The Centre for the Promotion of Private Enterprise(CPPE) has called for an extension by a minimum of six months to allow for seamless currency swap exercise.
The Central Bank of Nigeria(CBN) had earlier extended the deadline for the depositing of the old N200, N500 and N1,000 in banks for new ones, till February 17, 2023.
This follows outcries that there is no new notes in circulation as many are still stuck with the old notes.
The 17 day extension, which was announced by the governor of CBN, Godwin Emefiele, yesterday, followed the approval of President Muhammadu Buhari.
The CEO of CPPE, Dr. Muda Yusuf said, the 10 days is grossly inadequate to make up for the glaring shortcomings of the apex bank in this process. He stated that, the failure to give enough time frame deadline for the currency swap could put N100 trillion component of the national GDP at risk.
According to Yusuf, “two critical sectors are particularly vulnerable; Trade and Commerce; and Agriculture. The crippling of business transactions at the distributive trade end amid the currency swap crisis would not only undermine the trade and agricultural sectors but would have a knock-on effect on manufacturing value chain and the services sectors.
“This is because whatever is produced have to sold. trading end of the chain has been greatly disrupted by this currency swap crisis.”
He explained that the trade sector contributes about 14 per cent of GDP valued at an estimated N35 trillion; agricultural sector contributes 25 per cent, 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 been driving the resilience of the Nigerian economy amid numerous domestic and global headwinds. Any policy measure that would negatively disrupt these sectors should be avoided.
“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 for the currency swap exercise.”
CPPE called for urgent intervention of President Muhammadu Buhari to save millions of Nigerians from the anguish and pain of the current stampede of currency swap inflicted by an unrealistic timeline and glaring capacity gaps in the management of the process.
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He said, 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. Total money supply in the Nigerian economy as at December 2022 was N52 trillion; total currency was N2.6 trillion. Thus, cash as percentage of money supply was only five per cent. The implication is that 95 per cent of money is still within the banking system.
“The focus of monetary authorities should be on regulating money supply, not on mopping up currency notes. Currency notes are meant to be largely outside the banks, not in the banks.”
Yusuf stated that “the CPPE is worried that the CBN is committing huge resources to fixing what is not broken. The cost to the economy is also enormous.”
He added that “our cashless performance should be presented as the most urgent matter confronting the Nigerian economy. There are more critical macro-economic issues demanding the attention of the country’s economic managers and policy makers.”
