The Centre for the Promotion of Private Enterprise (CPPE) revealed that the claim by the CBN that the economy has too much cash outside the banking system has no basis in economic theory, and neither can it be supported by empirical evidence.
They praised the Supreme Court for ruling on old currency notes and urged the President Buhari, the Central Bank Governor and the Attorney General of the federation would comply with this court order in the interest of the rule of law, good order and public interest.
This was disclosed by CPPE’s Director, Dr Muda Yusuf, in a statement viewed by Nairametrics.
No economic theory: They said CBN’s claim of too much cash outside Nigeria’s banking system has no basis in economic theory nor can it be supported by empirical evidence, adding:
- “As of December 2022, to total money supply was N52 trillion, and the cash component of the money supply was N2.6 trillion, which was just 5%. Similarly, the country’s Gross Domestic Product [GDP] was N202 trillion, which gives a cash-to-GDP ratio of 1.3%. These ratios are some of the lowest around the world which shows that the Nigerian economy is not really a cash-dominant economy.
- “Cashless transactions in 2022 were about N400 trillion in 2022, according to NIBSS. The truth is that nothing is broken. And we 3 don’t fix what is not broken. Of course, we can do better, but not by crudely mopping up of cash in the economy.
Punitive and Cruel: They also added that the redesign was punitive, cruel and insensitive, urging that Nigerians deserve an apology from the promoters and proponents of the policy, they added:
- “The CBN currency redesign policy inflicted indescribable agony, suffering and distress on the majority of Nigerian citizens.
- “The trouble was not with the redesign, but the deliberate and unrestrained mopping up of cash in the economy. To date the CBN had mopped up about N2 trillion cash from the economy thereby paralyzing the retail sector, crippling the informal economy, stifling the agricultural value chain, immobilizing the transportation sector and disrupting the payment system in the economy.
- “It is true that the CBN has the right to redesign currency, but it does not have the right to dispossess the citizens of their cash. The choice of the 2 modes of the store of value is a fundamental right of citizens. The CBN has no right to impose that choice on citizens. It is a flagrant violation of the rights of citizens for the CBN to withhold the cash of citizens under the guise of currency redesign.
They added the CBN act cannot be superior to the constitution of the country, as the CBN cannot request the citizens to bring their cash for a swap, only to deprive them access to it, adding that a swap presupposes that whatever old notes were received by the banks must be replaced with new ones instantly.
CPPE urged President Buhari, the Central Bank Governor and the Attorney General of the federation to comply with this court order in the interest of the rule of law, good order and public interest. We welcome the supreme court ruling as it protects the citizens from a policy which is, by all accounts, disruptive, repressive and draconian.
What you should know
The Supreme Court on Friday ordered the Federal Government to allow the old Naira notes to continue as legal tender until Dec. 31, 2023.
Justice Emmanuel Agim, held that the preliminary objections by the Attorney General of the Federation, Bayelsa and Edo are dismissed as the court has the jurisdiction to entertain the suit, also citing Section 23(2)1 of the constitution, the court held that the dispute between the Federal Government and states must involve law or facts.
They also the federal government’s economic policy of Cashless and Naira Re-designing as an affront to the 1999 Constitution, and also a breach of the Constitution of the Federation in the ways and manners he issued directives for the re-designing of the Naira by the Central Bank of Nigeria CBN.
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