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Bismarck Rewane, chief executive officer of Financial Derivatives Company, is projecting that Nigeria will suffer a total gross domestic product (GDP) loss of $18 million per month due to the negative effects of the naira redesign policy.
Rewane spoke during a recent presentation at the Lagos Business School. The economist attributed the decline in GDP growth to the reduction in velocity of money in circulation and total man-hours loss in the economy.
“Total man-hours loss in a month will be 120 hours and total GDP loss in a month will be $18 million,” Rewane said. “Trade is settled mainly in cash and POS, although 70 percent of trading transactions are settled by cash.
“Therefore, velocity of circulation in the trading sector (16 times) is approximately four times more than the formal sector. A decline in the velocity of circulation could reduce output in the trading sector. Hence its contribution to GDP will fall.”
The Central Bank of Nigeria (CBN) had fixed February 10 as the deadline for the validity of old naira notes. But the Supreme Court temporarily restrained the Federal Government from banning the old naira notes and fixed today, February 15 for hearing on the matter.
Despite the extension, the new notes are scarce and Nigerians are also finding it hard to get the old ones. Meanwhile, the apex bank has attributed the scarcity to hoarding and advised citizens to embrace alternative payment channels such as eNaira and internet banking.
