Home Finance Mint the sore story and Soludo’s initiative

Mint the sore story and Soludo’s initiative

by Business News Report

By Omoh Gabriel, Business Editor
The story of Nigeria security Printing amd Mint is a very sodid one to tell. It leaves a sour taste in the mouth. It is a stiry of how some Nigerians and in parnership with foreiners decided to ruin a national asset for their own selfish interest as it is the case with many Nigerian assets. It is about cinflict of interest on the part of those who served in various capacity in the company. It is estimated that several billion dollars are lost annually through the company. A company set essentially to print security documents for Nigeria turned out ot be incapacitated by those who were entrusted with the responsibility to manage it and ensure that it functioned optimally. Because of vested interest Nigeria was enslaved and continued to import its currency form abroad. According to Professor Soludo, Nigeria rfequires on the average 4 billion notes annually. Officials of mint says that it cost about $30 to mint 1000 notes locally while minting it abroad by contract cost about $40. Mint officials say that it pays those concern to print abroad and earn a margin of $5 per 1000 note. This they argue goes into private pocket thus making the mint a haven for economic rent seekers.Going by this arguement, the vested interest in the mint were earning close to $20million per annum in any given year that notes were minted abroad. The group is a high net work of local and international syndicate that sort to mealk Nigeria dry. Because of the non functioning of the mint most of Nigeria security documents such as passport, cheque booklets, ballot papers which cost billion of dollars to print are done abroad. Nigeria instead of earning foreign exchange from the printing of security document for the region has became a net foreign exchange expender. Nigeria has had to spend several million dollars on printing security documents abroad while the mint lie idle.
For any patrotic Nigeria, this is unaccetable just as professor Soludo has said. In an interview recently he stated “ On the mint, I have said, as a Nigerians I find it unacceptable totally unacceptable, and a national shame, that as a country, we are the only country in the world that has a mint and still spent billions importing currency. And when we came, the proposal was to have a management contract that would have brought one of the foreign firms to manage the mint. But we said this is unacceptable, how can we bring in competitors to run the mint and hope that it is going to be competitive relative to, theirs, and we said no. We said we have to take it over, we are the major stakeholders of the mint. We account for over 80 per cent, 90 per cent of is businesses, we want to take it over and run it. Many things are involved, first is to prove a point, to break the jinx that Nigerians cannot manage. We want to prove or break that jinx, that out of 130 million Nigerians that we can not find competent people who can manage the mint profitably. This is unacceptable to us. We have to face that challenge and prove a point. That’s one. Two, we see the enormous potential that we have in there, we cannot be creating jobs abroad, by importation we are creating jobs abroad and not for Nigerians, the mint has the enormous capacity to grow and to add wealth creation, if you think about the backward linkages, even the banks print their cheques abroad, our electoral materials are printed abroad. And so you can imagine the billions of billions of naira being spent importing these, and we say this is not acceptable. Now like I said we are working on a business plan to get the mint to work, and we have a time frame, and have programmed our goal like I said , and I want to be held responsible for this, it is something I am itching, and like somebody said to me, you are staking everything, I say yes. if you don’t take a risk you can’t succeed. If you don’t venture there would be no success”.
But the net work of local and international interest group on the mint are highly connected and people with means. How far Professor Soludo will go dedpends on the political will and support he has from the presidency. If the powers that be will give their support to the CBN governor, the reform of the mint might be better for all.
The problem of Nigeria mint started when unwittingly the federal government entered into partnership with two foreign firms De La rue and G&D as technical partners. The two companies print security documents and were competitors of mint. The two had a place in the board of the company. Their presence in the board provided an open door for the them to manipulate the mint policy that was ti

