₦airaland Forum

Nigerian economy “loses N20 trillion” as 70% of cash sucked away from economy – CPPE

By Nairametrics
1 hour ago

The Center for the Promotion of Private Enterprise (CPPE) has said the Nigerian economy has lost N20 trillion as 70% of cash has been sucked away from the economy.

The Center also said that the protracted, acute cash scarcity being experienced in the country has not only crippled economic activities in the country but is now a major risk to the livelihoods of most Nigerians.

Yusuf observed that retail transactions across sectors have become nerve-wracking and distressing as payment system challenges persist. He said since the onset of the cash crisis, the Nigerian economy has lost an estimated N20 trillion.

These losses arose from the deceleration of economic activities, the crippling of trading activities, the stifling of the informal economy, the contraction in the agricultural sector, and the paralysis of the rural economy. There are also corresponding job losses in hundreds of thousands.

The CPPE said millions of citizens have slipped into penury and destitution as a result of the disruptions and tribulations perpetrated by the currency redesign policy, especially the mopping up of over 70% of cash in the economy. It said Nigerians have not been this traumatized in recent history.

In a press release by its chief executive, Dr. Muda Yusuf, the Center said the economy is gradually grinding to a halt because of the collapse of payment systems across all platforms.

•“Digital platforms are performing sub-optimally because of congestion; physical cash is unavailable because the CBN has sucked away over 70% of cash in the economy; and the expected relief from the Supreme Court judgment has not materialized. The citizens are consequently left in a quandary,” he said.

He stated that the commercial banks claim that the CBN has not officially communicated the Supreme Court’s judgment to them for any actions; the President has maintained a worrying muteness on the judgment; the market women and men are waiting to hear from President Buhari or the CBN governor on the legal tender status of old currency notes.

•“Curiously, there is an apparent reluctance or unwillingness by the federal government and the CBN to comply with the Supreme Court’s judgement. This is very disturbing and inexplicable,” he noted.

Meanwhile, Nigerians continue to groan in the adversity inflicted by the acute cash shortage amid the rejection of old currency notes by market operators, refusal by banks to accept the old notes, silence by the presidency on the supreme court judgment; and absence of official pronouncement by the CBN on the issue.

•“Evidently, President Buhari did not seem to appreciate the gravity and enormity of the suffering and pain that Nigerians have been experiencing since the onset of the currency redesign policy. We again plead with the President to immediately intervene to put an end to the devastating and traumatic outcomes of a repressive, poorly conceptualized, and badly implemented currency redesign policy. We request the following immediate actions”

•“The CBN should be directed to immediately inform the Nigerian public that the old currency notes [alongside the new notes] remain legal tender until the 31st of December 2023, in line with the Supreme Court judgment.”

•“The CBN should be directed to officially communicate the outcome of the Supreme Court’s judgment to the banks and affirm compliance with the judgment.”

•“The president should publicly empathize with Nigerians on the unwarranted and inexcusable pain and suffering that the currency redesign policy has wreaked on them.”

EDITORIAL: CBN, the rule of law and Nigerian democracy

If we took the CBN’s main price stability remit as our point of departure, Mr Emefiele’s incompetence is incontrovertible.

By Premium Times March 11, 2023

“The rule of law upon which our democratic governance is founded becomes illusory if the President of the country or any authority or person refuses to obey the orders of courts,” thus proclaimed Justice Emmanuel Agim, delivering the lead judgment in the case brought by three state governments – Kaduna, Kogi, and Zamfara – against the federal government at the Supreme Court, seeking an order invalidating the Central Bank of Nigeria’s (CBN) recent banknotes redesign. Expressing the Supreme Court’s unfamiliarity with “any law which empowers a bank to withhold a customer’s money and refuse…to give him/her”, the lead judgment extended the validity of the old naira notes until 31 December, ordering that they remain legal tender alongside the new notes, up until the newer deadline.

Very few Nigerians required the Supreme Court to remind them that “The (CBN’s) directive on (cash) withdrawal limit is an infringement of people’s rights”. And most have had to live with a frightening range of infringements since the banknotes swap policy came into effect. These have ranged from the economic (loss of earnings platforms across the economy’s informal sector), through the emotional (having to beg for cash from friends, family, neighbours and strangers to meet basic needs) to the conceptual (just struggling to make sense of the policy’s design, implementation and expected outcomes).

