CPPE Director Asks New CBN Gov To Suspend Naira Redesign Policy
The Chief Executive Officer of the Centre for the Promotion of Private Enterprise (CPPE), Muda Yusuf has called on the new Acting Governor of the Central Bank of Nigeria (CBN), Olayemi Cardoso to suspend the Naira Redesign Policy indefinitely.
The Director who set the agenda for the incoming CBN Governor stated “The naira redesign policy should be suspended indefinitely. It should not be a priority at this time as there was really no compelling argument to undertake the naira redesign in the first place”.
Godwin Emefiele, the immediate past CBN Governor introduced the Naira redesign policy in 2022 without the approval of former President Muhammadu Buhari. The policy which created distortion in the economy, led to hardship on the citizenry, forcing several businesses to go under.
The Supreme later ordered that both the new and the old currencies be used following the scarcity of the new denominations in the system.
Yusuf however said the momentum for the cashless economy should be sustained without resorting to the crude methodology of cash confiscation adopted by the previous dispensation in the CBN, an approach which he described as very disruptive with unbearable hardships on businesses and the citizens.
“Economic activities need not be disrupted to achieve a reduction in cash transactions in the economy. Indeed, Nigeria has one of the best rankings in cash dominance metrics. Cash as a percentage of GDP in Nigeria is one of the lowest globally at less than 2 per cent. For many other developing countries, the percentage is as high as 10 per cent.”
Speaking on the restoration of the forex market, he pointed out that the most urgent task before the CBN Governor is resolving the forex crisis and the debt service redemption.
“There is a serious confidence crisis in the foreign exchange market fueling an unprecedented speculative onslaught on the naira. The economy is grappling with severe adverse effects of depreciating exchange rates, soaring energy costs, ravaging inflationary pressures, the huge backlog of foreign exchange obligations that need to be cleared and debt service obligations that need to be redeemed.
“Sadly, these outcomes are manifesting at a time when the country’s foreign reserves have been substantially encumbered. There is an apparent deceleration in the pace of economic reforms as the outcomes are at variance with expectations. The social costs of the reforms were substantially higher than anticipated, resulting in push-backs from the civil society.
He said the social outcomes of the reforms have therefore called to question, the economic management orthodoxy of market reform forces.
“The CBN must ensure strategic and transparent intervention in the forex market to minimize volatility, as far as the reserves can support. In addition to the I and E windows, it has become necessary to create an autonomous window in the banking system where the currency can trade freely without any encumbrances. This is necessary to avert the diversion of remittances to other jurisdictions or the black market. We cannot afford to live in denial at this time.
He called for the clearance of the backlog of forex obligations to restore the confidence of domestic and foreign investors while steps are taken to reduce concentration risks in the banking system as a strategy to manage systemic threats to the bank system.
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