CEM ANALYSIS, FINANCE | The prevailing situation in the Nigerian economy with regards to the scarcity of the redesigned Naira currency can be seen as a litmus test of how prepared the economy is for the much conversed cashless transactions.
What became obvious immediately cash became scarce following the issuance of the new currency was that the internet network of many banks crashed completely and the situation has remained unabated in some of these banks.
Many customers who had their funds trapped are yet to get reversal and their accounts remain debited even when such banks would promise to attend to the challenges within 72 hours. What therefore has become obvious is that the required infrastructure for internet financial transactions in the economy remains grossly inadequate.
As it is currently, the Central Bank of Nigeria has boxed itself into a tight corner with people keeping the new Naira notes in their houses after their harrowing experiences to get whatever they have been able to secure. Of course, with the politicians apparently buying up a large chunk of the redesigned currencies from their banks, virtually nothing is left for the ordinary saver.
A vicious circle has obviously been created and that may require unmethodical policy thrust to get out of the quagmire. Certain things readily come to mind here, either to allow the situation to remain, hoping that the suffering of the masses will ebb with time. In this case, the CBN needs to develop a strong willed power to withstand the tout-like activities of politicians, the cat calls and their ubiquitous court actions.
The second alternative is to overhaul the entire internet infrastructure to make it functional so as to facilitate on line financial transactions but the internet service providers must be part of this plan. That makes this alternative long term.
The third option is to create an Idi Amin kind of economy where currencies are minted at the caprices of the leader. Of course, the CBN cannot afford to take this route especially as it was reported that it has massively adopted Ways and Means option of financing Government budgets all along.
One lesson the CBN should learn from the prevailing development is that it has lost the grip of banks. Politicians have corrupted many banks and CBN needs to strengthen its regulatory ambit to make these banks fall in line again. So far, the small savers have suffered most and from all indications, the scarcity of cash may linger until confidence is fully restored and these small savers are once again able to return their cash to the system. Incidentally, it would appear the aim of the policy is not being realised given what the CBN said that it has issued the required volume of currency to adequately service the economy. What that means is that the big boys have this time again cornered the money into their homes. There must be a way out.