Cash Scarcity: Economists urge CBN, banks to allow N100,000 withdrawals over counter

The CBN has been encouraged by economists to identify and resolve the bottlenecks related to the cash swap program that are causing the economic environment’s current climate of uncertainty.

The experts argued it was vital to reduce stress resulting from the policy’s associated problems in separate interviews in Lagos. They responded to the Supreme Court’s postponement of the lawsuit filed by various state governments, which contested the CBN’s deadline of February 10 to stop issuing the old N200, N500, and N1,000 notes.

Johnson Chukwu, the MD of Cowry Asset Management, said the situation was no longer a case of judicial decision or order but about what should be done to ease the strain on citizens.

I have stated repeatedly that CBN may force the commercial banks to pay as much as N100,000 over the counter, and if they do that and people are able to withdraw at least N100,000 every week, I feel the pressure will come down, and people will receive some relief,” said Mr Chukwu.

Professor of Financial Economics Ndubisi Nwokoma, who is also the director of the University of Lagos’ Centre for Economic Policy Analysis and Research, asked the CBN to find and fix any bottlenecks.

“I believe CBN should make an effort to locate and resolve any blockages. The printing of the newly designed naira notes must be improved, as must their efficient distribution through deposit money banks, according to Mr. Nwokoma. “In my opinion, the 2023 elections and the prevalence of vote buying are at the heart of the conflict over the old notes and the Supreme Court case.”

The professor stated that the “fight is more about the interests of some politicians who have stored away vast quantities of the old notes for use in mobilizing for the elections and less about the current misery of the ordinary citizen.”

Insisting that the CBN’s stance on old notes losing their legal tender status after February 10 is reasonable enough to win public acceptance, at the very least to save the credibility of the 2023 elections, he pleaded with Nigerians to embrace the CBN policy.

Professor of Economics and Public Policy at the University of Uyo, Akwa Ibom, Akpan Ekpo, called the delay “unfortunate” and wished the court had made its decision earlier.

But according to Mr. Ekpo, the Supreme Court is the highest court in the land, and the Nigerian Constitution supersedes the Central Bank. As a result, all government agencies, organs, and so on are required to uphold the Supreme Court’s ruling and to enforce it.

Sherifdeen Tella, a different economic professor at Olabisi Onabanjo University in Ago-Iwoye, Ogun, believes that the Supreme Court’s decision not to penalise CBN for disobeying its order is what is causing the economic turbulence.

If the court decides it needs more time, the hearing on the CBN policy may be postponed. However, failing to penalise those who disobey its directives, including the CBN, that the old Naira remain accepted for transactions is causing more economic turmoil, according to Mr. Tella. Or, is it necessary for someone to file a separate lawsuit in order to claim that the CBN, banks, or even a court in Lagos violated a court order?

“The postponement would only heighten the anxiety and uncertainty currently permeating the economic environment, especially against the backdrop of the fact that the CBN has maintained February 10, as the date the old notes cease to be legal tender,” said Uche Uwaleke, a professor of capital markets at Nasarawa State University, Keffi.

The case concerning the naira swap policy has been postponed by the Supreme Court of Nigeria until February 22 in order to allow it to aggregate all complaints pertaining to the subject coming from nine additional states that want to be included in the lawsuit. In the lawsuit initially brought by the governments of Kaduna, Kogi, and Zamfara, which contested the legitimacy of the federal government’s Naira swap scheme, nine other states have been added as parties.

As co-plaintiffs, the Supreme Court joined the attorneys general of Katsina, Lagos, Ondo, Ogun, Ekiti, Cross River, and Sokoto in a decision made on Wednesday by a seven-member panel chaired by Justice John Okoro.

As co-respondents, the attorneys general of Edo and Bayelsa were added.

However, the court has set the case hearing for February 22. As a result, the court mandated that the initial plaintiffs and the respondents—the federation’s attorney general—amend the previously filed processes to reflect the new parties.

(NAN)