Four days to polls: Naira chaos grounds economy

The chaos trailing the cash scarcity has assumed a worrisome dimension with the organised private sector raising the alarm that the crisis has grounded the economy.

Members of the organised private sector including the Lagos Chamber of Commerce and Industry, Nigerian Employers Consultative Forum, Nigerian Economy Summit Group, Nigerian Association of Small and Medium Enterprises and the Nigerian Association of Small-Scale Industrialists, have all reacted.

This happened as the cash scarcity sparked another round of violence in Ogun State, on Monday, resulting in the razing of two banks and the destruction of the local government council secretariat in Sagamu.

Speaking on the impact of the cash shortage on the economy, the Director-General of the Nigeria Employers Consultative Association, Wale Oyerinde said the situation had created massive disruptions in the flow of transactions, even as e-payment channels continued to fail.

Oyerinde said, “The impact is already obvious. The cash squeeze is already creating massive disruptions in the flow of transactions. The MSMEs are struggling, and the survival of the informal sector and the un-banked in the rural areas is already being compromised. We cannot pretend that all is well.

“The online banking portals and mobile infrastructure continue to fail, causing further hardship to businesses and Nigerians. While the release of the N200 notes will give some relief, it is hoped that the damage that has been done will be reversed gradually.”

On its part, the Nigerian Economic Summit Group, in a report made available to newsmen, said the naira redesign policy was beginning to take a toll on Nigeria as the economy suffered from a significant decline in the volume and value of cash in circulation.

The NESG further stated that the cash crunch had had adverse effects on households, informal businesses and formal businesses, particularly the Nano, Micro, Small and Medium Enterprises, which are the backbone of the private sector-driven economy.

The report read in part, “Long and unending queues are now common at banks as people often try unsuccessfully to withdraw cash. Time spent attempting to obtain new notes disrupts economic activities; makes it significantly difficult for people to engage in daily activities, as commuting becomes difficult or even impossible when cash is not in hand and when economic agents are not receptive to e-payment/bank transfers.”

The group also noted that the failure of deposit money banks to meet the growing demands for cash suggests that the banking system, given the existing technology, was unprepared for a sudden transition from the old naira notes to the new ones or a cashless economy.

Also lamenting the naira crisis, the Chairman of the Nigerian Association of Small and Medium Enterprises, Lagos State Chapter, Dr Adams Adebayo, said it was worrisome that the naira chaos had grounded the economy, adding that the situation had had a serious negative impact on SMEs.

He said, “The crisis is uncalled for. Micro, Small and Medium Enterprises are the worst hit by this unpopular policy of the CBN. The prices of goods have gone up and the ease of doing business is far away from us in Nigeria.

“The Federal Government should look beyond the politics of the naira redesign and focus on the damaging effects on businesses and the economy at large. The value chain in the formal and informal sectors with over N5bn cash transactions daily is almost destroyed with consequences for employment, business sustainability and national development.’’

“It was unfortunate that too much attention has been placed on the politics of the naira redesign with the government and the Central Bank of Nigeria, shifting attention away from the damaging effect of the cash squeeze on businesses and the already fragile and damaging economy.’’

However, dozens of customers were seen hanging around the ATMs, lamenting the hardship caused by the cash crisis.