Onwuka, Rewane Differ On Naira Re-Denomination | Independent Newspapers Limited
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Onwuka, Rewane Differ On Naira Re-Denomination

Emeka Onwuka
Posted: Jul 28, 2016 at 6:21 am   /   by   /   comments (0)

Bamidele Ogunwusi


Former Managing Director of Diamond Bank, Emeka Onwuka, and foremost economist, Rewane Bismarck, appear not to be on the same page on the issue of re-denomination of the naira.

While Onwuka advocated a re-denomination of the Naira by removing two zeroes, Rewane said the step would only add to the economic woes that the country currently faces.

Onwuka, while delivering his keynote address at the book launch in honour of the outgoing Managing Director of United Bank for Africa, Mr. Philip Oduoza, said the government could use the current economic downturn as an opportunity to re-denominate the Naira by removing two zeroes and enhance the psychological value of the Naira.

The book entitled “Dynamics of the Nigerian Financial System – Essays in Honour of Philips Oduoza”, was edited by Professor Mike Ogbeide.

Onwuka also called on government to consider redesigning and reprinting the Naira, which will be exchanged for the old notes within a reasonable time.

The outflow of the currency from the banks will then be subjected to existing cashless policies.

The benefits of this process, according to him include reduction of cash in circulation, reduction in the cost of transaction in the economy, reduction in crimes associated with cash and enhancement of financial inclusion, as bank accounts would be necessary in a cashless environment.

Others, according to him, include ease of tracking flow of funds for money laundering activities and curbing of corrupt practices as proceeds could easily be traced for several years after.

Rewane, Managing Director/Chief Executive, Financial Derivatives Limited, believes that efforts of government at this time should be directed towards local manufacturing.

“Re-denomination of the Naira cannot change anything. I have great respect for Onwuka. It is production that changes the economy. Ghana did it and what happened?

“I think it is a joke. It is like saying what is the difference between a can of beer and a bottle of beer?

“Anytime they do a bonus issue for share price in a company, they increase the value of shares but value of the company does not increase and the price of the shares goes down.

“People stupidly believe they have gained money but it is nothing. You have added more shares not the value. To me, it does increase productivity, it doesn’t increase consumption.”

On the CBN forex policy, Onwuka said the CBN would require patience and support of Nigerians for the market to settle and achieve the desired objectives of the new regime.

His words: “Hopefully the rates at which the market will settle will ultimately result in improved liquidity in the FX market.

“It is expected that the FX market reforms will resolve the issues around the official FX market, but the gap between that market and the parallel market may still remain at unacceptable levels.

“The CBN should consider lifting the FX ban on the 41 items currently excluded from the official market.

“It is an appropriate time to effect this, as the items will be funded from other autonomous sources outside of the CBN.

“Following on the back of this, all capital controls that were introduced on the onset of the FX rate crisis should be lifted.

“This will encourage entry of foreign investors as capital is a coward and stays on the sideline when there are doubts on its exit from any territory.”