The poor implementation of the naira redesign policy has had a great toll on the economy and the people. Consequently, the scarcity of the new naira notes has worsened the living condition of Nigerians. Also, the lingering fuel crisis has really not helped matters. Beyond this, Nigerians are grappling with epileptic power supply and rising inflation. This is despite the temporary reprieve from the Supreme Court following its interim order restraining the Central Bank of Nigeria (CBN) from going ahead with the enforcement of its February 10 deadline for the naira swap project.
Though the CBN says that its cashless policy is not designed to starve Nigerians of the new banknotes, but to encourage cashless transactions, the toll on the economy and livelihoods has become unbearable. The reported protests in some state capitals due to the cash crunch prompted some banks to close some of their branches. Also, chaotic scenes are still witnessed at many Automated Teller Machines (ATMs) as thousands of people struggle to access the new naira notes.
Small, medium and large businesses, in both formal and informal sectors of the economy, are feeling the pinch of the shortage of the new banknotes and the hoarding of fuel. The crippling effect of naira redesign policy will undermine the trade and agricultural subsector. It will also have a knock-on effect on other critical sectors of the economy, especially the manufacturing value chain and the services sector.
With the scarcity of the new naira notes, the trading end of the chain has been greatly disrupted by the currency swap crisis. The trade sector, for instance, contributes about 14 per cent of the nation’s Gross Domestic Product (GDP), which is valued at N35trillion. The agricultural sector, which contributes about 25 per cent to the GDP is valued at an estimated N62 trillion.
Most of the activities in these sectors are either in the rural areas or in the informal sector of the economy. These are the sectors that have made the economy resilient in the face of the numerous domestic and global headwinds, since the outbreak of the COVID-19 pandemic in 2020. According to statistics from the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), the informal sector has recorded about 20 per cent drop in sales in consumer goods and 30 per cent for the manufacturing sector since the scarcity of the new naira notes and the shortage of fuel started.
These are sectors that contribute the bulk of the GDP. The scarcity of petroleum products has caused great distortions for businesses and individuals. It has also had a deleterious effect on investment. It is estimated that the crisis could put Nigeria’s N100trillion component of the national GDP at risk. The reality is that the trading end of the supply chain in the country will be disrupted. This is because what is produced by the manufacturing sector will not be sold because there is scarcity of money to move the produce around. The chain reaction will be unpredictable.
With less than two weeks to the 2023 elections, the scarcity of the new naira notes is piling pressure on the government. We advise that urgent measures should be put in place to resolve the deepening crisis. Without making the new naira notes available, the country may likely be plunged into an unimaginable crisis that might spiral out of control.
We enjoin the politicians to be patriotic and put the country first before any other consideration. It is high time the politicians saw the writing on the wall and avert the looming danger. The naira redesign policy is good but the timing is wrong. In all, a bipartisan approach is urgently needed to address the problems associated with the naira redesign policy. The government should heed the recommendations of the Council of State in resolving the lingering naira shortage.
We agree with the recommendations of the Council, which urged the CBN to consider recycling the old naira notes to ease tension across the country or make the new ones available. This is in line with the advice by the World Bank and the International Monetary Fund (IMF), which last week urged the CBN to extend the time limit for the cash swap programme.
As the Supreme Court adjudicates on the substance of the ex parte application brought before it by the government of Kaduna, Kogi and Zamfara states tomorrow, Nigerians want to see an end to this matter so that the coming elections will not be scuttled. All hands must be on deck to ensure that the election is free, fair and credible.