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Published On: Wed, Feb 14th, 2018

Senate probes scarcity of lower denomination naira

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Central Bank of Nigeria (CBN)

Central Bank of Nigeria (CBN)

•Alleges diversion of N634.8bn fed road maintenance fund

By Ikechukwu Okaforadi and Christiana Ekpa

Senate yesterday mandated its committee on Banking, Insurance and other Financial Institutions to investigate the causes of scarcity of the lower denomination currency and report back to the senate in two weeks on how the issue can be resolved.
This senate resolution was sequel to a motion moved by Peter Nwobochi (Delta North), which he titled “Scarcity of lower denomination currency notes”, in which he raised concern over the scarcity of 5,10,20,50,100 and even 200 naira notes.
In the motion, Nwobochi said the scarcity pose a severe threat to the economy of the country, which he recalled is recovering from recession, adding that the consequences are that they are worsening inflationary trends.
“The nation’s currency is highly essential and critical in national development and if mismanaged the economy is doomed with adverse effect on the people and the nation”, said, even as he expressed worry that banks no longer dispense lower naira notes on the excuse that they hardly receive it from the CBN.
While lamenting that all developed economies operate with coins, a developing economy like Nigeria is not even using coins despite the glaring disadvantages from the absence of coins for routine transactions in the country, he warned that if the situation is not remedied urgently it may lead to total collapse of the economy.
Earlier in his ruling, the Deputy Senate President, Ike Ekweremadu, who presided over the plenary, disclosed that in other countries they limit their currency to small denomination, regretting that in Nigeria, the economy encouraged more circulation of higher currency.
“Fifty pounds is the highest to be seen in UK, in US it is hundred dollars, but in Nigeria it is one thousand note everywhere. It is something that the government should do something about”, he said.
Similarly, Magnus Abe, said the government should withdraw the small denomination if it is expensive to produce, pointing out that there is no need to retain them as legal tenders when they are not available.
He however said there is need to do everything to protect the economy and the currency, adding that this will protect the image of Nigeria.
In his remarks, Bassey Akpan said CBN has a duty to ensure adequate supply of money, irrespective of the currency. He said even though those in the city may not need small denomination so much, but in the rural areas where the majority resides, they need the lower denomination than the higher ones hence CBN has to consider this.
Samuel Anyanwu, in his contribution, said there are competent companies that can produce the polymer notes. According to him, the CBN had complained that the polymer notes are expensive, saying they are expensive because those notes are printed abroad.
Senator Momamned Kurfi, said the motion touched everybody in the chamber, observing that even the ones in circulation are dirty and torn to be accepted as legal tender.
Senator Gobir said the use of lower denomination is a function of the economy, saying there is need to increased local production of goods and services to make the lower currencies useful.
Meanwhile the Senate has alleged that percentage of fuel sales worth about N634.8 billion meant for the maintenance of federal roads was diverted to unknown account.
The allegation of the diversion of the funds was made by the chairman, Senate Committee on Federal Road Maintaance Agency (FERMA), Senator Magnus Abe, who revealed that the money meant for maintenance of Federal Roads across the country has been diverted to unknown account.
The chairman who vowed to use legislative means to unravel the diversion of the money meant for the maintenance of federal roads wondered how could a law be made to remit a certain percentage from sales of each of fuel and the money would be diverted to unknown account.
He added that everybody gets their shares from sales of fuel but the fund meant to maintain Federal roads were diverted to unknown account.

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