hinted toward printing Nigeria currency abroad. A confidential report on the Nigeria mint indicated that Nigeria was the contry sustaining the two companise abroad by printing its currency with them. The effective manipulation of the system was as a result of the corrupt practices that were embedded in the contract system in the printing of Nigeria notes. The Nigeria security printing and Minting Company has eight production line but at the moment only three are functioal. Most of the machine in the Lagos office are said to be obsolate. But the Abuja factory is said to be equipped with the most modern machine imported from Japan. The Bureau of Public Enterprises valuation of the assete of the company put its networth at $30 billion but the BPE was ready to dispose of the company for $11billion. Officials of NSPMC said that with $30 million the company can be resurcitated and brought to operate at full capacity. Before now the CBN was said to have out sourced currency printing because of the inability of the mint to satify the local demand for naira notes. But NSPM officials say that the management were always instructed to raise invoices in its name to cover currency orders made by the CBN. The excuse given was that the mint has no capacity to print the required notes internally. They alleged that this came about mainly as a result of some vested personal interest of past officials of the apex bank. The NSPMC they nargued was a victim of a clash of interest in which some highly placed persons at the board level used the mint to regularise the personal interest of board members. According to some dissenting voices within the mint, past officials of CBN merely asked the mint for its capacity and contract the rest to foreign interest at highly inflated contract price. This they said would not have happened were Nigeria a descipline country that follow due process. The Mint in their view was in a better position to negotiate currency minting contract than the CBN since it has the wherewithal to do so. NSPM official disclosed that the situation started during the period of military regime.
According to them the decision to marked down the mint was carried out through the board. Recently they say the mint was asked by some Nigeria GSM service providers to print recharged cards for them. The board it was learnt just turn down the offer outrightly without making an effort saying their mission was to prepare the mint for privatisation.
The currevnt CBN Governor Professor Charles Soludo in reaction to these allegation said that the management of the CBN under him is with determination, passion and conviction must move the mint forward in the interest of the Nigeria state.
The CBN governor said “ I just visited three of the companies in Europe and I made it clear to them, listen we haven’t come to discuss importation with you, I have come to tell you, this is our plan in three years, we will not be importing currency from you again. That in three years, I want to be self-sufficient, I want our mint to be world-class, and the mint for West Africa. Not just the mint for Nigeria it should be the mint for West Africa. And we are asking them, “is there any role you want to play in it tell us”. But while this is going on, life continues there is huge demand for currency. In fact, by our index we need not less than 3.5 to four billion new notes every year. We can’t meet it because it is very expensive to print. You know it cost mor than N10 to print one N5 note. So you can understand when you see people marching on the naira at parties, when I see parties going on and people are spraying and people are matching on it, I know what is going on in my own”.
The direct consequences of the failure of mint to meet the currency demand of the country is the growing circulation of dirty notes in the economy. Ordinarily notes in circulation once found dirty and torn are withdrawn by the CBN and new notes issued. This implies that atg any point in time the CBN has stock of new notes that are not issued. At the moment that seem not to be the case. The apex bank can not replace dirty notes. Infact at the moment the apex bank is having difficulties supplying 50 naira notes to the economy as that denomination appears to have vanish from the market place. Market women, bus conductors and other economic agents in the country are at a loss as to what has happened to the 50 naira notes. Also as a result of the prevailence of dirty notes in circulation there is a boom on trading in frsh notes in the Nigeria open market. In every major bus stops in major cities across the country fresh currency noptes are being openly sold at a premium. For every 1000 naira frsh notes a fess of either N100 or N200 is charged by youths mostly ladies who may not know thir way to the banks. Some suspect that like value cards being hawked at foreign missions in Nigeria, some banks may have through their treasurt department be making fast money through this means by employing these girls. Others suspect that because of the porous nature of Nigeria borders some currency traffikers may be making brisk business by importing Nigeria notes and the only way they pass them into the system is by selling them through that means. But CBN sees it differently. Soludo said because Nigeria like spraying money at parties they go patronise nthese road side sellers of the naira and that because there is in existence large churnk of dirty notes these individuals preffer the new notes hence the existence of the of the parallel market for the naira. But this he said will soon be a thing of the past when the CBN implement its clean notes policy. According