CEM REPORT, FINANCE | Events around the currency redesign, circulation and retrieval of old notes were thought to be winding down towards at least releasing Nigerian businesses and individuals to return to their normal economic activities. The ruling of the Supreme court and the conclusion of elections with the governorship election earlier scheduled to hold Saturday 11, pointed to some hope of coming out of the suffocating cash crunch the policy has caused.
Discussions around the impact of this policy has now changed from the micro perspective to a macro perspective. Those that defended this policy initially have begun to speak more of the imminent negative and devastating consequences it will have on the entire economy.
In a short submission titled “Naira Redesigning: The Honest Confessions of an Apologist”, Dr Alaba Olusemore is representing those that have taken a reversal position to an earlier stand on the policy following what they have termed poor implementation.
“When CBN reeled out the Naira Redesigning Policy and gave the desired outcomes, I, like many others became unrepentant advocates. Recent developments arising from poor implementation flattened my ego. It’s clear to the government, business concerns and households that recession is imminent”; Olusemore said.
Dr Olusemore is a veteran banker and a small business consultant. He based his assertion on the dislocation the policy and its implementation is having on production, distribution and exchange.
“For now, there’s great dislocation in production, distribution and exchange. No one is exempted.”; He lamented.
This is not far from the recently released assessment in relation to the impact on the economy, presented in scenario based outllook by the Nigerian Economic Summitt Group. NESG maintained that the policy is already having a disruptive effect on the production activities.
Disruption on production stems from the strain the policy is having on distribution since retail end of the chain is heavily constrained. When there is scarcity of cash, the retail market is weakened, when retail market is suppressed, production suffers.
The inefficient transfer network goes further to aggravate the situation as majority of micro business operators and artisans that make up the bulk of the participants in the retail sector don’t accept transfers.
Mr Ikenna, a small restaurant owner said; “it has not been this bad, the Nigerian business environment is being choked to say the least. I don’t accept transfers anymore because I have so much hanging that I don’t know my fate”
While production is heavily impacted, Dr Olusemore expresses worry over the current status and image of the Nigerian banking sector.
He said; “Financial intermediation in Nigeria has hit the rocks, posing grave dangers to banking and bankers. Would bankers ever regain confidence of their customers? Would the centre ever hold? The answer is in the womb of time.”
It should be agreed that confidence in the financial sector may have been seriously wounded having now being perceived as unreliable. There is definitely a serious job ahead for the image makers of the financial institutions to rebuild confidence in their customers.
In reality, the financial sector can be said to be in disharmony now being made vivid by the silence of CBN following the ruling of supreme court. The ruling which restored the legal status of the old notes should ordinarily clear the air. But being a financial issue, CBN is needed to authorize banks to dispense the notes and formally permit it for exchange.
What the silence has done is that, some banks dispense it across the counter and others don’t, ATMs are still not working in most part of the metropolis and worst of it is the confusion whether to accept it or not. the silence by CBN and the federal government leaves Nigerians in bewilderment.
In the words of Olusemore, “While waiting for further announcement the economy continues to slide into recession!”.
But there are big questions begging for answers; who is in charge of the Nigerian banking sector, the supreme court or the Central Bank? Why has CBN not spoken? Should Nigerians undermine the authority of CBN and trade with old currency?
Dr Olusemore, being a leader in the church concluded thus; We need divine intervention. Things can’t continue this way!