Governors of the 36 states of the federation have warned of impending recession following the damage the current scarcity of Naira notes is doing to the economy.
Accordingly, they urged President Muhammadu Buhari and the Central Bank of Nigeria (CBN) to listen to the voice of reason in respect of the suffering Nigerians are currently undergoing due to the new naira policy.
The Council of State had last Friday advised the CBN to print more naira notes or recirculate the old ones back to the system to ease the sufferings of Nigerians.
This was after the governors of Kogi, Kaduna, Zamfara and Kano States had dragged the federal government to Supreme Court, seeking invalidation of the deadline for the new naira policy which they said had caused untold hardship to their citizens.
The highest court in the land had last week ruled in favour of the governors, ordering the suspension of the February 10 deadline for the naira swap.
Rising from their meeting on Saturday, the governors under the aegis of the Nigeria Governors Forum (NGF) asked the federal government and CBN to reconsider their stands before the damage to the economy becomes too difficult to fix for the next administration.
They expressed sympathy and support for Nigerians who they said are experiencing great difficulties under the current CBN Naira re-design and cash withdrawal restrictions policy.
Chairman of the NGF and Sokoto State governor, Aminu Tambuwal, said they feel the pains of Nigerians and that they were determined to employ all legitimate channels to ease the situation.
According to him, it has become necessary to make a distinction between the CBN Naira redesign policy backed by Section 20 (3) of the CBN Act, 2007 and the aspirational policy of going cashless, both of which are mutually exclusive at this time.
He said it was the governors considered view that what the CBN is presently pursuing is a currency confiscation programme, not the currency exchange policy envisaged under S20(3) of the CBN Act, 2007.
Tambuwal stated that it is currency confiscation in the sense that the liquidity provided to the general public is grossly insufficient due to the restrictions placed on the amount that can be withdrawn regardless of the amount deposited.
He said, “The current approach of the CBN raises concerns about the respect for the civil liberties and rights of Nigerians as it relates to their freedom to use legitimately earned income as they so wish.
“The Forum believes that to deploy a cashless policy and deepen digital transactions, the best practice around the world is to create a suite of incentives to attract customers; rather than a draconian approach as we have witnessed in the last three months.
“The argument by the CBN for what it describes as the astronomical increase in the currency in circulation as the basis for this policy is not supported by its own data. According to the CBN, the currency in circulation increased from N1.4 trillion in 2015 to N3.23 trillion in October 2022.
“The bank appears not to have taken into consideration the increase in the size of the country’s nominal GDP over this period, the doubling of consumer prices, rising population, and the impact of the humongous Ways & Means advances to the federal government by the Central Bank of Nigeria over this period.
“In the circumstances, it is safe to draw either of two conclusions – the CBN data may be incomplete or in fact, Nigerians may have done exceptionally well in the transition to a cashless economy.
“In addition, considering the sizable informal sector in the nation, the amount of banknotes created in exchange so far by the CBN implies it vastly underestimated the economy’s actual cash needs.
“The inability to use the new notes has had far-reaching economic effects, leading to the emergence of the Naira black market, severe food inflation, variable commodities prices based on the method of exchange, and long queues as well as crowds around Automated Teller Machines (ATMs).
“And banking halls across the country with individuals hoping to get a fraction of their money in new notes to meet their daily livelihood. The country runs the risk of a CBN-induced recession.
“While we acknowledge the submission of the attorney-general of the federation that the federal government will comply with the ruling of the Supreme Court which calls for the halting of CBN’s plan to end the use of the old currency notes, we are yet to observe changes in the financial system.
“Consequently, we call on the federal government and the CBN to respect the Rule of Law and listen to the voice of reason expressed by Nigerians and several other stakeholders including the Council of State, before the damage to our economy becomes too great to fix by the next administration.
“Members rose from the meeting agreeing to direct their attorneys-general to review the suit at the Supreme Court with a view to consolidating the legal reliefs pursued by states”.
Private Sector Cries Out Over Shortage, Low Sales
Meanwhile, for a seamless operation of the economy, Organised Private Sector (OPS) and economic experts have called for the need to address the supply hiccups of the redesigned Naira notes that has crippled the demand and supply chains in the country.
National president of Association of Small Business Owners of Nigeria (ASBON), Dr Femi Egbesola, advised that adequate measures are needed to tackle the cash crunch disrupting the economy.
He noted that the effect of the cash swap policy is largely unprecedented, far reaching and a two fold exercise to erode the working capital of the nano and micro sector operators in the country.
The ASBON boss, however, listed the two-fold effects of the cash redesigned policy on the Small and Medium Enterprises (SMEs) sector, while warning that the micro, small and medium enterprises, informal sector operators, rural areas and the unbanked communities that have not embraced digital banking and financial inclusion are the worst hit of the cash swap and redesigned policy.
He said, “On one hand, nano and micro businesses in rural and hinterland areas that are largely dependent on cash for virtually all transactions are largely affected by the cash crunch.”
According to him, this category of businesses are not used to digital and online e-commerce banking transactions, hence, quite a number of them just couldn’t transact their normal day-to-day business activities.
