Plan to Phase-out Polymer Banknotes Stirs New Controversy

24 Apr 2013

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Polymer Banknotes

Obinna Chima and Nume Horsfall
The move by the Central Bank of Nigeria (CBN) to stop the printing of lower denominations of the naira in polymer and revert to paper currency has continued to generate mixed reactions from financial market analysts and economists.

Most experts, who spoke with THISDAY, described the plan by the central bank as a ‘policy summersault’ even as they decried what they described as the huge amount of resources that would be spent on the project.

Speaking in Washington DC, the Deputy Governor, Operations, CBN, Mr. Tunde Lemo explained that polymer banknotes fade easily.

Lemo had said: “By the middle of the year, we will start producing the lower denomination notes in paper not in polymer. My plea is that Nigerians should be patient with us. It wasn’t the fault of the CBN; it is just because we have to go back to the drawing board. We will correct that in the course of the year. Polymer certainly will be phased out. In fact, no new note is being printed in polymer now.”

But a former President of the Chartered Institute of Bankers of Nigeria (CIBN), Mr. Okechukwu Unegbu, expressed disappointment over Lemo’s comments.
Unegbu said: “I am surprised that Tunde Lemo is talking about scraping the polymer notes as he was the architect behind it in the first place. Going back is a waste of our country’s resources and if recalled he was a major player and principal partner in the first place.

“Tunde Lemo didn’t apologise for introducing it and its failure. Instead of scrapping it, we should have addressed what challenges by educating the market sellers and the public to avoid the notes fading.”

On his part, a Senior Lecturer at the Department of Economics, Lagos State University, Dr. Ibrahim Bakare pointed out that for any currency to be  regarded as a legal tender, it must be generally acceptable. Bakare argued that the polymer currencies are not generally acceptable.

“The decision of the CBN to change those notes to polymer then, was personal and that was a very big blunder on the part of the central bank. The people were unhappy then. We really need to consider the cost of converting to paper banknotes and the implication of that on the economy. We are going to waste multi-billion naira that ought to be channeled to the productive sectors on that.”

According to Bakare, the policies of the CBN “are not consistent.”
However, a financial consultant and Chief Executive Officer, B.A Adedipe and Associates, Dr. Biodun Adedipe   advised the central bank to carry out proper examination on the paper currency before reverting to it.

“All of these would have been avoided if it was subjected to proper check. My argument is that they should look at how to improve the polymer instead of throwing away the baby with the bath water, because how are they assuring us that we would not go back to status quo?” he queried.

Tags: Nigeria, Featured, Business, Ngozi Okonjo-Iweala, Polymer Banknotes, CBN

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