Yet, in a young democracy, the violation of the people’s rights is the more telling concern, especially at this stage in the election cycle, when the end-of-cycle polls doubles as the Republic’s affirmation of faith in what US President Abraham Lincoln described in The Gettysburg Address as “government of the people, by the people, for the people”. If our democracy is not to perish, it will matter too that acts of disdain for the laws of the land, a charge directed by the Supreme Court at Presidential Muhammadu Buhari, be as rare as the trampling on by government of the people’s rights.

The CBN’s response to the Supreme Court’s ruling is disturbing for precisely this reason. Not only has its governor, Mr Godwin Emefiele failed to offer a path towards implementing the apex court’s ruling, but there is no evidence whatsoever that the apex bank has acted to instruct deposit money banks to accept and dispense the old naira notes. In consequence, the ugly spectacle of bank customers queuing at bank branches in the wee hours of the morning in the increasingly forlorn hope that they might obtain some cash remains.

Mr Godwin Emefiele continues to offer a signal lesson in disdain for the mores and laws of the land. Whether it was his earlier bid to be president, or his decision to be in contempt of the Supreme Court. Bank chief executives, on the other hand, have failed to cover themselves in glory from the start of this saga. It will help to understand why they were unable to disprove the earlier malarkey where the CBN attributed the scarcity of cash to their unethical practices, rather than its failure to supply the system with enough new banknotes. But nothing can excuse their acquiescence in the CBN’s rule-breaking behaviour.

PREMIUM TIMES believes that the role of the industry regulator, even in a sector as important as financial services, is not analogous to that of a school principal, or of a regimental sergeant major in the army. The requirement to obey lawful orders should have our banks complying with the CBN’s decision, as soon as this was made. Along with Mr Godwin Emefiele, therefore, Nigerian banks’ chief executives have been responsible for inflicting pains on domestic economic actors that have continued to hurt the economy, while in the recent case, acting in gross contempt of the country’s laws.

It is in the nature of these contemnors of the laws of the land, that the respective shareholders of the businesses they head should act to bring them to book. We cannot build a democracy where scofflaws run the financial services space.

PREMIUM TIMES has made several calls for Mr Emefiele to be relieved of his office. These calls were premised on growing doubt as to his fitness for office. If we took the CBN’s main price stability remit as our point of departure, Mr Emefiele’s incompetence is incontrovertible. This is as much about the outcomes of his policy, and as the Supreme Court’s ruling points to, as it is about the thoughtlessness that goes into his policy design. However, rule breaking is why we would want Mr Emefiele to be arrested and tried. We cannot build a democracy on the back of impunity and illegality. But there is also the charge of economic sabotage.

If the first is criminal. The second is treasonous.

Alas, President Buhari, himself a scofflaw, as noted by the Supreme Court, is neither able nor willing to do right by the country on this matter. This will be the legacy of his eight-year rule. But we cannot continue to allow acts of criminal conduct to define our democracy.

SANWO-OLU: OLD NAIRA NOTES REMAIN LEGAL TENDER

The Lagos State Government has noted the hardship sparked by the Naira redesign policy, which has affected business and commercial activities.

There is no reason to reject the old notes, going by the Supreme Court judgement delivered on March 3, 2023.

The apex court declared that “no reasonable notice was given as required by Section 20(3) of the CBN Act,” noting that the public only became aware of the policy through press remarks, which cannot qualify as a notice to the public.

The court maintained that the policy has impeded the functions of State governments, pointing out that the directive that stops the use of the old notes is illegal, unconstitutional, null and void.

Governor Babajide Sanwo-Olu has, therefore, called on business owners, especially retailers, to accept the old N500 and N1,000 notes - in line with the Supreme Court judgement that the currency remains legal tender until December 31, 2023. It is illegal to reject the notes.

All agencies of the Lagos State Government are advised not to reject payments made with the old currency by the public.

Gbenga Omotoso
HC, Information & Strategy

1- GOVERNOR SOLUDO: SPECIAL PUBLIC ANNOUNCEMENT

1. Commercial banks have been directed by the Central Bank to dispense old currency notes and to also receive same as deposits from customers.

2- Tellers at commercial banks are to generate the codes for deposits and there is no limit to the number of times an individual or company can make deposits.

The Governor of the CBN gave the directive at a Bankers’ Committee meeting held on Sunday, 12th March 2023.

3- The Governor, Emefiele, personally confirmed the above to me during a phone conversation on Sunday night. Residents of Anambra are therefore advised to freely accept and transact their businesses with the old currency notes (N200; N500; and N1,000) as well as the new notes.

4- Residents should report any bank that refuses to accept deposits of the old notes. Anambra State Government will not only report such a bank to the CBN, but will also immediately shut down the defaulting branch.

Signed
C. C. Soludo CFR.
Governor