“There’s no cash anywhere. Even to pay transporters to move their farm goods and products from the farm to the town becomes a great challenge as transporters need to be paid in cash.
“The resultant effect of this is that many of these perishable goods are sold at give away prices. This indeed is a big loss for businesses in such sectors,” he pointed out.
Also speaking with LEADERSHIP, director, Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, said the crisis generated by the currency swap could put the N100 trillion component of the national GDP at risk, noting that even the 10 day extension of the deadline for the swap is grossly inadequate.
According to him, 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 the manufacturing value chain and the services sectors.
He stated: “The trade sector contributes about 14 percent of GDP valued at an estimated N35 trillion; the 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”.
Also giving a forecast on the impact of the situation on the real sector, director general, Manufacturers Association of Nigeria (MAN), Segun Ajayi-Kadir, said the cash flow difficulties have been affecting sales of finished domestic goods.
He explained, “I would put a rough estimate of a 25 per cent drop on monthly sales of domestic goods if the situation should persist for the next three weeks. As the purchases from the retail end that are mostly transacted in cash dries up, you will immediately notice a sharp drop in wholesale purchases and instant buildup of unsold inventory in your industries.
“This situation is not good for anyone, the industry, the government and the ordinary citizen. You will have a compounded crippling lack of patronage for the domestic manufacturer; the denial of government revenue that would have accrued from consumption taxes and the disruption of the daily life and needs of the average Nigerian.”
Similarly, the director general, Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Sola Obadimu, while commending CBN for the 10 days extension, noted that the exercise has been largely and needlessly disruptive to the economy.
He said, “The management of the currency exchange exercise could certainly be better. The past few weeks have been quite traumatic for a lot of Nigerian citizens and small businesses particularly – coupled with the fuel issue.
“This week, for instance, a lot of ATM machines in both Lagos and Abuja had no cash – including at the Airports. This is not decent enough. And, given this development, whatever is happening in the rural areas is better imagined.
“I don’t think we should shut down the economy because of pending elections. Imagine a visitor coming into Nigeria for the first time and, on arrival at the Airport, couldn’t withdraw any money from any ATM machine in either Lagos or Abuja, what kind of investment rating would he give us?
“Therefore, there is a need to ensure that the infrastructure is strengthened and the electronic banking system is more reliable. Currently, we have an environment of mistrust and delayed transactions which is hugely frustrating, unreliable and unacceptable.”
PoS Transactions Slump By 13%
Meanwhile, the value and volume of electronic transactions done through the Nigeria Inter Bank Settlement System (NIBSS) Instant Payment (NIP) channel dipped slightly last month with the value of transactions done on point of sale and mobile platforms recording a decline, latest data has shown.
According to January 2023 electronic transactions data released by NIBSS, the volume of transactions done via NIP dropped by 3.5 per cent in January to 542.65 million compared to the December 2022 figure of 561.31 million.
Similarly, the volume of transactions via the NIP platform went down by 7.74 per cent from N42.023 trillion in December 2022 to N38.772 trillion last month.
However, the transaction volume and value had risen by 55 and 45 percent respectively when compared to 348 million volume and N26.6 trillion value recorded in January of 2022.
While the volume of transactions via the POS platform had risen by 13.04 per cent, the value of transactions on the platform declined by 2.3 per cent.
Last year a total of 85.23 million transactions with a value of N826.3 billion was transacted through the POS platform as against 96.34 million transactions with a value of N807.16 billion done in January this year.
Similarly, as the volume of transactions done via the mobile scheme platform rose in January this year, the value of the transactions dipped.
Compared to N105.17 million recorded in December last year, transaction volume on the mobile platform rose to N108.135 million, a 2.8 percent improvement.
However, the value of transactions on the platform declined to N2.37 trillion in January, 2023 as against N2.48 trillion recorded in December 2022, showing a 2.8 per cent decline.
Year-on-year, the industry data shows that payments made through the point-of-sale (PoS) in terms of volume increased to 96 million, a six percent surge from 90 million recorded in the periods under review.
Its value of transactions also showed significant growth of N807 billion in January from N573 billion reported in January 2022, representing a 98 percent rise in its value.
Following the same trend, while the volume of mobile transactions increased by 237 percent to 108 million in January 2023 from 32 million in January 2022, its value also rose by 124.8 percent to N2.4 trillion from N1.1 trillion in the period under review as reported in the industry data.
I Feel Your Pains, Tinubu Tells Nigerians
Meanwhile, presidential candidate of the All Progressives Congress APC, Bola Ahmed Tinubu has said he feels the pains of Nigerians who are currently bearing the brunt of the combined problems of scarcity of new Naira notes and fuel.
He said although he and his running mate, Senator Kashim Shettima, have nothing against the CBN cashless policy and Naira redesign, they are only worried about the way its implementation has disrupted the country.
He noted that the past few weeks had been challenging for Nigerians, particularly the poor and vulnerable masses, those engaged in Short and Medium Scale Enterprises (SMEs), and those whose very survival depend on daily cash transactions.
“They have felt the brunt of the combined problems of scarcity of fuel and new Naira notes,” he stated.
