Naira in circulation grows 71% in Q1 2023
By Jeph Ajobaju, Chief Copy Editor
Naira in circulation rose by N701.4 billion to N1.6 trillion in the first quarter ended March (Q1 2023) spurred by the Supreme Court order that the Central Bank of Nigeria (CBN) extend the deadline for phasing out old naira notes to December 31.
CBN data shows a 71 per cent increase after the bank obeyed the order.
Currency in circulation dipped 235.03 per cent to N982.09 billion in February 2023 from N3.29 trillion in October 2022.
The CBN mopped up N2.3 trillion from circulation in the course of the naira design policy announced in October 2022 by CBN Governor Godwin Emefiele, which involves N200, N500 and N1,000 notes.
Emefiele said the challenges of currency management are made worse by hoarding of banknotes by members of the public, with statistics showing more than 80 per cent of currency-in-circulation was outside the vaults of commercial banks, per reporting by Daily Trust.
However, the hardship inflicted on citizens by the poor implementation of the policy compelled some state governments to sue the federal government to the Supreme Court over the policy.
The Supreme Court in its ruling on March 3 extended the legal tender of the old N200, N500, and N1,000 notes to December 31 this year.
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NECA warns of long consequences of naira scarcity
The Nigeria Employers’ Consultative Association (NECA) has warned of the ripple effects of the naira swap policy, saying it would take a long time for businesses, especially the informal sector, to recover.
It reiterated in a statement that many businesses have closed due to the low purchasing power of consumers.
NECA commended the Nigeria Labour Congress (NLC) and the federal government for embracing dialogue and heeding the call of stakeholders to stop labour’s planned nationwide strike before it began on March 29.
“The Central Bank of Nigeria (CBN) has shown goodwill and true support for the ailing economy by immediately disbursing cash to the commercial banks and directing them to open beyond their normal working hours to ease the cash crunch in the nation.
“This action could have been averted in the first place,” NECA Director General Adewale-Smatt Oyerinde said in the statement earlier in April.
Reduced productive output, high inventory, job cuts
“We commend the efforts of [CBN] Governor, Mr Godwin Emefiele, and the … Minister of Labour and Employment for personally getting involved and monitoring the disbursement to ensure compliance with the Bank’s directive to end the cash crunch, which the economic nerve-centre and other areas have started witnessing improvement,” Oyerinde added.
“Business activities had stagnated in the last 10 weeks of the implementation of redesigning of the currency policy nationwide leading to reduced productive output, high inventory and job cuts and impediments to personal and business transactions.”
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