Taiwo Hassan 
Officially, the deadline for old naira notes to end being legal tender is tomorrow even as the Central Bank of Nigeria (CBN) has assured Nigerians that there will be light at the end of the tunnel, bat small business operators still in a dilemma. Taiwo Hassan reports
Indeed, the crisis over the redesigned naira notes has partly affected Nigerians, including the Micro, Small and Medium scale Enterprises (MSMEs) operators and other manufacturing businesses. Precisely, the organised private sector (OPS) has stated that businesses are suffering the consequences of the currency management policy lapses with regard to deadline extension for phasing out old notes as legal tender in the country.
Statistics
From records, the trade sector contributes about 14 per cent of GDP valued at an estimated N35 trillion; agricultural sector contributes 25 per cent, valued at an estimated N62 trillion. Most of the activities in these sectors are either in the rural areas or in the informal sector of the economy. These are the sectors that have been driving the resilience of the Nigerian economy amid numerous domestic and global headwinds. No doubt, the outcome generated amid the crisis over the shortage of new naira notes and phasing out of the old notes in one way has created uncertainties in the two critical sectors of the economy in the country.
Dilemma
There is no doubt the two critical sectors, trade and commerce, and agriculture are particularly facing vulnerabilities at present with the crippling of business transactions at the distributive trade end amid the currency swap crisis. In fact, the ongoing currency swap is not only undermining the trade and agricultural sectors, but also, having a knock-on effect on manufacturing value chain and the services sectors. This is because whatever is produced has to be sold. The trading end of the chain has been greatly disrupted by the crisis.
LCCI’s stance
While reacting, the Director- General of the Lagos Chamber of Commerce and Industry (LCCI), Dr. Chinyere Almona, explained that during the launch of the redesigned naira notes last December, expectations were high for the smooth transition to the use of the new notes for business transactions across the country. She, however said: “We (LCCI) regret to note that expectations have been dashed, business deals impeded, and loss of time and value experienced by many. “The Central Bank needs to enlighten the public on grey areas about the scarcity of the new naira notes in addition to strengthening its policy implementation capacity. This is the minimum expectation in the face of a currency crisis in which we find ourselves. Naira notes “The new naira redesign has triggered varied reactions and feedback that suggest that related issues like the phasing of old currency notes, withdrawal limit, and the scarcity of new notes may have started to impact businesses and social livelihood beyond intentions.”
Multiplier effects
Almona stressed that while banks have endeavored to meet the currency demands of their customers through Automatic Teller Machines, and electronic transfers, the scarcity of the naira has rendered their efforts ineffective. “Businesses are suffering the consequences of the CBN currency management policy lapses. Regarding the deadline extension for phasing out old notes, the chamber does not see any value in this if the scarcity of the new Naira notes persists. “While we support the drive towards a cashless economy, redesigning the naira and phasing out old currency notes could have been better planned and implemented with no hardship for businesses and individuals,” the LCCI boss added.
CPPE’s assessments
In his opinion, the Director, Centre for the Promotion of Private Enterprise (CPPE), Dr. Muda Yusuf, said for an economy that is tottering on the brink, the capacity to absorb shocks and disruptions was severely constrained, saying with 133 million Nigerians in poverty, inflicting additional hardship on the citizens would be unfair, insensitive and inconsiderate. According to him, “the reality is that presently in many parts of the country, more than half of the currency in the hands of citizens are still old notes. And it is on record that the banks were still giving out old notes even few days to the CBN deadline. “The citizens should not be made to pay for the incompetence, inefficiency and ineptitude of state institutions. “Given the size of the Nigerian economy, our large population of over 200 million people, the dominance of the rural economy, the huge informal sector, the literacy level, and the over 30 million Nigerians that are unbanked, a minimum of six months window ought to have been given for the currency swap exercise. “The CPPE calls for the urgent intervention of President Muhammadu Buhari to save millions of Nigerians from the anguish and pain of the current stampede of currency swap inflicted by an unrealistic timeline and glaring capacity gaps in the management of the process.” He added that the vote buying argument was not compelling enough to justify the scale of pain, agony, trauma and economic disruptions foisted on Nigerians by this currency swap pandemonium. There should be better ways of curbing vote buying than inflicting pain on innocent citizens. The SFIU, EFCC the POLICE and ICPC have bigger responsibilities in this respect. In addition, Yusuf explained that the argument that currency swap would enhance monetary policy effectiveness and curb inflation had no strong basis in economic theory. “Money supply is a more critical variable in the inflation equation,” he said.
CBN’s position on currency swap
While defending the currency swap policy initiated by the CBN, the Governor of the CBN, Mr. Godwin Emefiele, asserted that President Muhammadu Buhari gave the apex bank the approval to embark on this ambitious programme. He said, in the past, the CBN had not have the opportunity to embark on such currency redesigned program in last 19 years. Emefiele said: “Ladies and gentlemen, right from the onset of this currency swap redesigned programme, we made it clear that for 19 years, the CBN hasn’t been able to conduct this important aspect of its mandate, whereas, this should normally have been done within a 5-8 years window. “Our aim is mainly to make our monetary policy decisions more efficacious and like you can see; we’ve started to see inflation rate trending downwards and exchange rate relatively stable. “Secondly, we aim to support the efforts of our security agencies in combating banditry and ransom taking in Nigeria though this program and we can see the military are making good progress in this important task in Nigeria. “Ladies and gentlemen, available data at the Central Bank of Nigeria has shown that in 2015, currency in circulation was only N1.4 trillion. As at October 22, currency in circulation had risen to N3.23 trillion; out of which only N500 billion was within the banking industry and N2.7 trillion held permanently in people’s homes. “Ordinarily, when CBN releases currency into circulation, it is meant to be used and after effluxion of time, it returns back to the CBN, thereby keeping the volume of currency in circulation under the firm control of the CBN.” The CBN governor continued: “So far and since the commencement of this program, we have collected N1.9 trillion; leaving us with about N900 billion (N500 billion + N1.9 trillion). “We are happy that so far, that the exercise has achieved 75 per cent of the N2.7 trillion held outside of the banking system. “Aside from those holding illicit/ stolen Naira in their homes, for speculative purposes, we do aim to give all Nigerians that have Naira legitimately earned and trapped, the opportunity to deposit their legitimately trapped monies at the CBN for exchange.”
Buhari’s commitment
To demonstrate his support for the country’s currency swap policy initiated by the CBN, President Muhammadu Buhari assured Nigerians that he was committed to resolving the cash crunch that has become a problem across the country following the shortage of the new naira notes in circulation. Buhari spoke to the Progressive Governors Forum, who came to the Presidential Villa to seek solutions to the cash crunch which, they said was threatening the good records of the administration in transforming the economy. According to a statement signed by a presidential spokesman, Mallam Garba Shehu, President Buhari said the currency redesign would give a boost to the economy and provide long-term benefits while expressing doubts about the commitment of banks in particular to the success of the policy. “Some banks are inefficient and only concerned about themselves”, said the President, “even if a year is added, problems associated with selfishness and greed won’t go away.” He said he had seen television reports about cash shortages and hardship to local businesses and ordinary people and gave assurances that the balance of seven of the 10-day extension would be used to crackdown on whatever stood in the way of successful implementation. “I will revert to the CBN and the minting company. There will be a decision one way or the other in the remaining seven days of the 10-day extension,” the President assured.
Last line
With the deadline coming to an end, the CBN management’s assurances to continue accepting the old notes and that no Nigerians would lose money should act as a succour that the apex bank’s intention is genuine and people oriented.
