*CPPE asks central bank to allow commercial banks handle collection of old notes
Dike Onwuamaeze
The Nigeria Economic Summit Group (NESG) has advised the Central Bank of Nigeria (CBN) to adapt a gradual phasing out of the old naira currencies by prolonging their legal tender usage side-by-side with the new notes.
The NESG which gave the advice in a report titled, “Naira Redesign Policy: Caught in the Web,” noted that this would stave off further adverse socio-economic effects the implementation of the current naira redesign policy was having on the economy and to restore confidence in the country’s financial system.
It, however, warned that prolonging the cash scarcity associated with the currency redesign policy would likely motivate a slowdown in Nigeria’s economic growth as many productive activities might have been halted due to the inability to access cash, especially the informal sector that runs primarily on cash and controlled about 65 percent of Nigeria’s GDP.
The report stated: “As laudable as the aims of the CBN were in its decision to redesign the currency, the evidence is that there has been a myriad of unintended challenges, which have been significantly disruptive to economic activity and negatively affected the welfare of citizens. Urgent redress is, therefore, required to stave off further adverse socio-economic effects and to restore confidence in the financial system.”
The NESG recommended that due to the hardship households and businesses were facing, especially in the informal sector, “the CBN needs to reconsider prolonging the legal tender usage of the old notes side-by-side with the new notes. This is important to give the CBN the opportunity and time to devise effective ways of getting the new note to the unbanked populace and rural dwellers that constitute a large portion of the informal economy. As such, a gradual phasing out of the old note is advised.”
It added that the CBN should, “expedite the printing of new notes and streamline their distribution channels to ensure efficient delivery of the new notes to commercial banks and other financial institutions. This will help ensure an adequate supply of cash to meet the public’s demand and reduce long queues and other inconveniences.”
The NESG also urged the CBN to, “launch a public sensitisation campaign to educate the public on the need for new notes and the reasons behind the delayed printing process or scarcity of cash. This will help prevent negative vested interest narratives and misinformation resulting from an inadequate supply of cash. The campaign should emphasise the objectives and benefits of currency redesign.”
It also emphasised the, “urgent need to expand the capacity of the digital financial system to accommodate the mass migration to digital channels. This is important to ensure a seamless transition to digital channels as alternatives to cash. The difficulty experienced by people attempting to use digital channels for transactions suggests that payment platforms are not adequately mature to adjust quickly to a cashless economy.”
The NESG noted that the naira redesign policy, alongside other policies that have had unintended consequences, would continue to dampen investors’ confidence in Nigeria.
“Policies such as this further compound the level of uncertainty in the economy, which disincentivises investors from committing their funds to the Nigerian economy.
“With nearly 40 per cent of the adult population being excluded from the financial system, the challenges emanating from the cash crunch following the redesign will amplify the trust deficit in the financial system.
“Hence, many more people will resort to stacking up cash. This will be against the cashless policy agenda of the CBN and will defeat the essence of the Naira redesign policy,” the group warned.
Similarly, the Centre for the Promotion of Private Enterprise (CPPE), has expressed concern over the CBN’s conflicting directives on where to deposit the old currency notes, whether the commercial banks or central bank.
The Chief Executive Officer of the CPPE, Dr. Muda Yusuf, stated yesterday that this confusion was inflicting additional pains on already traumatised millions of innocent Nigerians seeking to return the old notes.
Yusuf said amidst the chaos which the policy had created, it was evidently impractical for the CBN’s offices to properly handle this process of receiving old currency notes, which are still in abundance in the hands of millions of Nigerians.
“The process should also be simplified to accommodate millions of rural dwellers, the informal sector players, the over 30 million unbanked Nigerians and several millions that are not literate. We plead with the CBN to review its processes in the interest of fairness, justice and social inclusion,” he added.
