By Comrade Gbenga Olowoyo
The naked dance in the market that characterized the Federal Government monetary policy as implemented by the Central Bank of Nigeria in recent past months is another phase in the socio political and economic life of Nigerians.
The harsh and inhuman experience Nigerians went through is tantamount to regimented life pattern, that is very synonymous with war like period when citizens can not live a normal life but patterned in tune with the dictate of slave master dictum- it is very unfortunate.
Honestly, the New Naira re-design was seen as a Policy that will re direct the economic fortune of the country in a way that will make Nigeria money stronger after mopping up the free rein money in circulation via hands of individual which was to the tune of over 2 Trillions Naira as revealed by the Central Bank of Nigeria and amplified by the President of the Federal Republic of Nigeria General Mohammodu Buhari.
From the perspective of rational thinking , patriotic Nigerians were convinced ab-initio that it is very desirable to implement the Naira re-design for the purpose of allowing Central Bank to be in full control of its statutory responsibllities as the apex bank in Nigeria.
Nigeria Naira a ledger tender or commodity item-?
The evolutionary trend that occured to Nigeria Naira in the last four months posed a very serious hypothesis on whether the Nigeria Naira is now a legder tender or a commodity in an open market because the scarcity of the Naira pushed it to the level of using Naira to buy Naira to the point of using not less than 30 % Nigeria money to buy N200,N500 and N1000 of the same Nigeria money depending on the location and situation you find yourself.
What is ledger tender?
Legal tender is a mode of payment that is statutorily legalized for the purpose of engaging in businesses, transactions within the territory of a country; the ledger tender could be in coins or Naira as it is in Nigeria.
The legal tender serves as official currency, authorized and controlled by the country central bank with statutory instrument of economic Policy.
From the economic point of view, ledger tender is the officially recognized, authorized and legally accepted mode of payment for the exchange of goods, tax payments, debt settlements, storage value,unit of account as well as standard of deferred payments, hence, there is no rationale for citizens to decline its acceptability.
To put it succinctly, legal tender makes it possible to send money abroad, settle debts, make public and private payments,it reinforces the use of a single currency and permits flexibility in the money in circulation, reduces transaction costs and permits Government and Central Bank to control monetary Policies in order to stabilize the economy.
The transmutation of Nigeria Naira to a commodity item and economic Chess game
The twist of Nigeria Naira from ledger tender to commodity item occasioned by the Naira re-design and the scarcity of New Naira notes posed a serious danger not only to nation’s economic Policy but also to the well being of the citizenry.
In recent months Nigeria Naira becomes useless to the point that the Naira was placed for sale with the same Naira, for instance, N200 goes for extral N50 Naira, N500 goes for extral N200 while N1000 goes for extral N300 as the case may be.
This development is clear case of hopelessness and total collapse in the economic and monetary management of the country
The consequences of this scenario is depicted in a statement issued by the Centre for the Promotion of Private Enterprise (CPPE) by the Chief Executive Officer Dr Muda Yusuf
Accoding to him,
the Nigerian economy has lost an estimated N20 trillion since the onset of the cash crunch, arising from decelerating economic activities, crippling trading activities, stifling of the informal economy, contraction in the agricultural sector, the paralysis of the rural economy and there have been also corresponding job losses in hundreds of thousands.
In a statement tagged “The Trauma of currency redesign policy: Urgent intervention imperative by President Buhari”, the CPPE called for urgent action by President Muhammadu Buhari and the Central Bank of Nigeria (CBN) to address the protracted acute cash scarcity that has not only crippled economic activities in the country, but now a major risk to the livelihoods of most Nigerians.
Dr. Muda Yusuf, Director/CEO Centre for the Promotion of Private Enterprise (CPPE) said; “Since the onset of the cash crisis, the Nigerian economy has lost an estimated N20 trillion. These losses arose from the deceleration of economic activities, the crippling of trading activities, the stifling of the informal economy, contraction in the agricultural sector and the paralysis of the rural economy. There are also corresponding job losses in hundreds of thousands.
