January 29, 2023

Currency swap deadline puts N100trn national output at risk — CPPE

Godwin Emefiele, CBN Governor


…10 days extension grossly inadequate

By Yinka Kolawole

The Centre for the Promotion of Private Enterprise (CPPE) has said that the deadline set by the Central Bank of Nigeria (CBN) for Nigerians to change their old N200, N500 and N1,000 notes to new ones, noting that even the extension of the deadline by 10 days by the apex bank is grossly inadequate.

Dr Muda Yusuf, Director at CPPE, stated this in a statement made available to Vanguard on Sunday.

His words: “The failure to extend the deadline for the currency swap could put N100 trillion component of the national GDP at risk.

“Just got the news that the deadline for the currency swap has been extended by 10 days.  CPPE believes that 10 days is grossly inadequate to make up for the glaring shortcomings of the apex bank in this process.”

He noted that two critical sectors are particularly vulnerable – Trade and Commerce; and Agriculture.

“The crippling of business transactions at the distributive trade end amid the currency swap crisis would not only undermine the trade and agricultural sectors but would have a knock-on effect on the manufacturing value chain and the services sectors. This is because whatever is produced has to be sold. 

“The trading end of the chain has been greatly disrupted by this currency swap crisis.

“The trade sector contributes about 14% of GDP valued at an estimated N35 trillion; the agricultural sector contributes 25%, valued at an estimated N62 trillion.  Most of the activities in these sectors are either in the rural areas or in the informal sector of the economy. 

“These are the sectors that have been driving the resilience of the Nigerian economy amid numerous domestic and global headwinds. 

“Any policy measure that would negatively disrupt these sectors should be avoided,” Yusuf further stated. 

According to him, “the argument that currency swap would enhance monetary policy effectiveness and curb inflation has no strong basis in economic theory.  The money supply is a more critical variable in the inflation equation”.