Image of New Naira Notes, Source – Google Images
As Nigerians continue to reel in the pains of the unavailability of the new naira notes to meet up with daily financial transactions and caught in the web of a policy overhaul that has left many cashless, Twitter users have reacted to some of the key components of the speech given by President Muhammadu Buhari in his state of the nation broadcast on persistent issues around the legal tender of Africa’s largest economy.
The president in his broadcast stated that the volume of banknotes not domiciled in Nigeria’s banking system has retarded the attainment of potential economic growth and distorted financial policy and efficient management of inflation.
Advisory Partner and Chief Economist, PwC West Africa, Andrew Nevin in a tweet that 70,000 Twitter users have viewed tagged the position as “economic nonsense”
Screenshot of Andrew Nevin Tweet
In the same vein, Nigeria’s former Statistician-General, Dr. Yemi Kale in a series of tweets asserts that cash outside the banking system does not retard economic activity as it is utilized in the confines of the informal sector.
He further adds that economic activities can only be retarded on the basis of the financial sector exhausting its available funds to stimulate economic activity.
Screenshot of Yemi Kale Tweet
Ibrahim Shelleng, a financial analyst and economist while sharing his perspective with Summit Post News said conventional macroeconomic tools normally deployed by the central bank of Nigeria will become largely ineffective with less than 50 percent of cash in the country outside the financial system. He adds that “the effectiveness of monetary policy can be directly attributed to the central bank’s control of liquidity in the country”.
Shelleng further posits that for monetary tools to be effective, the apex bank needs to have a firm grasp on system liquidity, which is not the case in Nigeria.
“When you add the cash in circulation that has been gotten through illicit means (kidnapping, financial crimes among others) then this makes it even more pertinent for CBN to gain a foothold on currency in circulation,” he said.
Meanwhile, as the cash crunch bites harder, the apex bank in a statement signed by the director of corporate communications, Osita Nwanisobi has urged Nigerians to disregard information asking citizens to take the old N1000 and N500 to deposit money banks as the central bank did not instruct banks to take back old notes.