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As Nigeria went to polls for electing a new president today, the cash-strapped Nigerian economy continues to be in turmoil. Arguably the well-intentioned currency withdrawal resorted by the government to flush out the parallel economy has seemingly boomeranged on the people.
As Nigeria went to polls for electing a new president today, the cash-strapped Nigerian economy continues to be in turmoil. Arguably the well-intentioned currency withdrawal resorted by the government to flush out the parallel economy has seemingly boomeranged on the people.
On 26 October 2022, Nigeria’s apex- bank, the central bank of Nigeria (CBN), announced the introduction of redesigned three high denominations of the naira notes. The policy was designed to mop up excess cash of over three trillion nairas (US$ 6.5 billion) outside the banking system, little realizing that the step triggered a major economic problem: currency shortage at the automated teller machine (ATM) cash points.
Since the full implementation of the policy on February 1, and the deadline for the validity of the old notes passed, getting the new naira notes has been a challenge. But opinions are different among certain sections of people. They feel that with the move, the government would be able to unearth unaccounted money hoarded by people without paying taxes. But economists question the idea behind the withdrawal of the currency in a large economy like Nigeria, which is also the highest populated country in the continent.
Among the groups lamenting the policy include the industrial sector. The Manufacturers Association of Nigeria (MAN) said the scarcity of the Naira is having an impact on production output. The association said that it is affecting the economy because of the difficulties in accessing cash by the people, leading to poor aggregate demand. Some of the manufacturers apprehend that the situation may precipitate lay off of the workers since the employers are finding difficulties to pay off their salaries because of the accumulation of inventories.
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As the elections are taking place, the world is looking at a faster economic recovery of the largest populated country in Africa having 218 million people. It is also adjudged as the most industrialized country in the region, pushing South Africa into the second slot. Should the country be bailed out from its record high inflation and constant erosion in the value of the local currency by the new set of rulers who would assume office shortly is the trillion-dollar question being asked by the citizens.
