll now be getting N1000. If food cost u N1000, it'll now cost u N10
It doesnt make the naira stronger and there is no need for people to start rushing to nigeria.
It makes the naira look appealing and now folks wont need ghana must go bags to collect money from bank lol
lmao@ person who thinks they can get their popsie to send N100k and have it be $100k. N100,000 in the new system is really N10,000,000 now, can ur dad send u that now?? If he cant, he wont be able to afford to send u that N100,000 then!!
lmao@ person who doesnt decimalization becos they dont want their salary to seem small
the biggest problems are the sellers who will try to do wayo and feed off the confusion this will cause, and wont reduce their prices accordingly.
Guaranteed Ghana just did theirs, but compared to Ghana, Naija is a jungle lol
The new currency structure thing has been suspended indefinitely.
The new currency structure thing has been suspended.
Hi Linda,
I always knew you were a smart gal. I really like your blog page and I think God has not even started with you. I know you'll get far, keep it up and keep updating us here in Canada about Nija.
Have a blessed day and keep being you.
Me
http://monthlyyouth.com/?ref=312671
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