Market News

Businesses rue losses over naira notes’ scarcity - THE NATION

JANUARY 30, 2023

Bank customers have continued to lament the scarcity of the new naira notes amid concerns that the scarcity could have adverse effect on the nation’s economic performance.

Reports across the major commercial cities yesterday indicated that retailers and businesses were rejecting old notes, forcing customers to abandon their transactions.

The Central Bank of Nigeria (CBN) yesterday announced a 10-day extension to the January 31, 2023 deadline.

In many of the banks’ branches visited in Lagos at the weekend, customers who wanted to deposit old notes were seen in long queues waiting for their turn.

Many of banks’ Automated Teller Machines (ATMs) were not working, after CBN directed that old notes should not be loaded on the machines.

Businesss owners and customers said the new notes should be made available across payment channels to forestall greater losses.

Agnes Chika, a trader based in Ereko, Ibeju-Lekki, Lagos, said she no longer collects the old notes, because of the difficulty of depositing them in the banks. She also said getting new notes had been difficult except for few customers who opted for online banking transfers.

“I have been in FirstBank branch in Mayfair Garden, Ibeju-Lekki, Lagos for three hours, and it has not even been my turn. I will no longer collect old notes, once I am out of this challenge. The few sales we have been making were through bank transfers because of the risk of still collecting the old notes,” she said.

Pascal Okorie, a Lagos-based Point of Sale (PoS) operator, however, said the policy threatens his  businesses and job creation and have called on the CBN to rethink the policy.

He predicted business closure for many PoS operators and job losses across the country from the policy fallout. He said many small businesses would witness high cost of operation and business losses due to the policy.

Many banks in Abuja metropolis ran out of the new notes.

For instance, Fidelity Bank and Zenith Bank at Wuse Zone 3 stopped dispensing new notes from their Automated Teller Machines (ATMs) shortly after mid day.

Banks were receiving deposit of old notes but not disensing new notes. In few instances where the ATMs were dispensing new notes, such as Kubwa, a satellite town in the Federal Capital Territory (FCT), the queues were long and arduous.

Centre for the Promotion of Private Enterprise [CPPE], yesterday expressed concern that the failure to extend the deadline for at least  six months could put N100 trillion component of the national GDP at risk.

Managing Director, CPPE, Dr. Muda Yusuf, said that two critical sectors- trade and commerce; and agriculture, will be particularly vulnerable if a six-month extension is not granted.

He warned that the crippling of business transactions at the distributive trade end amid the currency swap crisis would not only undermine the trade and agricultural sectors but would have a knock-on effect on manufacturing value chain and the services sectors. This is because whatever is produced have to sold. 

“The trading end of the chain has been greatly disrupted by this currency swap crisis. The trade sector contributes about 14 per cent of GDP valued at an estimated N35 trillion; agricultural sector contributes 25 percent 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,” Yusuf said.

He further noted that these are the sectors that have been driving the resilience of the country’s economy amid numerous domestic and global headwinds.  Therefore, he further stressed, any policy measure that would negatively disrupt these sectors should be avoided.

“For an economy that is tottering on the brink, the capacity to absorb shocks and disruptions is severely constrained. With 133 million Nigerians in poverty, inflicting additional hardship on the citizens would be unfair, insensitive and inconsiderate,” Yusuf said. 

He explained that presently, more than half of the currency in the hands of citizens are still old notes.  Besides, he revealed that until yesterday’s 10 days extension, it is on record that the banks were still giving out old notes.

“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,” Yusuf said.

He said the vote buying argument is not compelling enough to justify the scale of pain, agony, trauma and economic disruptions foisted on Nigerians by this currency swap pandemonium, saying there should be better ways of curbing vote buying than inflicting pain on innocent citizens.  The SFIU, EFCC the POLICE and ICPC, he said, have bigger responsibilities in this respect.

Yusuf also said the argument that currency swap would enhance monetary policy effectiveness and curb inflation has no strong basis in economic theory. “Money supply is a more critical variable in the inflation equation,” Yusuf said.

Report by Taofik Salako, Collins Nweze, Muyiwa Lucas, Nduka Chiejina, Abuja and Daniel Essiet


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