Joseph Inokotong – Abuja
Centre for the Promotion of Private Enterprise (CPPE) has commended the Supreme Court ruling on the use of the old Naira notes as legal tender.
CPPE said Nigerians deserve an apology from the promoters and proponents of the policy, especially the arbitrary and uninformed mopping up of cash in the economy, and expressed the hope that President Buhari, the Central Bank of Nigeria Governor and the Attorney General of the Federation would comply with the court order in the interest of the rule of law, good order and public interest.
Director, Centre for the Promotion of Private Enterprise (CPPE), Dr Muda Yusuf, while reacting to the Supreme Court decision said, “We welcome the Supreme Court ruling as it protects the citizens from a policy which is, by all accounts, disruptive, repressive and draconian. It is also punitive, cruel and insensitive.
“Indeed, Nigerians deserve an apology from the promoters and proponents of the policy, especially the arbitrary and uninformed mopping up of cash in the economy.
“The CBN currency redesign policy inflicted indescribable agony, suffering and distress on the majority of Nigerian citizens.”
According to Yusuf, “the trouble was not with the redesign, but the deliberate and unrestrained mopping up of cash in the economy.”
He pointed out that “To date the CBN had mopped up about N2 trillion cash from the economy thereby paralyzing the retail sector, crippling the informal economy, stifling the agricultural value chain, immobilizing the transportation sector and disrupting the payment system in the economy.”
He affirmed that the CBN has the right to redesign currency, but noted that it does not have the right to dispossess the citizens of their cash as the choice of the mode of the store of value is a fundamental right of citizens.
The Director said; “the CBN has no right to impose that choice on citizens. It is a flagrant violation of the rights of citizens for the CBN to withhold the cash of citizens under the guise of currency redesign.
“The CBN act does not give the CBN that right. The act cannot be superior to the constitution of the country. The CBN cannot request the citizens to bring their cash for a swap, only to deprive them of access to it.
“A swap presupposes that whatever old notes were received by the banks must be replaced with new ones instantly. Otherwise, the period of the swap should be extended until the CBN is in a position to do so.
“In many other climes, such swaps are done over 12 to 20 months, or even more, to minimize disruption.
“The claim by the CBN that the economy has too much cash outside the banking system has no basis in economic theory, neither can it be supported by empirical evidence.
“As of December 2022, the total money supply was N52 trillion and the cash component of the money supply was N2.6 trillion, which was just 5%.
“Similarly, the country’s Gross Domestic Product (GDP) was N202 trillion, which gives a cash-to-GDP ratio of 1.3%. These ratios are some of the lowest around the world which shows that the Nigerian economy is not really a cash-dominant economy.
“Cashless transactions in 2022 were about N400 trillion, according to NIBSS. The truth is that nothing is broken. And we don’t fix what is not broken. Of course, we can do better, but not by crudely mopping up cash in the economy.
“The contention that the arbitrary mopping up of cash will curb inflation and enhance monetary policy effectiveness equally has no basis going by available data.
“It is also on record that about N15 trillion has been mopped up with the Cash Reserve Ratio (CRR). Indeed, the bigger threat to monetary policy effectiveness and inflation is the N22 trillion ways and means finances of the CBN.”
He noted that “the entire exercise was a needless disruption of economic activities, especially among the most vulnerable segments of the economy, unfortunately.”
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