CEM INSIGHT, FINANCE | The fall out of the currency redesign and circulation hit Nigerians as a storm without notice with a strange phenomenon of lack of cash for every day transactions. This is the first time this has happened in the history of Nigeria and has occupied a copious space in the Nation’s history hence forth.
The critical economic situation where Nigerians had to art to buy back their hard-earned money has continued to generate comments from experts and public commentators dwelling on the impact the process had and is having on the livelihood of Nigerians and the general economic activities of the nation.
Comments have also been generated around coping with the situation, CBN’s next line of action and the need for possible infrastructural upgrading to support the whole cashless economy policy by the Central Bank
Chairman of Continental Economy Magazine, Mr Patrick Akamiokhor has in the same vein, urged stakeholders in the Banking industry themselves to come together to invest in the interbank transfer network in Nigeria following the unstable performance of the network experienced in this period of persistent cash scarcity.
The veteran banker and CEO of Forward Bureau de Change gave the admonition while chatting with CEM crew over the weekend. His experiences in the ongoing cash crisis and the impact in the Bureau de Change market has intensified the need to urgently invest heavily in the network.
While responding to the question on the level of investment Nigerian government should effect on the network infrastructure, Patrick Akamiokhor said; “It is the banking industry that should do that investment. Anything left in the hands of government doesn’t work. Are the refineries working? Is the power sector walking? There is nothing owned by government that is actually working.
“Let the banking industry, due to the present experience come together and decide on the level of investment to be made in the interbank transfer network.”
Akamiokhor explained that the naira redesign and implementation affected every sector of the economy with the BDC business not in exception. Scarcity of cash and the poor network experienced during the period reduced the level of activities in the market since people could not find physical cash and could not transfer for the purchase of foreign exchange.
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He said; “For the past 2 to 3 weeks, business have been down in the sense that people don’t have cash to buy and then the interbank transfer system has also been experiencing problems probably because there is an unusual increase in transaction, lot of transfers have not been going. So, you can stay for two or three days without doing a transaction.
“Transaction that could be done is probably between the same bank. BDCs that have accounts virtually in all the banks are the ones still managing. But moving money from bank to bank has been very difficult. That has truly affected our business.
“We just pray that in the next couple of weeks, everything will come to normal.”
However, Akamiokhor expressed approval for the objectives of the cash redesign but faulted the ‘business as usual’ approach in the implementation by CBN.
“This policy of Naira Redesign was well-intended, unfortunately not well implemented. Their plan was to Redesign the currency to enable them retrieve the cash not accounted for, into the system. According to CBN, there was a lot of money in the system but not circulating because some people were hoarding the naira for political purposes.
Getting the money back into the system was aimed at reducing inflation and reduce interest rate since the bank will have more money in the system. It was also meant to increase the productive base of the economy.
However, the way it has turned out was not expected, now there is so much crisis in the system. Some people, especially those in the rural areas don’t even have money to spend at all. It was not the expectation of the Central Bank that it will get to this point.
Circulating the new notes was supposed to have ended on the 31st of January and as that date some people had not even seen the new notes. Even at the moment, some people in the rural areas have not still seen the new notes at all.
While some have blamed commercial banks for the cash crisis, Akamiokhor faulted both the CBN and the commercial banks. He blamed it on lack of stakeholders’ engagement by the CBN; involving the commercial banks, microfinance banks, POS agents and even BDCs.
“I can’t remember hearing anything like a meeting between the CBN and the commercial banks were well mapped out action plan was discussed. It was business as usual where commercial banks go to CBN and collect money to give to their customers. Now this is a major shift, there was supposed to be a well-marked out plan to get this money to the end users.
“There would have been a meeting with the key stakeholders; the commercial banks, the microfinance banks, the POS agents and all the money agents in the system. It would have been a well-thought-out plan.
“I think CBN should have discussed strategy on how to get this money to the end users, how much was available on immediate and how much is available to each bank based on the sizes of the banks as well as how to involve the microfinance banks and POS Agents.” He said.
Involvement of POS agents was to ensure that the new notes get to the rural areas faster.
“In my local government, for instance, there are only two banks; one in Okpela and the other in Agenebode. So how do you expect 2 banks to serve a whole local government? I learnt that even in the North, there are some local governments where you don’t have bank presence at all, no microfinance bank, no Commercial Bank and no financial company. How do you get to such places.
The POS should have been involved to facilitated quick circulation to hinterland even if they were not going to be given much to pay out.”
As a Way forward, “commercial banks should cooperate with CBN. Let Banks start to open accounts massively. Let them relax account opening requirements for now so that many people can open account so people can access the new notes.
Speaking on the debate about maturity of Nigeria for cashless policy, Akamiokhor said we should drive maturity for the cashless policy.
“There is no economy in the world that is matured, you have to drive maturity when it comes to issues like this. Before the banking reform, we were not having ATM machines in Nigeria but they came. Initially people didn’t want to take ATM card, but after a time everybody got used to it. it is the same thing here.
“We are matured enough to have a cashless policy that can affect at least 70% of Nigeria. Even for those that live in the rural areas who are pure illiterate, there is hardly anyone in Nigeria today that does not have at least a literate child.” He said.
Akamiokhor urges Nigerians to get it right this time in the forth coming election, emphasizing that is the only way things can move on well.
“My wish and my prayer are that we should get it right this time around. If we have the right and qualified people in place, things we move. Nigeria economy is a very big economy”; He said.
He spoke strongly for private sector larger participation in the economy.
“I remember vividly when Obasanjo sold the refineries to Dangote, Nigeria protested that Obasanjo was selling Nigerian assets to his friends. From that time to today those refineries have not done anything meaningful. The same Dangote whose money was refunded has built another refinery that Nigeria is now hoping for.
“We should try to get it right this time around so that we can move Nigerian economy from government to private sector, that is how democratic economies are operated, that’s how capitalist economies are operated. The economy should be in the hands of the private sector. Government can only regulate and not government everywhere doing everything. Money pumped into government businesses and never returned, if you put such amount into the private sector, this economy will run.
That was what Obasanjo did when he tried to encourage the private sector, but in the last couple of years, everything has gone down.
