July 14, 2024
CPPE lauds Supreme Court for restraining order on cash swap deadline
In 2021 economic outlook report, we posit that the annual real GDP growth rate would range between -2% and 1%
– By Godswill Odiong

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By Eyo Nsima
The Centre for the Promotion of Private Enterprise [CPPE] welcomes the restraining order of the supreme court on the timeline for the currency swap. We believe this would restore normalcy to economic activities especially in the distributive trade sector, the informal sector and rural economy. It would also douse current social tension and the risk of social unrest in the country.

The small businesses and the ordinary citizens were the biggest victims of the unspeakable disruption and hardship inflicted by the impractical deadline given by the CBN on cash swap.  They are the biggest users of cash.

In a statement obtained by The Daily, www.thedaily-ng.com, the Chief Executive Officer, CPPE, Dr. Muda Yusuf, stated: “The CPPE reiterates its position that given the huge population of over 200million,the large informal sector which accounts for over 40% of the GDP, the large rural economy and the over 30 million unbanked Nigerians, the CBN cash swap model and timeline was greatlyflawed.  It is inappropriate to arbitrarily cut down on currency in circulation without due regard to data, empirical studies and global best practices.

“We affirm our position that N2.6 trillion currency in circulation is not too much for the Nigerian economy with a GDP of about N250 trillion.  Any attempt to arbitrarily cut it will create a crisis.  It is unacceptable that citizens are denied access to their cash deposited forpurposes of cash swap. This could undermine the confidence of the citizens in the banking system and pose a major risk to the financial inclusion objective of the CBN. On boarding citizens unto the cashless platform should not be decreed or forced on them. It should be voluntary and incentive driven.

“In Nigeria, Cash to GDP ratio is less than 1.5%; while Cash/Money supply ratio is just about 5%.  These are some of the best currency ratios globally and mark of the remarkable progress that has been made in cash-less policy drive.  Cash to GDP in United States isabout 9%; in the Eurozone it is about 10%.

“This underlines that fact that cash is not the problem of the Nigerian economy or monetary policy effectiveness.CBN Ways and Means financing of over N22 trillion is a much bigger problem for liquidity management.It is regrettable that a purely monetary policy management issue has been profoundly politicized as witnessed in the past few weeks. This had obscured fundamental economic conversations.

“Meanwhile, in compliance with the Supreme Court order, we urge the CBN to immediately allow the old and new currency notes to co-circulate until such a time when the old notes are gradually and completely withdrawn.  This is global best practice. This should happen between within a space of three to six months.

“Meanwhile, all the cash that has been mopped up should be released to their owners, unless there are reasons to suspect such lodgments and this should be escalated to the antigraft agencies.Citizens that have lodged their cash for purposes of the cash swap should be allowed unfettered access to their money.”

 

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