Naira Swap : 36 governors warn Nigeria at risk of CBN-induced recession
The Nigeria Governors’ Forum (NGF) has warned that the country is at risk of recession which will result that the continuous scarcity of the N200, N500 and N1,000 new notes as the Central Bank of Nigeria (CBN) remains rigid despite Supreme Court ruling.
The 36 governors said in a communiqué issued at the end of a meeting of the NGF, which held on Saturday lamented that though the Attorney General of the Federation, Abubakar Malami (SAN), said the Federal Government would comply with the order of the Supreme Court of Nigeria nullifying the February 10 deadline for the validity of three old notes, Nigerians have not experienced any change so far.
The communiqué which was signed by Aminu Tambuwal, Chairman of the NGF, criticised the CBN over the handling of the naira redesign policy, adding that the resulting naira note scarcity is causing hardship for Nigerians.
“The inability to use the new notes has had far-reaching economic effects, leading to the emergence of the Naira black market, severe food inflation, variable commodities prices based on the method of exchange, and long queues as well as crowds around Automated Teller Machines (ATMs) and banking halls across the country with individuals hoping to get a fraction of their money in new notes to meet their daily livelihood,” the communique signed by the Chairman of the Forum and Sokoto State Governor, Aminu Tambuwal party read.
“The country runs the risk of a CBN-induced recession.
“While we acknowledge the submission of the Attorney General of the Federation that the Federal Government will comply with the ruling of the Supreme Court which calls for the halting of CBN’s plan to end the use of the old currency notes, we are yet to observe changes in the financial system.
“Consequently, we call on the Federal Government and the CBN to respect the Rule of Law and listen to the voice of reason expressed by Nigerians and several other stakeholders including the Council of State, before the damage to our economy becomes too great to fix by the next administration.”
“The argument by the CBN for what it describes as the astronomical increase in the currency in circulation as the basis for this policy is not supported by its own data.”
“According to the CBN, the currency in circulation increased from N1.4 trillion in 2015 to N3.23 trillion in October 2022. The Bank appears not to have taken into consideration the increase in the size of the country’s nominal GDP over this period, the doubling of consumer prices, rising population, and the impact of the humongous Ways & Means advances to the federal government by the Central Bank of Nigeria over this period.
“In the circumstances, it is safe to draw either of two conclusions – the CBN data may be incomplete or in fact, Nigerians may have done exceptionally well in the transition to a cashless economy.
“In addition, considering the sizeable informal sector in the nation, the amount of banknotes created in exchange so far by the CBN implies it vastly underestimated the economy’s actual cash needs.
