The renewed CBN cashless policy was designed to kick in effectively early this 2023 and it had stipulated that individuals and corporate bodies would only have maximum cash withdrawals of five hundred thousand naira (N500,000) and five million naira (N5,000,000), respectively. Access to these amounts was, however, not generally possible because the apex bank was not able to supply enough cash to commercial banks for depositors all over the country. This precarious situation lingered, along with months-long fuel scarcity that led to fuel price being hiked indiscriminately and arbitrarily at various filling stations in the country. These two biting challenges crippled families and businesses as almost everyone in most families was dispossessed of his or her cash.
The cash challenge, especially its negative impact, has finally reached the point where the Nigeria Labour Congress (NLC) and its president, Comrade Joe Ajero, have issued a directive for workers to go on strike in the coming week in Abuja. He said it was lamentable that the CBN and the federal government could not address the sufferings of her citizens, which appear to be getting worse than had been anticipated. And this position is on the basis of the Supreme Court’s order of 3rd March, which mandated the circulation and spending of the old notes (especially the N500 and N1,000), and recognising them as legal tender until 31st December 2023.
The cash crunch has been so severe that a lot of people have seen their projects abruptly come to a halt. Workers have also found it almost impossible to get cash and pay their transport fares to work, and take care of their every other daily need since February, when the CBN withdrew the old notes from circulation. The various moves made, including that by organised labour unions, ironically, pushed the CBN to respond quickly by assuring that they will flood banks with old naira notes. So, this laughable somersault only made nonsense of the poor masses who trooped out when the CBN first came up with the policy. It has turned out to be counterproductive, not achieving anything meaningful, except for months of pains and hardships Nigerians have gone through.
There is, however, no doubt, that the CBN action of naira colour redesign and the withdrawal of old currency notes from circulation, has its momentary merits over the exchange rate. But the impact of strengthening the naira may have just been temporal, as viewed from the currency scarcity at the parallel exchange market. But, it is a clear indication that “the coast is clear” for a future exchange rate appreciation against foreign currencies; as soon as the local currency starts gaining traction once the productivity profile of the economy begins to rise. The above prediction is likely, and could occur sooner than later, if the inflation rate starts dropping, followed by an expected reduction in bank interest rates that would likely be backed by an ‘import substitution policy’ from the government, in the light of an obvious ‘backward integration’ roadmap for local manufacturers. These would be manufacturers favourably engaged in their respective productive operations within the economy to boost government revenues.
The socioeconomic problems the nation is facing includes low disposable income in the pockets of most Nigerians (most of the vulnerable people that fall below the poverty line). These Nigerians are psychologically affected by a poverty mentality, resulting partly from a weak currency. Only a very few resilient ones struggle tirelessly with innovative moves and mastery of their trade, refuse to be swallowed up and refuse to accept defeat, in their efforts to surmount economic impediments in their way for survival. Such people contribute towards growth, no matter how insignificant their contributions may be.
Similarly, whenever the import coefficient for the economy drops (i.e., reduced imports) in the nation’s trans-border trade (in the calculation of an improved national economic efficiency or the GDP growth), it signals very strong and commendable performances by economic players and investors who have not only promoted growth through more exports of locally made goods (both tangible, from the manufacturing, and intangible, from the services sectors) but have, at the same time, belief in influencing more and new entrants to keep expanding economic activities within their specific sectors.
The government at the same time is pushed to sit up by making sure that capital projects for the right infrastructure that can sustainably support growth in every aspect of thriving economic activities are put in place.
The naira policy, by shrinking the currency in circulation or moving to the more sophisticated aspect of a cashless system, no doubt, would obviously impact positively on the nation’s economy if Nigerians would accord respect in the usage of the local currency, and also if those in authority with the operators in the financial sector shall patriotically implement the ethics of good governance from a corporate governance perspective (devoid of all forms of corrupt practices), the economy for sure, will bounce back fully.
