As we all know that we as a country are battling with recession,It may take some time for the naira to stabilize or it may never stabilize. But one thing is clear,while the naira is going up and down it will affect businesses.

Businessmen will have difficulty planning because
you need stability to plan. Foreign Direct Investors will be wary of Nigeria because they need certainty before they can invest. Already several international financial institutions including WorldRemit have suspended money
transfers to and from Nigeria.

The truth is that if we keep on doing the same
thing, we will keep on having the same results.
That is just plain commonsense. We need to do something radical to change our situation for the better.

I recommend going back to the idea of re-
denomination of the naira that was floated by the
former Central Bank of Nigeria governor, Professor
Charles Soludo about eight years ago.
That idea was a brilliant one which had worked in
Ghana and helped stabilise their currency and
boost their economy. Many Nigerians remember the Ghanaian cedi from the eighties as a very weak currency compared to the Naira. Many of us who are old enough used to laugh at that currency.
However, after Ghana re-denominated the cedi in
2007, the currency bounced back and became
stronger vis-a-vis other major world currencies.
In the 80s, one Naira could get you over 40 cedis,
but as of today, one cedi would get you 80 Naira.
The table has been reversed! The cedi is now
stronger than the Naira and Ghanaians are having
the last laugh. One dollar would get you 4 cedis today whereas one dollar could get you almost 400 Naira. But the main difference is in the stability. The value of the cedi remains strong and stable while the Naira is weak and unstable.
Ghana was not the first country to re-denominate
its currency. Turkey re-denominated its currency
in 2005 and it was a success in fighting inflation.
In fact, before their re-denomination exercise,
Turkey suffered from hyper-inflation, but after the
Turkish Lira was re-denominated and six zeroes
were removed from the currency, their inflation
reduced to single digit rates.

China has also re-denominated and their currency
now competes with the dollar as a world
currency.Professor Soludo planned the same thing for Nigeria. The naira re-denomination he planned for would have taken two zeros from the Naira
meaning that N10 would automatically become
10 kobo while N100 would become N1 and
N1,000 would become N10.
The expected result of the re-denomination was
that it would neutralize inflation because more
currency would be in coins and just the
psychological effect of that alone would drive
down prices.
Also, one of the major reasons why a currency
has or does not have value is the cost of printing
it. With the re-denomination, the cost of printing
the Naira would have gone down as less high
quantity of high denominations of the currency
would be printed and be in circulation.
Also, re-denominations immediately drives down
the costs of handling cash and book keeping as
well as other accounting costs.
The international consulting firm,
PriceWaterhouseCoopers noted that the re-
denomination of the Ghanaian cedi reduced the
cost of doing business in Ghana by, and I quote,
‘reducing the time taken to input financial data
and time spent by management in reviewing the
same’.
Nigeria has a great economic challenge today.
Inflation is now in double digits whereas it was in
single digits last year. The purchasing power of
the naira is losing value everyday. The naira is
exchanging for the dollar at double the cost it did
last year. Banks are firing their staff. Businesses
are closing down.
If we continue to do the same thing, we will
continue to have the same results. It is time to
try new ideas.
Over 50 nations have re-denominated their
currency. There is enough evidence of the
success of this exercise. We do not have to
reinvent the wheel. Let us learn from others and
save our economy.
Was it not Einstein who said that doing the same
things and expecting different results amounts to
insanity? We can keep switching from the Dutch
Auction System to the Modified Dutch Auction
System to stopping the sale of foreign exchange
to Bureau de Change and reversing that policy,
but where would that leave us? Where has that
left us?
And some of the policies we are putting out there
just look to me like panic measures which cannot
get us the results we are seeking.
Let us do the prudent thing and redenominate
and then going forward there should be a
convergence of the official interbank rates and the
black market rates.
Once we have a redenomination in place, the next
thing we will need is for the Central Bank of
Nigeria to be truly independent. No more should
anybody or institution, no matter how powerful,
have a say or any influence on how the CBN
directs the monetary policy of the nation.
The CBN governor must be allowed to take
decisions without looking over his shoulders. If he
is always being second guessed by the executive
or by influential captains of industry, he will lose
his gumption and his command presence.
This is what happened to Professor Charles
Soludo after then President Umaru Yar’Adua
intervened to halt his naira redenomination
project on the flimsy excuse that Soludo did not
consult with him.
Ideally, the CBN governor should consult with the
CBN board and the Monetary Policy Committee
and once decisions are taken at those meetings,
the President should be informed first as a matter
of courtesy and not for the purpose of seeking
approval from him.
Ideally, it is the Senate that should oversight the
CBN and that is why we get regular briefings from
both the CBN and the Minister of Finance.
In America, their version of our Central Bank
(known as the Federal Reserve), like many other
central banks, is an independent government
agency that is only accountable to the public
through the United States Congress. Neither the
US Federal Reserve nor its chairperson are
answerable to the American president.
The result of this is that the monetary policy of
America is completely divorced from politics. It
does not matter whether there is an election or
not, if the US Federal Reserve needs to take a
decisive action, it takes it.
This same practice is in operation in almost all
nations that have a stable economy. The only
nations I can think of where the President
interferes with the autonomy of the central bank
are Venezuela and Zimbabwe, and looking at the
state of their currency, I am not sure that is the
route Nigeria wants to take.

Yes. It's one of the best and most effective methods of curbing inflation. But as of now,the naira hasn't reached the point where it should be Re-dominated. It would be cool to take a 1k to the bank to change for 1 naira tho. And it would help fulfil PmB's promise of making a naira equal to a dollar. Not sure about that statement pls correct me if I'm wrong