Four days to polls: Naira chaos grounds economy
The chaos trailing the cash scarcity has assumed a worrisome dimension with the organised private sector raising the alarm that the crisis has grounded the economy.
Members of the organised private sector including the Lagos Chamber of Commerce and Industry, Nigerian Employers Consultative Forum, Nigerian Economy Summit Group, Nigerian Association of Small and Medium Enterprises and the Nigerian Association of Small-Scale Industrialists, spoke in separate interviews with The PUNCH on Monday.
This happened as the cash scarcity sparked another round of violence in Ogun State, on Monday, resulting in the razing of two banks and the destruction of the local government council secretariat in Sagamu.
Speaking on the impact of the cash shortage on the economy, the Director-General of the Nigeria Employers Consultative Association, Wale Oyerinde said the situation had created massive disruptions in the flow of transactions, even as e-payment channels continued to fail.
Oyerinde said, “The impact is already obvious. The cash squeeze is already creating massive disruptions in the flow of transactions. The MSMEs are struggling, and the survival of the informal sector and the un-banked in the rural areas is already being compromised. We cannot pretend that all is well.
“The online banking portals and mobile infrastructure continue to fail, causing further hardship to businesses and Nigerians. While the release of the N200 notes will give some relief, it is hoped that the damage that has been done will be reversed gradually.”
On its part, the Nigerian Economic Summit Group, in a report made available to The PUNCH, said the naira redesign policy was beginning to take a toll on Nigeria as the economy suffered from a significant decline in the volume and value of cash in circulation.
The NESG further stated that the cash crunch had had adverse effects on households, informal businesses and formal businesses, particularly the Nano, Micro, Small and Medium Enterprises, which are the backbone of the private sector-driven economy.
The report read in part, “Long and unending queues are now common at banks as people often try unsuccessfully to withdraw cash. Time spent attempting to obtain new notes disrupts economic activities; makes it significantly difficult for people to engage in daily activities, as commuting becomes difficult or even impossible when cash is not in hand and when economic agents are not receptive to e-payment/bank transfers.”
The group also noted that the failure of deposit money banks to meet the growing demands for cash suggests that the banking system, given the existing technology, was unprepared for a sudden transition from the old naira notes to the new ones or a cashless economy.
Also, speaking with The PUNCH, the Deputy-President of the Lagos Chamber of Commerce expressed concern that the Gross Domestic Product for the first quarter of the year would be significantly impacted as businesses have been unable to operate at optimal levels due to the naira scarcity that has forced down consumer spending power.
According to Idahosa, the cash scarcity has been significantly exacerbated by political actors who are hoarding as much currency as they can for vote-buying during the forthcoming general elections.
He said, “It is not likely to continue for a long time. It is already having a short-term impact. Certainly, in February, national industry productivity, sales, travel and other sectors will show reduced levels of operations. People are grounded. A significant amount of the new notes are in the hands of people who are preparing for elections, and once that objective is achieved, the money will go into circulation.’’
“Even if it was just N300bn new notes that were printed, we would not have the kind of crisis that we have now if the N300bn were circulating. Everybody that wanted N10,000 from the ATM or over-the-counter should have been able to get it.’’ Punch
