Cost of naira shoots up food prices

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The cost of the naira, occasioned by the naira redesign policy of the Central Bank of Nigeria (CBN) has increased the misery of Nigerians, with the cost of food prices rising steeply.

In addition, the private sector has also cried out, lamenting, the policy has paralysed businesses in the country.

A survey by Blueprint, shows that the prices of palm oil, groundnut oil, rice, garri, beans, among others have risen very high in a space of less than a month.

Investigations revealed, most bulk suppliers of these products,  with some of them in the remote area of the country, refused payments through transfer.

The available option is for the middle traders to buy the scarce naira from the black market, before going ahead to buy from primary sources.

Investigations also revealed that, money transfer from banks applications became erratic with such hanging for days, and at other times getting reversed later.

This made primary suppliers to be wary of
By the end of the day, salary earners will lose 20 to over 30 per cent of the value of their money to buy food stuff already inflated by the same margin, increasing the misery of workers whose salaries are constant and in some cases not paid regularly.

On the private sector front, Muda Yusuf, a former Director-General of the Lagos Chamber of Commerce and Industry (LCCI), lamented that over N2 trillion had been retrieved from the economy since the commencement of the policy on December 15, 2022.

The retrieval, he added, has rendered businesses unable to access cash to run their operations smoothly.

Nigerians have been going through harrowing experiences since the redesigned N200, N500 and N1,000 notes came into circulation on December 15, 2022 and the CBN retired the old notes as legal tender initially on January 31, 2023, but extended to February 10.

President Muhammadu Buhari, on February 16, gave the N200 note an extended circulation life till April 10, while affirming the February 10 expiration date of the old N500 and N1,000 notes.

“Till date, the CBN had mopped up about N2 trillion cash from the economy thereby paralyzing the retail sector, crippling the informal economy, stifling the agricultural value chain, immobilising the transportation sector, and disrupting the payment system in the economy,” Yusuf said.

Admitting that the CBN had the right to redesign the country’s currency, he, however, argued that the apex bank did not have the right to dispossess the citizens of their cash.

Yusuf noted that the choice of the mode of store of value is a fundamental right of the citizens, adding that the CBN had no right to impose that choice on citizens.

“It is a flagrant violation of the rights of citizens for the CBN to withhold the cash of citizens under the guise of currency redesign.

“The CBN cannot request the citizens to bring their cash for a swap, only to deprive them access to it. A swap presupposes that whatever old notes were received by the banks must be replaced with new ones instantly.

“The entire exercise was a needless disruption of economic growth activities, especially among the most vulnerable segments of the economy,” he said.

Giving further clarification, Yusuf said the CBN claim that the economy had too much cash outside the banking system had no basis in economic theory, neither can it be supported by empirical evidence.

“As at December 2022, the total money supply was N52 trillion and the cash component of money supply was N2.6 trillion, which was just five per cent . Similarly, the country’s gross domestic product (GDP) was N202 trillion, which gives a cash-to- GDP ratio of 1.3 per cent.

“These ratios are some of the lowest around the world, which shows that the Nigerian economy is not really a cash-dominant economy,” he said.

Yusuf applauded the March 3 Supreme Court ruling on the validity of the old N200, N500 and N1000 as legal tender till December 31, 2023.

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