TWO DECIMAL PLACE REDUCTION MONETARY POLICY OF THE NAIRA When the former governor of the Central Bank of Nigeria professor Charles Soludo (SC) introduced a new monetary police that would reduce the naira size to two decimal place, the policy was not properly examined by the then economic team of the late president Musa Yardua’s federal executive council to discern whether the policy was more in the favour of the Nigerian economy than other political interests that saw the policy not been implemented. The value of currency is not only in the purchasing power, but also in its efficient and ‘sensitive value’ to the user, which has a great minting advantage in terms of efficient production and cost reduction. The Nigerian currency is supposed to be Naira and Kobo, but at the moment only the naira is in circulation facing out totally the use of the kobo, which is the beginner. An economy without a beginning currency would definitely have an inconsistent end. There is no doubting the fact that the currency would do better by implementing the monetary policy as introduced by the former CBN administration, because a reduction in the currency size is an increase in its sensitive value to the ordinary user. Where there is sensitive value, the currency enjoys more respect and care which saves much damage that would be done to the naira notes thereby reducing the cost of producing more notes. Purchasing value = buying power/value with other currencies Sensitive value = efficiency/respect/sharpness/lesser stress/maintenance value Reduction of the currency to two decimal place making a N500 for instance to become N5 helps the efficiency of the currency, which also tells on the economic value to some extent. If $1 is equivalent to N150 for instance, the reduction would put naira to N1.5, thereby bringing back the currency to the beginner level and increase the sensitive value. The difference between the naira and the dollar will only be 50k, and the 50k apart from being easier, humble and sensitive in value, will also reflect the days of value of the Nigerian currency to the foreign currencies regarded as ‘hard currency’ acceptable globally. It is always better to have a currency in small size but more value than big size but less value (the value should be equivalent to the size to reduce the pride and maintain the value level). This policy will also face-out big figures and help our traders and other SMEs in calculating with low figures instead of high figures far too higher than the physical commodities. If a rap of vegetable cost N100 for instance currently, the reduction to two decimal place making the cost to fall back to N1 will help the seller to sensitively regard the naira in comparison to the big size of the rap of vegetable commodity sold, thereby giving a better economic signal than selling it in the cost of the naira with two decimal places. N100 = N1 (reduction to two decimal places) $1 = N1.5 (sensitive value improvement and sharpness to hard currency) A reduction in the decimal place is also a reduction in burden, and a reduction in the burden helps the sensitive value, which encourages the ordinary user to have little available currency at a particular time and a little responsibility of maintenance because of the reduction to two decimal place. A holder/owner of N500 denomination if any, would be seeing thousands and millions with more value than it is now, because of what his N500 piece can declare to the haversack. There is corruption in Nigeria, and how does currency help to control corruption? Currency helps to destroy stolen wealth dug in the ground for several years when they discover that such reduction has face-out the liquid naira in their possession, except such moneys are in hard currency. Movement of the naira cash from bank to bank will also be easier for the security operatives, who have suffered from the hands of gun men on occasional ambush. Transaction by bunk tellers will take lesser time in counting when the two decimal place has been removed than when it’s still there, plus a more available space in the ATM machine for the currency according to the notes installed. Now that the Nigerian economy is growing, it is most necessary to adopt a research approach of taking decision rather than doing meetings and placing more emphasis on region and religion, because research helps a nation to discern better the cellulose aspect of anything which is more difficult to do ordinarily or view from an ordinary human lens. The policy was rejected mainly because of the Nigerian factor placing what people can do below where they hail from. In other words, regional and religious grounds, which no Nigerian at the moment do not require a story teller to be told of its great damage to our economic life. This is because the former CBN governor was a good monetarist beside other weaknesses. And there was none in the federal executive council at that time who could interpret monetary policy better than Soludo at that time, judging from the political handling of the late president’s health at the time. Eye of A Needle and Lens Of The Camera The simple principle of the eye of a needle explains and confirms the policy as a better driver of currency value than when the two decimals are involved. The eye of a needle reveals that packing sand in the sea shore is not as difficult as picking just a sand, because of the tiny nature. This prompt the reason why faith was regarded as the eye of a needle or mustard seed capable of driving the supernatural and moving mountains respectively. Following the hardway always have a better end than packing the sand (picking is harder than packing), as it will pose a harder tackling to other currencies when reduced. So, a reduction in the decimal place is relative to the driving sharpness of the currency when the reduction is implemented. The lens of a camera or telescope is always small yet able to capture colossal objects, which reveals why the lens of the human eye is made small in order to have sharp visibility or clarity of view. What this explains regarding currency is that big-figure currency is a blunt monetary policy that must be reduced to the sharp edge that cut the currency in the mint factory. The edge and the blade of the sword is the power of the sword, and they are the smallest departments. The same applies to the carpenter driving a nail, who knows that the edge enables the driving and joining of woods to be possible. The higher the size of a currency the smaller the ‘sensitive value’ becomes to the ordinary user where sensitive value aids purchasing value in efficiency and cost of producing the notes. The best for Nigeria at the moment especially where about 11 states plus Lagos of recent are now oil producing states demands the implementation of the reduction of naira to two decimal place to help the sensitive value and aid the purchasing value with time as the real sector relatively improves along with the naira. This also tells why inflation is preferred at single digit than double digit. Lagos for instance realizes about N348billion from taxation annually, when this is converted to dollars, it becomes just about $2.3billion in value, whereas the income is nothing compare to the much that needs to be done in Lagos State. So, a reduction of the naira to two decimal place would make such state humble and make them work harder each time a cumulative of budget or taxation is done and mentioned. The much billions and trillions we mention makes the nation believe that they are rich whereas the purchasing value is far below the figure mentioned, which makes no sense. Reducing it to two decimal place will make the naira sharper, closer to other hard currencies and sensitive to the ordinary user plus a good signal to the trillion-billion-calling government officers to work harder rather than depending on the size of the money instead of its all round value. The eye of a needle here signals the reduction of the naira to a sharper edge in driving close to other hard currencies where N150 per dollar for instance becomes N1.5. Question Why is inflation preferred at single digit than double digit? If one is to convert $200 to naira at, is not better and safer to have N300 than having N30,000 naira with too many currency notes involved when the policy implemented? Between N300 and N30,000, which requires more currency notes or expenses of producing notes/denominations? We LOVE Nigeria! Lad! Sylvester Emmanuel A non-regional and a no-religion Nigerian!
Posted on: Fri, 28 Jun 2013 11:10:02 +0000
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