BY MICHAEL EBOH
The decision by the Central Bank of Nigeria, CBN, to restructure the country’s currency, shows that the apex bank lacks confidence in its cashless policy and will likely abandon the initiative designed to reduce cash transactions, according to a report by analyst at RTC Advisory Services Limited.
RTC, in its Business and Economic Review for the month of August 2012, prepared by Mr. Opeyemi Agbaje, Chief Executive Officer of the company, also stated that restructuring the country’s currency is of no immediate value to Nigeria’s economic priorities.
According to him, the currency restructuring programme contradicts the CBN’s cashless economy initiative and adds no value to the nation’s critical priorities.
He said, “While we do not share the general perception of a link between higher currency notes and increased inflation, we believe the new CBN policy contradicts its ‘cashless’ banking initiative and adds no value to the nation’s critical priorities. “The new policy thrust suggests abandonment or lack of confidence of the CBN in its ‘cashless’ initiative.”
Commenting on the general economic performance, Agbaje said Nigeria’s Gross Domestic Product, GDP, current growth rate is a reflection of the low contribution of the financial sector to the growth and development of the economy.
He also attributed the low GDP growth rate to the sluggishness of the capital market, insecurity, unavailability of credit to the private sector among others.
He said, “Second quarter GDP growth of 6.28 per cent is falling below the seven to eight per cent threshold and seems like a trend following first quarter 6.17 per cent.
“This may reflect financial sector tepidity, capital market sluggishness; agriculture strains, insecurity and constrained private sector credit and activity.”
He further applauded Nigeria’s improvement in the Global Competitive Index, GCI, ranking — from 127th to 115th — saying, however, that insecurity and absence of the Petroleum Industry Bill, PIB, may prevent the country from reaping the benefits of the improvement in the ranking.