Nigeria has lost N20 trillion to the naira redesign policy of the Central Bank of Nigeria (CBN)’s Governor, Godwin Emefiele, since it started in January 2023, according to a report by the Centre for the Promotion of Private Enterprise (CPPE) seen by Dataphyte on Sunday.
According to the report signed by the CPPE’s Director-General, Dr Muda Yusuf, the losses emanated from the deceleration of economic activities, crippling of trading activities, stifling of the informal economy, contraction of the agricultural sector and the paralysis of rural economy.
The report said the economy was gradually grinding to a halt because of the collapse of payment systems across all platforms, noting that digital platforms were performing sub-optimally due to congestion.
“Physical cash is unavailable because the CBN has sucked away over 70% of cash in the economy; and the expected relief from the supreme court judgement has not materialized. The citizens are consequently left in a quandary,” the CPPE said.
The CBN began the implementation of the new naira policy on December 15, 2022. The policy incorporates setting weekly withdrawal limits for individuals (N100,000) and corporate entities (N500,000), as well as redesigning of N1000, N500 and N200 notes. The apex bank claimed that the policy “will help check. counterfeiting…. strengthen the economy, reduce the expenditure on cash management, promote financial inclusion, and enhance the CBN’s visibility of the money supply.”
However, a perceived poor implementation has led to shortages of the N200, N500, and N1,000 notes across the country. Economic agents from farmers to traders who depend on cash are struggling to have access to the local currency to carry out life-saving transactions.
The CPPE said there had been huge job losses in the economy so far and President Muhammadu Buhari did not seem to appreciate the enormity of the issues at stake.
“Evidently, President Buhari has not seemed to appreciate the gravity and enormity of the suffering and pain that Nigerians have been experiencing since the onset of the currency redesign policy. We again plead with the President to immediately intervene to put an end to the devastating and traumatic outcomes of a repressive, poorly conceptualized and badly implemented currency redesign policy,” the private sector-led organisation said.
The organisation said the banks were claiming that the CBN had not officially communicated the Supreme Court judgement to them for any action, noting that the president had maintained a worrying silence on the judgement;
The organisation further said that market women and men were waiting to hear from the Buhari or Emefiele on the legal tender status of old currency notes, regretting that there was an apparent reluctance or unwillingness by the Federal Government and the CBN to speak or comply with the Supreme Court judgement.
“This is very disturbing and inexplicable,” it noted.
Demands from Buhari, Emefiele
The CBN has failed to implement the referenced Supreme Court judgment which nullified the policy and declared it as an affront on the 1999 Constitution.
The court had held that Buhari’s disobedience of the February 8 order was a sign of dictatorship, noting that his unconstitutional use of powers had breached the fundamental rights of the Nigerian citizens in many ways.
Reacting to that, the CPPE said the apex bank should be directed to immediately inform the Nigerian public that the old currency notes (alongside thenew notes) remained legal tenders until the December 31, 2023, in line with the judgement.
“The CBN should be directed to officially communicate the outcome of the Supreme Court judgement to the banks and affirm compliance with the judgement. The president should publicly empathize with Nigerians on the unwarranted and inexcusable pain and suffering that the currency redesign policy has wreaked on them,” the CPPE added.
There is less cash in Nigeria
Dataphyte checks have shown that there is less cash in Nigeria contrary to the CBN’s excess liquidity claim.
Research shows that money circulating in the Nigerian economy is only a drop in the pan. Analysis shows that the N3.23 trillion cash circulating in the Nigerian economy is only 1.52 percent of Nigeria’s Gross Domestic Product (GDP). Other developed and emerging economies are worse. The European Union’s cash-to-GDP ratio was 9.27 percent as at December 2022.
Also, cash-to-GDP ratio was 9.85 percent as at December 2022 in the United States and 3.14 percent in the United Kingdom by January 2023. In South Korea, another developed country, cash is also king. Cash-to-GDP ratio in the Asian nation is 7.70 percent while Germany’s is 28.2 percent. Japan’s is 18.9 percent whereas Malaysia is 8.9 percent.
More so, cash-to-GDP ratio was 7.75 percent in Mexico by the end of 2021. Nigeria is better than some emerging market peers in Africa such as Kenya (2.4 percent) and Morocco (21.7 percent).