to him ‚ÄúWe are working on what we call clean notes policy. Part of it is also currency policy. To what appropriate denomination to print getting the nature of your transactions and we are working on it— again we have got some work to do in restructuring the mint. We have got to get our machines in place. Even to order for a full set of the production line, you need about 18 months to wait because the machines for us will be customised. You place order for the item and wait. To my greatest disappointment, I thought it is something that if we find money, we can go and bring it in tomorrow by next year, I will say bye-bye to everybody, but I was told sorry, you have to place an order then we start customising and then we deliver 18 months at the earliest time. Now you begin to build the factory. You begin to put that one say for three years‚Äù
For Soludo even if CBN was part of the problem in the past “all old things have passed away, we now start a new”. The CBN the governor said the apex bank is developing a business master plan for the mint. The problem of the mint the CBN governor said is that of management. According to him “ Management is going to be tested and Nigerians are going to run it. It is shameful that after 40 years of independence we continue to import currency. The era of such days are numbered. On CBN being on the board, we are drawing a straight line now and we are moving forward. When you are talking about patronage, I don’t think that is a fair accusation, CBN has been the one providing the lifeline to the mint. Without the CBN’s lifeline, there would be no cash advance to it. When I came into office, one of the first thing presented to me to sign was N600m to the mint. I asked which mint and why, why should I be giving them cash advance when we don’t control it. We need to take control of the mint so that when we are putting in money there, we know why. The CBN has been the life-wire in terms of credit line. The problem has been the capacity of the mint. Even this year, it has not met anything. near what it was given to mint. It is always having shortfalls, maybe, they produce 1.5 million notes. But that patronage, it is the time that the capacity was there. We have excess idle capacity but we are waiting patiently with the master-plan. In the next three years, the mint will not be the same again. Our goal is that our mint should be in the top 10 in the world in the next three years”.
Industry analyst how ever are quick to point out that the problems of the mint and the mint misfortunes is a reflection of the general situation of the manufacture industry in the country, that is some of the problems be-setting the nation’s industrial sector like devaluation of the naira, high cost of production etc, are actually infringing on the operations of the real sector the mint inclusive.
The CBN admits that there are basic social economic problems facing industries today but said that the authorities are working hard on solving the problems. Soludo said “That is why we are doing the analysis now. I will say largely in my mind that when I set out to get things done, I don’t give you obstacles, I give you opportunities. I feel the opportunities and not the obstacles. We can write from here to Jericho of the obstacles, and reasons why it would not work, why do I say so, the mint, the technology for the currency manufacture is the same, It is the same machine all over the world, the same two companies producing the machines, Jerry and Command, You talk about ink, this is an oligopolistic market. What is different is the management, that is what we change. Whether it is the devaluation or whatever, we still import and we still have to pass through the exchange rate. So devaluation or depreciation of the currency still affects the imported one. If you are talking about the cost of production, why would people in England, Germany or in France produce at a lower cost structure with their high labour cost, if we all buy the same machine from the same place at the same cost. So technology, people operate this machine, there are human factor who fashion out this currency we operate. In terms of what we pay our own people and what they pay theirs in terms of the cost structure, If you look at the cost structure as well, there is absolutely , since the technology is the same, no reason why the French company or UK company should produce at a lower cost. Because the labour cost there, which should be a significant churnk of the input into this, is much higher. That is when you import, it is being imported with the same currency depreciation. Therefore, at the heart of the problem is management, and that is where we want to get where the problem is. Once we sort it out there, the issue of financing should not be much problems. If you manage it well, the finances you generated, you also plough back and run it profitably. We are the only country in the world with a mint that imports currency. There must be something else other countries specially have that we don’t have”
The CBN is to manage the mint for three years and privatise it. Said Soludo, “Privatisation would be part of the game plan. Part of the game plan is to restructure and revamp it and get it to a world class, so that Nigerians will buy the shares. So the plan is that we take it over and run it after about three years, we put part of the shares to the market”.
The new management of the CBN mean well for the country and the mint but will they be allowed to carry out the master plan and implement it faithfully, the next three years will tell. Nigerians are watching.

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