A professor of development economics has stated that the delay in the redesign of the naira has made the Central Bank of Nigeria’s monetary policy ineffective.
Prof. Ken Ife disclosed this during the 10th Convocation Lecture of Godfrey Okoye University, with the theme: Nigeria: The State of the Macro-Economy.
He stated that delays in the redesign caused 80% of the currency in circulation to be outside the bank. He added that 40% of the nation’s money is not banked, while 40% of citizens live below the poverty line.
- The issue: He said, “Redesigning of the naira should be five years, but for 20 years, we have not done it.”
He also stated that counterfeit naira might outnumber legitimate money in circulation, making it impossible for the CBN to know how much is in circulation.
The economist said money launderers’ activities and ECOWAS policy had also caused the naira to be used in other countries without oversight.
- “All these have made transmission of monetary policy in the country challenging and forced commercial banks to lend at a higher rate.
- “Money laundering, intense speculation on the value of the naira, frequent demand of ransom by kidnappers, and Naira serving as the second currency in the 15 ECOWAS countries are making it hard on the quantities of our currency,” said the expert.
Causes of inflation: He said structural factors such as a lack of power, bad roads, water, rail transport, and rising costs were to blame for the country’s cost-push inflation, which was exacerbated by a 300% cent increase in diesel prices.
He claimed that 68% of manufacturers provide 100% of their power all the time, causing the prices of their goods to rise.
- He said, “The import dependency of our economy places us on the transmission belt of the global exogenous supply chain, which aggravated the inadequate supply of dollars.
- “This will help narrow the spread between official and black market exchange rates,” he noted.
For the record: The Central Bank of Nigeria (CBN) has directed that commercial banks in the country remain open on Saturdays until January 31, 2023, to allow bank customers to exchange old naira notes for new ones
