Muda Yusuf, the Director of the Centre for Promotion of Private Enterprise (CPPE) has said that Nigeria’s cash-to-GDP ratio is one of the lowest in the world at 1.5%.
He stated this while speaking to the scarcity of newly redesigned naira notes on Arise TV.
Commenting on CBN’s continuous push for the new notes to replace the old ones, He opined that the deadline given by the apex bank to have the new notes in circulation isn’t feasible.
His position: Challenging the position of the CBN on too much cash in circulation, he stated that law is quite different from reality, adding that something may be legally right but may not be right in terms of morality. He said:
- “If you look at the data, cash dominance is measured by cash to GDP ratio and cash to GDP ratio in Nigeria is one of the lowest in the world. We have a GDP of over 200 trillion and this cash we are talking about is just N3 trillion, just about 1.5%. How much more cashless can you be?”
- “In the United States, cash to GDP ratio is about 10%, in the UK it is about 3% but in Nigeria, it is 1.5%. You need cash to service an economy. The cash we have is not too much for this economy. You need to look at the data and important policies should be data-driven, they should be evidence-based.”
Adding that the apex bank’s position cannot stand in the face of theory and empirical evidence, he added, “Total money supply in this economy is N51 trillion while cash component of money is just N3 trillion and cash outside the bank is just N2.8 trillion, just about 5% of that. So is that too much?”
On the finance bill: He hopes that the national assembly will allow for a proper public hearing because the bill covers all sorts of issues. He said:
- “There was supposed to be a public hearing but the senate gave only 24 hours for the public to take place. What kind of democracy is that? The house of rep scheduled a hearing for 13th January, we didn’t know what happened.
- “Even before the date, they had passed the bill to the president for accent and this is a bill that contains far-reaching legislatures, amending lots of legislations that impact the investing environment which required a lot of input, consultation with the stakeholders and the key agencies of government. Luckily, the president had a listening ear, he accented to the appropriation act but he didn’t assent to the finance bill and that has gone back for further consultation.”
