The Nigerian Village Square - Breaking News: Soludo Overruled on New Naira Policy!

Breaking News: Soludo Overruled on New Naira Policy!

Written by Reuters

Friday, 24 August 2007

Nigerian government stops currency re-denomination plan

Fri 24 Aug 2007, 14:39 GMT

By Felix Onuah

ABUJA, Aug 24 (Reuters) - Nigerian Justice Minister Michael Aondoakaa on Friday froze a plan to re-denominate the naira currency which the central bank announced last week, saying the bank had violated the law.

Aondoakaa said Central Bank Governor Chukwuma Soludo should have sought President Umaru Yar'Adua's written approval before announcing the plan, which involves removing two zeros from price tags from Aug. 1 next year.

"I, as the chief law officer of the federation, hereby stop all actions on the re-denomination of the naira," Aondoakaa told reporters after a meeting with Yar'Adua.

Festus Odoko, the central bank's chief spokesman, said it would discuss the issue with the justice minister. "It is certainly not true that the bank did not consult with the president about the re-denomination," Odoko said.

Re-denomination was one of a number of policies announced by Soludo on Aug. 14, some of which financial markets considered more significant.

Asked if the other measures were also being frozen, a close aide to Yar'Adua, who did not wish to be named, said: "It is only the re-denomination that the president is not happy with."

Critics had questioned the cost and benefits of the re-denomination plan, announced just a few months after the central bank introduced new 50, 20, 10 and 5 naira notes. These notes, which cost millions of dollars to print, would become useless after the proposed re-denomination.

Aondoakaa cited section 19 of the Central Bank of Nigeria (CBN) Act 2007, which states among other provisions:

"Currency notes and coins issued by the Bank shall be ... in such denominations of the Naira or fractions thereof as shall be approved by the President on the recommendation of the Board."

"ILL-CONCEIVED"

"The federal government has done the right thing in halting the ill-conceived policy. The whole policy was not well thought out," said Ayo Teriba, head of consultancy Economic Associates in Lagos.

Soludo announced the re-denomination at the central bank's main auditorium to an audience of hundreds including state governors, ministers, diplomats and journalists.

Soludo said at the time that the aims of the re-denomination included anchoring inflationary expectations better, strengthening public confidence in the naira, making conversion to other currencies easier and promoting usage of coins.

He also announced that the central bank would distribute part of fiscal revenues to the three tiers of government in dollars from next month, while from Jan. 1, 2009 it would adopt an inflation-targeting framework and remove restrictions on current account transactions.

The re-denomination was the measure that attracted most criticism. "Given the limited economic benefits, as well as the high fiscal cost associated with the re-denomination, there was always going to be some level of uncertainty attached to it," said Razia Khan, regional head of research for Africa at Standard Chartered Bank in London.

The naira depreciated on Friday to 126.41 to the dollar from 126.38 on Thursday, dealers in Lagos said, but they added it was not in response to freezing of the re-denomination plan.

Robot Robot is offline
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	# 1 Nigerian Justice Minister Michael Aondoakaa has frozen a plan announced last week by the central ...Read the full article. Posted by Robot\| 24.08.2007 10:59

Namio Namio is offline
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	# 2 Na wah o! Just lika that? Man pass man, position pass power. Posted by Namio\| 24.08.2007 11:03

teebee teebee is offline
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	# 3 Interesting. The political game begins in earnest and the quest for self-determination and political influence. It will be nice to see how this turns out, since some have argued that Yar'Adua must have been fully in the know about the Soludo plan. O how messy politics can be, but I guess we have to live with it. Posted by teebee\| 24.08.2007 11:09

tengallons tengallons is offline
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	# 4 For a policy that would require so many arms of the Federal Government to implement, it would be very strange if Soludo did not run this by UMYA -- regardless of what the instrument setting up the CBN says. There's something wrong with this whole picture. Posted by tengallons\| 24.08.2007 11:14

ezyvic ezyvic is offline
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	# 5 Sitting on the fence and over-seeing the government's reaction I cant help clapping at the obvious insincerity of purpose behind the decision of the attorney general. Soludo should have known better that pulling the naira out of the drench would not favor the high and mighty who had stashed away million/ billions of dollars at a grossly devalued expense of our dear naira. so, telling them (politicians) that the risk in diplomatically transferring these funds was not worth it would never ever go down well with them. It is a big shame though, when we see the same politicians appreciate the strong economies they try to support with stolen funds. I use this medium to call on President Yar'dua to contain the excesses of those politicians, including the Attorney General (political appointee) not to destroy the future of the unborn. We all agree that the constitution cannot even thrive in the jungle, and this makes me wonder why only policies that can better the life of future Nigerians is challenged by the attorney general, considering he only recently attempted to protect other PDP politicians from the venom of the EFCC and the ICPC. Why has the attorney general looked sideways when Aloa Akala amongst others abuse the legal books by firing and hiring their state law officers to suit their selfish interest. Nigerians must wake up to their responsibilities in calling these politicians to order for us to avoid abuses from other nations as witnessed in Spain and Greece because our country has failed to function right. This is the time to take our the bull by the horn, as I await the reaction of the CBN governor, who I hope will not compromise the hard earned benefits that such a policy strategy will earn Nigerians on the long term. Posted by ezyvic\| 24.08.2007 11:19

biolapedro biolapedro is offline
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	# 6 This has to be a welcome development. I'm sure they have concluded that the de-merits outweigh the merits of the hasty redenomination Posted by biolapedro\| 24.08.2007 11:20

Viktorius Viktorius is offline
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	# 7 What is wrong with this Aondoakaa guy? Why is he more concerned with the legality of a move by the CBN to make a decision concerning matters it oversees by law (CBN Act 2007) rather than trying to speed up justice for the millions of people who are still awaiting trial in Nigeria detention centres and prisons? Why is he always trying to exert his authority over others instead of doing his job? :mad: I am not pre-empting the law, but me thinks that this ass will once again be forced to hang his head in shame as he tenders another public apology. Let's watch and see what happens. Barman! Bring Star and esi-ewu....:D Posted by Viktorius\| 24.08.2007 11:20

ikechiji ikechiji is offline
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	# 8 I imagine that Soludo's days are numbered at CBN. It was definitely not wise or politically savvy to announce such a major plan so early in UMYA's administration without getting everybody on board. I also find it hard to believe that CBN would not have discussed the policy while Usman was Deputy Governor. Also why spend all that money introducing new notes only to turn around and announce re-denomination which would involve printing new currencies months later? Something is definitely fishy! Posted by ikechiji\| 24.08.2007 11:24

ula-lisa ula-lisa is offline
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	# 9 One is very interested in reading the law that says that in justification... My initial thoughts, UMYA caved to pressure of the crooks who have money in the 100m off-shore... who wrecked our economy... who are not interested in a rebound of value... whose proxies trade in the parallel market...(in a panic) who want to remain the only kings on the hill-top of a rubbished naira. Posted by ula-lisa\| 24.08.2007 11:30

Big-K Big-K is offline
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	# 10 Too many policy flip-flops in the first 3 months of this administration. This is why a visionary leader is always better than someone, though honest, who was dragged reluctantly to lead the country. Posted by Big-K\| 24.08.2007 11:35

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