In a statement he personally signed and issued in Abuja yesterday, Tinubu said, “We feel the pains of our market women and artisans who have experienced low sales because customers do not have cash to make purchases.
“We hear the loud cries of farmers in rural areas and hinterlands who have been forced to sell their produce at much lower prices so they don’t lose out completely. We hear every Nigerian dealing with the consequences of the roll-out of the cash swap programme”.
According to him, while the scarcity arising from the supply limitations of the new naira notes is still in place, reports that fuel queues across the country are easing out as a result of better supply to fuel stations is encouraging.
He noted: “We are now confronted with how to bring quick, sustainable solutions and relief to Nigerians on the challenges still posed by the non-availability of new Naira notes so that social and economic activities can move on unimpeded and normalcy can immediately return to our financial services sector and overall productivity of our nation.
“In seeking a quick resolution, the National Council of State met on Friday, February 10, 2022, and advised the government and Central Bank in particular, to push more new Naira notes into circulation and also allow for the old notes to remain a legal tender by ensuring supply gaps relative to infrastructural limitations are bridged by recirculating it to ameliorate the pains caused by the scarcity of new ones.
“We agree with the wisdom of the Council of States as a necessary starting point to begin redressing the unintended consequences of what would have otherwise been a good policy that required mainstream adoption.
“For the records, I and my running mate, Senator Kashim Shettima and our campaign council do not have anything against the CBN Naira redesign and cashless policy in principle. We are, however, only concerned about its disruptive implementation and the hardship it has brought on the generality of our people who currently can’t access their hard-earned money to meet obligations and the attendant consequences on the informal sector, where the majority operate.
“Despite the challenges and current difficulties, we are a country of resilient, bold and courageous people who don’t succumb to hard times. We have always overcome our most difficult times and come out better as a people and a nation. This time will not be different. We will make lemonade out of our current lemons.
“As leaders, our commitment to our country every day must be on how to make life better for our people and we are called upon not to waste the opportunity the moment presents to us to ramp up capacity and capability to serve 200 million Nigerians, leaving no one behind and ultimately improve the living conditions of every single Nigerian. Our task now is to restore hope in the country by implementing these steps to energise our people so that we can do big things for a better future and shared prosperity. We can build upon this citizen-focused policy challenge to offer a template on how government should work for the people”.
The APC standard bearer listed six ways through which the Central Bank of Nigeria CBN can end the current hardship in the country caused by the scarcity of newly redesigned Naira notes.
He implored the CBN to consider the following the advice of the Council of States, and immediately announce that the old and new Naira notes, especially the non-withdrawn notes and coins, will co-exist as legal tender for the next 12 months to follow examples of countries that have successfully implemented similar monetary policy.
“This will immediately remove growing tension in the country, eliminate panic reactions by the populace and allow time to scale up infrastructural gaps around alternative payment options to cash”, he added.
PDP Insists APC Hoarding New Notes In States
Meanwhile, the Peoples Democratic Party (PDP) yesterday alleged that APC governors are warehousing the new Naira notes in facilities owned by their party interests in Lagos, Kano, Kogi, Kaduna, Imo and other parts of the country for the purpose of vote buying in the presidential election.
The party made the claim in a statement issued by its national publicity secretary, Debo Ologunagba.
PDP demandes that APC leaders, including its presidential candidate, Bola Ahmed Tinubu and state governors under the party’s platform should immediately release billions of new Naira notes in their custody.
The opposition party said it was wicked and unpardonable that APC leaders who say they are deeply involved in intercepting and hoarding new Naira notes are hoodwinking Nigerians by posturing as though they are concerned about their plight.
Ologunagba said the controversial Naira redesign and swap policies are programmes of the APC administration which is also completely in control of the production and circulation of the new notes.
He said having realised that they cannot win in the 2023 general election, the APC leaders sabotaged the system and diverted the new Naira notes so as to create widespread social unrest to justify their plan to derail the elections and truncate our democracy.
His words: “Our party has been informed by some well-meaning APC members on how six APC State governors led by a particular infamous Governor of a prominent State in the North West region are coordinating the hoarding of new Naira notes for the vote buying scheme of the APC ahead of the February 25, 2023 Presidential election.
“The PDP has also been made aware of how APC governors are allegedly warehousing the new Naira notes in facilities owned by APC interests in Lagos, Kano, Kogi, Kaduna, Imo and other parts of the country for the purpose of vote buying for Senator Tinubu in the Presidential election.
“Nigerians can recall that the APC was recently busted in the process of swapping the sum of N22.5 billion in old N1000 notes for new ones in Kano State for vote buying, in a deal wherein a substantial part of the old notes was allegedly conveyed to Lagos State for secret swapping with new notes.
“It is therefore callous for APC leaders to continue to watch Nigerians spend nights at ATM stands, fight one another in bank halls and ATM centers for cash with millions stranded without money to take care of their daily needs.
“The PDP calls on Nigerians to hold the APC and its leaders directly responsible for the pain, economic hardship, social dislocation and psychological distress they are going through on account of APC induced cash scarcity in the country.”