“Evidently, President Buhari did not seem to appreciate the gravity and enormity of the suffering and pain that Nigerians have been experiencing since the onset of the currency redesign policy.
“There is need to put an end to the devastating and traumatic outcomes of a repressive, poorly conceptualized and badly implemented currency redesign policy”.
The CPPE noted that millions of citizens have slipped into penury and destitution as a result of the disruptions and tribulations perpetrated by the currency redesign policy, especially the mopping up of over 70 percent of cash in the economy, stressing that “Nigerians have not been this traumatized in recent history.”
According to the CPPE, the economy is gradually grinding to a halt because of the collapse of payment systems across all platforms as digital platforms are performing sub-optimally because of congestion; “physical cash is unavailable because the CBN has sucked away over 70% of cash in the economy; and the expected relief from the supreme court judgement has not materialized. The citizens are consequently left in a quandary”.
“Curiously, there is an apparent reluctance or unwillingness by the federal government and the CBN to comply with the supreme court judgement. This is very disturbing and inexplicable.” Dr Yusuf added
“ Nigerians continue to groan in the adversity inflicted by the acute cash shortage amid rejection of old currency notes by market operators, refusal by banks to accept the old notes, silence by the presidency on the supreme court judgement; and absence of official pronouncement by the CBN on the issue.
“Retail transactions across sectors have become nerve-wracking and distressing as payment system challenges persist.
Positions of the Presidency and CBN on the policy
Although, different statements issued by the Presidency and the CBN authority on Monday 13th March provided soft landing for the groaning masses:
The apex bank’s Acting Director of Corporate Communications, Isa AbdulMumin, announced
on Monday that the CBN met with the Bankers’ Committee and has directed that the old N200, N500 and N1000 banknotes remain legal tender alongside the redesigned banknotes till December 31, 2023.
AbdulMumin stated that the CBN took the decision based on the Supreme Court’s ruling of March 3, 2022.
“Consequently, all concerned are directed to conform accordingly,” the statement read in part.
The CBN’s declaration comes after President Muhammadu Buhari absolved himself of any blame for the failure of the apex bank to obey the highest court in the land.
The Presidency statement earlier issued and signed by the Special Assistant to the President on media and publicity Garba Sheu,noted that the cashless system the CBN is determined to put in place, is supported by the country’s citizens who bear the brunt of the sufferings as they believe that the action would cut corruption, fight terrorism, build an environment of honesty and reinforce the incorruptible leadership of the President.
There is no doubting the justifications adduced by the presidential spokesperson but the taciturnity of the authority on sensitive matters like the issue of currency in the country is needles, responsiveness and responsibllities are expected to be the watchword of leadership.
NLC position on the raging issue
The ultimatum of 7 days issued by the Nigerian Labour Congress (NLC) to President Muhammadu Buhari-led government and the Central Bank of Nigeria to end Naira scarcity in the country is a right step in a right direction.
The NLC threatened that the workers in the public service may embark on a strike to press home their grievances if the government fails to resolve the socio-economic hardship which the monetary policy had created.
Comrade Joe Ajaero, the President of Nigeria Labour Congress NLC issued the ultimatum on Monday March 13th 2023 in Abuja, at the opening session of the Central Working Committee (CWC) meeting of the apex labour union.
Ajaero, expressed concerns about the hardships Nigerians were experiencing as a result of the Buhari administration’s cash swap policy, warned that after the seven-day period expired, workers would be directed to stay away from work if nothing was done to improve the situation.
The NLC President also criticised the country’s current fuel shortage, lamenting that workers and Nigerians were being pushed to the brink of starvation.
Better days ahead of Nigeria economy with empirical projections
Nigeria’s export bills outweighed import earnings by N1.2trn in 2022 based on data released by the Natinal Bureau of Statistics (NBS) the minerals export was the major item that pushed Nigeria goods trade surplus to N1.2 trillion in 2022 as export bills (N26.8 trillion) outweighed import earnings (N25.6 trillion) for the first time since the pre-COVID year (N2.23 trillion in 2019).
Nevertheless, the NBS noted that the surplus in 2022 represents an improvement of over 162 percent compared to the 2021 goods trade deficit of N1.94 trillion.
