Naira Restriction Policy: Nigeria Runs Risk Of CBN-induced Recession – NGF Wans
The Nigeria Governors’ Forum (NGF), has declared that the country runs the risk of a Central Bank of Nigeria (CBN)-induced recession as a result of the Naira re-design and cash withdrawal restriction policy.
This was as it said that the argument by the apex bank 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.
The governors therefore vowed that they would employ all legitimate channels to ease the difficulty created by the CBN’s policy and therefore resolved to direct their Attorneys General to review the suit at the Supreme Court with a view to consolidating the legal reliefs pursued by States.
The NGF specifically said that while the Forum acknowledged 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, it however noted that Nigerians are yet to observe changes in the financial system.
The NGF which stated these in a communique issue at the end of its 3rd meeting on Saturday, February 11, 2023, noted that what the CBN is at present pursuing is a currency confiscation programme as against currency exchange policy envisaged under S20(3) of the CBN Act, 2007.
The NGF’s communique which was signed by its chairman and Governor of Sokoto State, Hon. Aminu Waziri Tambuwal, explained that CBN’s is carrying out 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provided to the general public is grossly insufficient due to the restrictions placed on the amount that can be withdrawn regardless of the amount deposited.
The Forum noted that 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.
First, we express our sympathies and support with Nigerians who are experiencing great difficulties under the current CBN Naira re-design and cash withdrawal restrictions policy.
“It has become necessary to make a distinction between the Central Bank of Nigeria (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.
“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.
“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 sizeable 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,” it said.
The Forum therefore called 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 the economy becomes too great to fix by the next administration.
