CBN Indecision on Old Naira Notes Crippling Informal Economy

In a statement by its Chief Executive Officer, Muda Yusuf, the organisation welcomed the Supreme Court ruling as it protects the citizens from a policy which is, “by all accounts, disruptive, repressive and draconian.”

“To date, the CBN had mopped up about N2 trillion cash from the economy, thereby paralysing the retail sector, crippling the informal economy, stifling the agricultural value chain, immobilising the transportation sector, and disrupting the payment system in the economy.

“The CBN indeed has the right to redesign currency, but it does not have the right to dispossess the citizens of their cash. The choice of the mode of the store of value is a fundamental right of citizens. The CBN has no right to impose that choice on citizens,” the statement added.

The Director-General of the Small and Medium Enterprise Development Agency of Nigeria (SMEDAN), Mr. Olawale Fasanya, echoed the CPPE’s concerns, lamenting that cash scarcity is frustrating the efforts of many small-scale entrepreneurs, particularly those who rely on daily sales to run their businesses. He reveals that the agency is already in the field gauging the impacts of the cash scarcity on the activities of SMEs operators and  that initial feedback has shown that many informal sector operators have been forced to either close shops or suspend operations.

Also ,a financial expert, Gbolade Idakolo, appeal to  President Muhammadu Buhari  to  immediately direct the CBN governor to revert to the status quo. “The naira redesign policy has shrunk the economy by over a trillion in business losses. Many SMEs have closed shops due to their direct dealings with cash.

“The policy increased hardship for the already stressed population, and the Supreme Court judgment is a great relief,” he said.

Consumers are more cautious with their spending due to the limited availability of cash, which has led to a decline in sales for many businesses, especially small and medium-sized enterprises (SMEs) that rely heavily on consumer spending to stay afloat.

Food sellers who usually bring their commodities from the northern parts of the country complained at the Lagos popular Mile 12 market that the lack of cash is causing them to incur heavy losses because some of the retailers who buy in small quantities from them now find it difficult to pay for the goods. 

Given the perishable nature of farm products like pepper, tomatoes, yams, and cows, they are being forced to sell their products on credit. They feared that this arrangement may result in heavy losses because of the difficulty of forcing retailers to pay back, especially since the problem of cash scarcity is yet to abate.

Mr Matthew Aburime, a student of Lagos State Polytechnic, Ikorodu, who expressed disappointment, said he had been unable to spend the money he collected from a bank.

“I came from Ikorodu to Ajao Estate to spend some time with my grandmother, unfortunately for me, when it was time for me to go back to my base, there was no liquid cash to be given to me.

“Someone, then, told me that a nearby bank was paying old notes. Since it was from a commercial bank, I felt they would pay based on the instruction of the Central Bank of Nigeria (CBN).

“Then, I went and queued, eventually, I was able to withdraw N10,000 from the bank.

“As we speak, the money is still with me, I’ve not been able to spend it; the first rejection was from commercial bus driver.

Aburime urged President Muhammadu Buhari or the Central Bank Governor to make pronouncement on whether to accept it or not.

“They, being quiet is making people lose more money,” he said.

Accoring to him, their quietness, has also given some people the power to cheat and commit heinous act like the excess charges from the PoS agents.

Mr Daniel Okpulonu, a trader, also shared same regrets.

“When I realised that these old notes that I was receiving from my bank was not legal tender was when a bank official announced that people who had received the old notes should not bother bringing it back to deposit, as it would not be acceptable.

“As we speak, I am still going about with the money, looking out for where I can spend it. All to no avail.

“This is not good enough, government should come out and tell us what they want from us, Nigerians have suffered enough since the inception of this policy,” he said.

The CPPE noted that it is a flagrant violation of the rights of citizens for the CBN to withhold citizens’ cash under the guise of currency redesign. The CBN act does not give the CBN that right, it argued.

“A swap presupposes that whatever the banks received old notes must be replaced with new ones instantly,” it said.

 Government should resolve the issue urgently in the interest of the economy