New Naira Notes & Cash Withdrawal Limits
Many countries embrace electronic payments and minimal use of cash not because their currencies are scarce, or they do so to avoid penalties but because their economies run on credit and e-payment is more convenient, safer and incentivised than cash.
As it turns out, Nigeria actually has one of the lowest amount of currencies in circulation relative to GDP or per capita of N15,200 (about $34) compared to the U.S. at $6,700 per capita, UK at ￡1,200 per capita and the Eurozone at €3,600 per capita.
Even if we consider the US dollar as a global currency, America has more dollars printed per person on earth ($280) than the amount of Naira per Nigerian citizen ($34).
Therefore, the real problem with Naira in circulation is the illicit cash in the hands of corrupt persons and other criminals which is best tracked and controlled through financial intelligence than currency restriction or scarcity. Afterall, significant illicit funds exist within the banking system while much more are laundered in various assets especially real estate which are not hidden in septic tanks yet not enough is being done by the government to deal with the problem.
If we haven't done enough to fight financial crimes in plain sight, it will be difficult to convince the people to make any sacrifice and endure some pains in the hope that they are doing so to enable government fight crimes aided by physical cash.
So, a more effective strategy would be to make e-payments easy and attractive, supply as much Naira notes as are necessary and leverage on intelligence to identify and punish criminals with illicit funds.
Chief Executive LaFam Facility Management LIMITED
2 年Well said, but our problem as a Nation is that we have no working system. Having more cash in illicit hands is the issue and people have been made to believe having cash is better. We need a new mindset, a new orientation and ideology that having less cash is better and secured. Our businesses and financial dealings must be open or transparent and those in charge of financial intelligence must be ready to do more..CBN, NFIU and the Banks be seen to be reasonable
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2 年The reality of this ill-timed policy of CBN has shown that rapid demonetizations can generate significant short-term costs, with small-scale businesses, and poor and vulnerable households, potentially being particularly affected due to being liquidity-constrained and heavily reliant on day-to-day cash transactions.?Already, households and small and medium scale businesses have already faced elevated financial pressures from prolonged high inflation, which unfortunately is now being compounded by high cost of foodstuffs and fuel price shocks as well as phasing out existing naira notes over a short time period. All these are just multiplying the challenges of survival or surviving or both
Personal Assistant to the Permanent Secretary, Lagos State Ministry of Economic Planning and Budget. Head, Analysis Unit, Lagos Economic Intelligence Department.
2 年We need to understand how to incentivize policies in a way that will compel people and increase compliance rate automatically. We have continued to apply solely sticks with no carrots. Rather than incentivise the process, we deny people easy access to basic needs. That has been the structure of our economic policy space. Little things can change the tides for Nigeria, but we need to agree on a common goal, set in motion strategic steps with well thought-out policies
University of Oxford, University of Cambridge, University of Lagos, Lagos Business School etc
2 年As at today in my neighborhood, most of shops close before 2pm while some didn't open at all. Do we transfer money to Okada driver, Danfo driver or Aboki selling suya by roadsides. This cashless policy will not work well because over 70% of Nigerians survive in the informal sector. Most of Economic Theorists agreed that Development is slow, gradual, and piecemeal. Where did Central Bank of Nigeria learn its miraculous development theory??
Founder & Principal Partner @ Gbenga Adeoye & Co.( Chartered Accountants). Founder @ Closing Breeze (Canada) and Global Legal Partners( Law Firm in Nigeria)
2 年Apt