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•Says deadline puts N100trn national output at risk
By Merit Ibe, [email protected]
The Organised Private Sector (OPS) has expressed displeasure at the poor implementation of the naira redesign policy of the Central Bank of Nigeria (CBN), calling for a focus on regulating money supply to save the economy from collapse.
According to them, going by the barrage of complaints and horrifying experiences of businesses and individuals, the currency swap crisis has had a negative impact on businesses, as currency in circulation remained quite low and unable to sustain business activities in the country.
The OPS pointed out that the deadline puts N100trillion national output at risk.
The sector was also of the view that a minimum of six months window ought to have been given for the currency swap exercise, as the 10-day extension was grossly inadequate to make up for the glaring shortcomings of the apex bank in the process.
Chairman, Manufacturers Association of Nigeria, (MAN), Apapa branch, Frank Onyebu, called for measures to ensure that, not only is more cash put into circulation and trickles down to the masses at the grassrootsto avoid a total collapse of the already fragile economy and a possible breakdown of law and order.
“The decision to redesign the Naira is welcome. However, like with most things in Nigeria, the problem is always with implementation.
“This should have been an easy enough exercise. Take your old money to the bank and get news ones using certain laid out ground rules.
“The CBN ought to have set out the ground rules based on experiences from previous exercises. They should have thought about the Nigerian factor and put in place measures to mitigate it.
“Thus far the implementation of this policy has been a failure. There appears to be confusion everywhere.
“The CBN is saying one thing; the commercial banks are saying a totally different thing. Corruption has, once again, reared its ugly head. A few individuals have taken hold of all the currencies that have been released, leaving majority of the people (mostly the masses) with no money at all.
“The extension of the deadline has had little or no impact, because most people still don’t have access to either the new currency or the old one.
“We all know that Nigeria hasn’t developed adequate infrastructure to support a totally cashless economy.
“It is therefore pertinent that the CBN works out measures to ensure that, not only is more cash is put into circulation, but that it trickles down to the masses.”
Director at the Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, for his part noted that the focus of the monetary authorities should be on regulating money supply, not on mopping up currency notes.
Yusuf explained that currency notes are meant to be largely outside the banks, not in the banks, adding that cash is a medium of exchange to be used by citizens, not to be stored in the banks.
Noting that a minimum of six months window ought to have been given for the currency swap exercise, as 10 days is grossly inadequate to make up for the glaring shortcomings of the apex bank in this process, Yusuf said the reality is that presently in many parts of the country, more than half of the currency in the hands of citizens were still old notes.
“And it is on record that the banks were still giving out old notes even few days to the CBN deadline.
“The citizens should not be made to pay for the incompetence, inefficiency and ineptitude of state institutions.
“Given the size of the Nigerian economy, our large population of over 200 million people, the dominance of the rural economy, the huge informal sector, the literacy level and the over 30 million Nigerians that are unbanked, a minimum of six months window ought to have been given.”
The failure to extend the deadline for the currency swap could put N100 trillion component of the national GDP at risk.
In his view, the argument that currency swap would enhance monetary policy effectiveness and curb inflation has no strong basis in economic theory, saying money supply is a more critical variable in the inflation equation.
The CPPE is therefore worried that the CBN is committing huge resources to fixing what is not broken. The cost to the economy is also enormous.
According to the Director General of the Lagos Chamber of Commerce and Industry (LCCI), Chinyere Almona, the new Naira redesign has triggered varied reactions and feedback that suggest that related issues like the phasing of old currency notes, withdrawal limit, and the scarcity of new notes may have started to impact businesses and social livelihood beyond intentions. While banks have endeavored to meet the currency demands of their customers through ATMs and electronic transfers, the scarcity of the Naira has rendered their efforts ineffective.
“With the launch of the redesigned Naira notes last December, expectations were high for the smooth transition to the use of the new notes for business transactions across the country.
“We regret to note that expectations have been dashed, business deals impeded, and loss of time and value experienced by many. The Central Bank needs to enlighten the public on grey areas about the scarcity of the new Naira notes in addition to strengthening its policy implementation capacity. This is the minimum expectation in the face of a currency crisis in which we find ourselves.
“Businesses are suffering the consequences of the CBN currency management policy lapses. Regarding the deadline extension for phasing out old notes, the Chamber does not see any value in this if the scarcity of the new Naira notes persists.
“While we support the drive toward a cashless economy, redesigning the Naira and phasing out old currency notes could have been better planned and implemented with no hardship for businesses and individuals.
