The Centre for the Promotion of Private Enterprises (CPPE) on Friday said Nigerians deserve an apology from the Federal Government for subjecting them to hardship via its new naira swap and cashless policy.
In a statement by Muda Yusuf, Chief Executive Officer of the CPPE, the Centre described the policy as “punitive, cruel and insensitive.”
It noted that Nigerians have experienced difficulties accessing their money since the currency swap programme was launched, leading to protests and attacks on banks and ATMs in parts of the country.
As such, the Centre insists that Nigerians deserve an apology from the promoters and proponents of the policy, especially the ‘arbitrary and uninformed’ mopping up of cash in the economy.
This is as the organisation also commended the Friday ruling of the Supreme Court on the use of the old naira notes as legal tender, saying the ruling the ruling protects the citizens from a policy which is, “by all accounts, disruptive, repressive and draconian”
On Friday, the Supreme Court extended the validity of the N200, N500, and N1,000 Naira notes till 31 December. The policy had declared old N200, N500 and N1,000 notes invalid since February 10, before extending validity of N200 to April.
In its ruling, the court held that the directive of President Muhammadu Buhari for the redesign of the new notes and withdrawal of the old notes without due consultation is invalid.
According to the CPPE, “Hopefully, President Buhari, the Central Bank Governor and the Attorney General of the federation would comply with this court order in the interest of the rule of law, good order and public interest.”
The organization said the CBN currency redesign policy inflicted indescribable agony, suffering and distress on the majority of Nigerian citizens.
“The trouble was not with the redesign, but the deliberate and unrestrained mopping up of cash in the economy.
“To date the CBN had mopped up about N2 trillion cash from the economy thereby paralyzing the retail sector, crippling the informal economy, stifling the agricultural value chain, immobilizing the transportation sector and disrupting the payment system in the economy.
“It is true that the 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. The CBN has no right to impose that choice on citizens.”
Flagrant Violation
The think tank noted that 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 CBN that right, it argued.
“A swap presupposes that whatever old notes was received by the banks must be replaced with new ones instantly,” it said.
“Otherwise, the period of the swap should be extended until the CBN is in position to do so. In many other climes, such swaps are done over twelve to twenty months, or even more, to minimize disruption.
“The claim by the 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.”
The CPPE noted that in December 2022, the total money supply was N52 trillion and the cash component of the money supply was N2.6 trillion, which was just 5 per cent.
It added that the country’s Gross Domestic Product [GDP] was N202 trillion, which gives a cash to GDP ratio of 1.3 per cent.
It said the ratios are some of the lowest around the world which shows that the Nigerian economy is not really a cash-dominant economy.
According to the think tank, cashless transactions in 2022 was about N400 trillion, 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 cash in the economy,” the CPPE said.
“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 by the Cash Reserve Ratio (CRR).
“Indeed, the bigger threat to monetary policy effectiveness and inflation is the N22 trillion ways and means finances of the CBN.
“The entire exercise was a needless disruption of economic activities, especially among the most vulnerable segments of the economy, unfortunately.”