The positive trade balance was recorded during the period despite the weaker naira (9.09 percent y/y to N461.50 in 2022), weaker demand for export commodities, the effects of Russia’s invasion of Ukraine in 2022, which translated to weaker trade flows among nations, and the continued high costs of imports as companies became hard hit.
From the available report, from Nigeria bureau of statistics, Nigeria’s total merchandise trade in 2022 accelerated to N52.4 trillion in 2022 from N39.75 trillion in 2021 as Nigeria’s total export value surged 42 percent to N26.8 trillion from N18.91 trillion in 2021.
The increase in total exports was higher than the total import value, which stood at N25.59 trillion (23 percent up from N20.84 trillion in 2021).
However, total trade declined by 4.52 percent in the fourth quarter to N11.72 trillion, relative to N12.27 trillion as reported in the third quarter of 2022, as the value of total exports exceeded the value of imports in the quarter.
An analysis of the data filed by NBS shows that Nigeria exported mainly ‘mineral products’ which amounted to N5.7 trillion or 89.11 percent of total export value.
This was followed by “vehicles, aircraft and parts thereof; vessels, among others,” which were valued at N199.29 billion or 3.13 percent of the value of total exports, and “products of the chemical and allied industries,” worth N169.27 billion or 2.66 percent of the value of total exports.
Meanwhile, export value during the quarter was dominated by crude oil exports (N4.9 trillion), which accounted for 77 percent of total exports.
Non-crude oil exports stood at N1.5 trillion or 22.76 percent of total exports, of which non-oil products contributed N732.24 billion, representing 11.51 percent of total exports.
For the import values, which declined 15.5 percent in fourth quarter (Q4) to N5.4 trillion, there were mineral fuels (N1.9 trillion)
There were also imported machinery and transport equipment (N1.3 trillion), chemicals and related products (N694.68 billion).
According to the NBS, the value of imported manufactured goods in the quarter under review stood at N2.5 trillion, a decrease of 14.11 percent as compared to the value recorded in Q3, 2022 (N2.9 trillion).
This value also declined by -18.43 percent when compared to the value recorded in Q4 of 2021 (N3 trillion).
Meanwhile, the value of other oil product imports in the fourth quarter of 2022 stood at N1.9 trillion, indicating a decline of 18.18 percent from the value recorded in Q3, 2022 (N2.3 trillion), but an increase of 10.40 percent compared to the value recorded in the corresponding quarter of 2021 (N1.7 trillion).
Nigeria’s major trading partners in the review period were China and Belgium, while exports went to Spain and the Netherlands.
The two major agricultural products traded were superior quality cocoa beans and sesame seeds.
“We note that Nigeria’s trade balance can be further improved through policies aimed at export promotion, especially for non-oil exports.
“This can be achieved if the Federal Government creates an enabling business environment to improve trade and exports , and prioritize the working of existing refineries and build new ones to stimulate our economy from consuming to producing economy, just as seen in the recent rise in the trade balance,”
The analysts added that the pressure on the naira as a result of the devaluation, rising inflationary levels and the headwinds faced by global trade in 2022 as a result of slowing economies and supply chain congestion globally have brought about the shrinkage recorded in the total trade balance for Nigeria.
Arising from the above in respect of New Naira re-design and supreme court judgement of March 3rd on the matter , Nigerians should not be tossed around with the press statements from the presidency and the Central Bank of Nigeria without matching it with actions.
A situation whereby banks will issue Old Naira Notes to customers and refuse to accept the same old Naira Notes as deposit will amount not only to double standard but also a slippery way of putting Nigerians to double Jeopardy of scamming by deceit by the commercial Banks which has being the experience of customers for the past one week.
Nigerian will reject this trick vehemently if ever rear its ugly head from the commercial Banks.
The political leaders and those in the Nigeria Economic Management Team should allow Nigeria to work for Nigerians.
Enough is enough!!!
Comrade Gbenga Olowoyo, fcia fipma JP
is a Trade Unionist and industrial relations practitioner
gbengaolowoyo3@gmail.com
08033570338
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