Can you remember the social media trend that went something like this: “Tell me you are a Nigerian without saying it?” before I get into more detail? So, if you missed that trend before, now is the ideal opportunity to catch up, and as your “best friend,” I gift you this excellent opportunity: Photograph yourself in a queue for fuel, PVC, or Naira notes and upload it (welcome, best friends), and for those itching for more, let us now concentrate on the recent queuing’s economic repercussions.
Meanwhile the petty trader refused to take my old money some days back
In terms of GDP or per person, Nigeria has one of the lowest levels of money in circulation. Nigeria has one of the lowest per capita levels of money in circulation when compared to the US at $6,700, the UK at £1,200, and the Eurozone at €3,600, with N15,200 (about $34). As a reserve currency, the US dollar prints more money per person ($280) than Nigeria ($34).
The fundamental issue with the naira, according to PwC’s Fiscal Policy Partner and Africa Tax Leader Taiwo Oyedele, is that a lot of illegal money is in the hands of corrupt individuals and other criminals. Taiwo continued by saying that financial intelligence, rather than limiting the amount of money available or making it difficult to obtain, is the best approach to track and manage this illicit wealth. Even while there are several unlawful monies in the banking system and numerous more that are laundered in other assets, particularly real estate, which is not buried in septic tanks, the government is not doing enough to address the issue.
Read also: Fuel scarcity mocks Buhari, APC’s claim on subsidy being scam
According to the Central Bank of Nigeria (CBN), it has already recovered N1.9 trillion in cash that was kept outside of the banking system because of its new naira notes and cash swap programme.
The failure of government agents to stop those who undermine the safeguards put in place to create the ideal downstream environment is also a problem
After meeting with President Buhari on Sunday, January 29, 2023, CBN Governor Godwin Emefiele announced to the public that the apex bank had reduced the amount of currency outside the banking system from a massive N2.7 trillion to N900 billion because of the introduction of the new naira notes. Only N1.4 trillion, according to data from the Central Bank of Nigeria, was in circulation in 2015. That amount had increased to N3.23 trillion by October 2022, of which only N500 billion was kept in banks and N2.7 trillion was kept by homeowners on an ongoing basis. The rate of advancement since the program’s beginning indicates that around N1.9 trillion has been gathered. There are now approximately 900 billion Naira (500 billion + 1.9 billion). This endeavor has been effective 75% of the time out of the N2.7 trillion that is not in the banking system.
More Nigerians would be able to turn in their old notes if the deadline was pushed from January 31, 2023, to February 10, 2023, and the cash swap in our rural areas will function more effectively. All old bills that are not retained by the CBN lose their legal tender status after that date. Additionally, from February 10 to February 17, 2023, Nigerians have a 7-day grace period under Sections 20(3) and 22 of the CBN Act to deliver their old notes to the CBN. It will be simpler for monetary policy to lower the rate of inflation due to the massive amount of money that the central bank is re-entering the economy.
Where did you find yourself?
To be more exact, I was assigned ticket number 45 when I showed up at the filling station a few days ago, and I was viewed as a lucky shot in comparison to hundreds of other people behind me on the queue.
Discussing fuel shortages without bringing up prices is impossible. Since then, the product subsidies in Nigeria have developed a life of their own. Prices have skyrocketed across the nation, with some authorized marketers in regions like Auchi, Edo State, selling fuel for as much as 400 naira per litre.
It makes sense that there are lengthier queues in cities like Abuja and Lagos where there are still certain levels of oversight and regulation. It is not the fault of common Nigerians that refineries cannot be kept up and run efficiently to at least meet domestic demand.
The failure of government agents to stop those who undermine the safeguards put in place to create the ideal downstream environment is also a problem. But the people must realize that it is their responsibility to hold their leaders accountable and to deal with criminals who are determined to thwart the interests of the general welfare. This poorly managed energy sector is still very flammable, both physically and metaphorically. It cannot eat us completely while we are awake.
Explainer on the highlights of the committee’s decision
• The MPR was raised to 17.5% by 100 basis points.
• The asymmetric corridor of +/- 100 basis points that surrounded the MPR was retained.
• The CRR was retained at 32.5%.
• The liquidity ratio was likewise maintained at 30%.
It is worth noting that the monetary policy corresponds to the new design of the naira note and the reduction in the minimum amount of cash that may be taken out over the counter. This also contributes to tightening the negative real yields in the fixed-income market, which had discouraged foreign investment. With the benchmark interest rate at 17.5% and inflation at 21.34%, the real returns are 3.84% negative.
This is the first interest rate increase in 2023, indicating that the central bank is maintaining the aggressive rate strategy that began in 2022. Remember that the CBN boosted interest rates by a total of 500 basis points last year in an attempt to contain the country’s increasing inflation rate.
Despite a drop in headline inflation from 21.47% to 21.34% in December 2022, the monetary policy rate was raised. According to the CBN governor, a small drop in December inflation figures is insufficient to start celebrating, which influenced the decision to raise rather than hold or loosen.