The Centre for the Promotion of Private Enterprise (CPPE) had described the Supreme Court ruling on the use of the old currency Naira notes as legal tender as commendable and expressed the hope that President Muhammadu Buhari, the Central Bank Governor and the Attorney General of the Federation would comply with the court order in the interest of the rule of law, good order and public interest.
The Centre, in a statement by its Chief Executive Officer, Dr. Muda Yusuf, issued on Friday welcomed the apex court’s ruling as it protected the citizens from the Central Bank of Nigeria’s (CBN’s) Naira redesign policy which is, by all accounts, disruptive, repressive and draconian.
In addition, the CPPE boss noted that the policy also was punitive, cruel and insensitive, adding that indeed, Nigerians deserve an apology from the promoters and proponents of the policy, especially based on the arbitrary and uninformed mopping up of cash in the economy.
Yusuf stated: “The CBN currency redesign policy inflicted indescribable agony, suffering and distress on 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.
“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. The act cannot be superior to the constitution of the country. The CBN cannot request the citizens to bring their cash for a swap, only to deprive them access to it.
“A swap presupposes that whatever old notes were received by the banks must be replaced with new ones instantly. 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”, he added.
According to the economist and former Director-General of the Lagos Chamber of Commerce and Industry (LCCI), 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.
Specifically, he pointed out that as of December 2022, total money supply was N52 trillion, cash component of money supply was N2.6 trillion, which was just 5%.
Similarly, the CPPE’s chief maintained that the country’s Gross Domestic Product [GDP] was N202 trillion, which gives a cash to GDP ratio of 1.3%. These ratios are some of the lowest around the world which shows that the Nigerian economy is not really a cash-dominant economy.
He further clarified: “Cashless transactions in 2022 totalled about N400 trillion in 2022, 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 of cash in the economy.
“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”, Yusuf added.
