Naira redesign policy is disruptive, repressive, draconian – Economist
…Says Nigerians deserve apology
“Indeed, Nigerians deserve an apology from the promoters and proponents of the Naira redesign policy, especially the arbitrary and uninformed mopping up of cash in the economy”.
The Chief Executive Officer, Centre for Promotion of Private Enterprise (CPPE), Dr
MUDA YUSUF, made this assertion.
According to him;
“The CBN currency redesign policy inflicted indescribable agony, suffering and distress on majority of Nigerian citizens.
” The trouble was not with the redesign, but the deliberate and unrestrained mopping up of cash in the economy. The CBN mopped up about N2 trillion cash from the economy, thereby paralyzing the retail sector, crippling the informal economy, stifling agricultural value chain, immobilising transportation sector and disrupting the payment system in the economy”.
He pointed out: “It is true that CBN has the right to redesign currency, but it does not have the right to dispossess the citizens of their cash. The choice of the mode of store of value is a fundamental right of citizens”.
Dr YUSUF, who is also an economist, emphasised : “The CBN has no right to impose that choice on citizens.
It is a flagrant violation of the rights of citizens for the CBN to withhold the cash of citizens under the guise of currency redesign.
” The CBN act does not give the apex bank that right. The act cannot be superior to the constitution of the country. The CBN cannot request the citizens to bring their cash for a swap, only to deprive them access to it.”
His words : “A swap presupposes that whatever old notes was received by the banks must be replaced with new ones instantly. Otherwise, the period of the swap should be extended until the CBN is in position to do so.”
He added : “In other climes, such swaps are done over twelve to twenty months, or even more, to minimise disruption.
“The claim by CBN that the economy has too much cash outside the banking system has no basis in economic theory, neither can it be supported by empirical evidence.
” As at December 2022, the total money supply was N52 trillion, cash component of money supply was N2.6 trillion, which was just 5 percent. Similarly, the country’s Gross Domestic Product (GDP) was N202 trillion, which gives cash to GDP ratio of 1.3percent.
“These ratios are some of the lowest around the world, which shows that the Nigerian economy is not really a cash-dominant economy. Cashless transactions in 2022 was about N400 trillion in 2022, according to NIBSS.
” The truth is that nothing is broken. And we don’t fix what is not broken. Of course, we can do better, but not by crudely mopping up of cash in the economy. The contention that the arbitrary mopping up of cash will curb inflation and enhance monetary policy effectiveness equally has no basis going by available data.
“It is also on record that about N15 trillion has been mopped up.
The entire exercise was a needless disruption of economic activities, especially among the most vulnerable segments of the economy, unfortunately”.
More so, Dr YUSUF commends the ruling of the Supreme Court on the use of old currency naira notes as legal tender.
He stressed: “Hopefully, President Muhammadu Buhari, the central bank Governor and Attorney General of the federation would comply with this Court order in the interest of the rule of law and public interest. We welcome the supreme court ruling as it protects the citizens from a policy, which is, by all accounts, disruptive, repressive and draconian. It is also punitive, cruel and insensitive”.