CBN’s Naira Redesign Policy May Contract Nigeria’s GDP–Rewane

CBN’s Naira Redesign Policy May Contract Nigeria’s GDP–Rewane

Financial Derivatives Company under the leadership of Bismark Rewane has likened the chaos caused by the naira redesign policy of the Central Bank of Nigeria to ‘Things Fall Apart’.

The Company also predicted up to five per cent decline in Nigeria’s Gross Domestic Product in the first quarter of 2023.

It made the projection in its Lagos Business School Breakfast Club (February) session titled: “Nigeria Hits a Brick Wall.”

The statement comes amidst controversies caused by the cash swap and naira redesign policy introduced late 2022.

Cash shortage has hit Africa’s biggest economy with over 200 million people.

Banks are short of cash to pay customers intending to withdraw.

“The FGN, with the best intentions, decided to redesign the naira at the most inauspicious time. But as Abbot Bernard said, “The road to Hell is paved with good intentions.

“The chaos and the unintended consequences of the policy remind us of the following books: ‘Thriving on Chaos’ (Tom Peters), ‘There Was a Country,’ and ‘Things Fall Apart’ (Chinua Achebe). These books are as relevant today as they were when they were authored.

“While inflation dipped in December to 21.3 per cent, it is still at its highest level since 2005 and could be higher in the near term. Policymakers appear helpless.”

The CBN withdrew N1.9trn and only printed N300bn back into circulation.

FDC said, “The macroeconomic impact of the downtime due to ATM queues, petrol queues and the cash crunch could result in a contraction of 3%– 5% of GDP in Q1 2023. PVCs are now steeply discounted. In a perverse twist of fate; the cash crunch has made PVC/vote purchasing cheaper, with the asking price of a PVC or ballot paper now being steeply discounted from N15,000 to N2,000.

“Unfortunately, a policy intended to be a punitive measure against vote purchasing has now become a ‘Dream Come True’ for the moneybags. How quickly things can change! As Harold Wilson once said, ‘seven days is a long time in politics’.

“With hindsight, it is clear that some of these problems were self-inflicted and could have been easily avoided.”


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