Some segments of the organised private sector (OPS) and stakeholders in the commercial space have called for urgent measures to address the hiccups in the supply of the redesigned naira notes in order to safeguard continued growth of the economy.
Accessing cash has been difficult nationwide following the implementation process of withdrawing the old Naira notes and issuing of new ones, despite the extension of deadline for the process by 10 days last week.
But Governor, Central Bank of Nigeria, Godwin Emefiele, at a press briefing on Friday attributed the situation to sabotage by banks, assuring that the hiccups in supply will soon be over.
The Manufacturers Association of Nigeria (MAN) said the hiccup in cash supply could lead to a drop of 25 percent in monthly sales of goods within three weeks if not quickly addressed, while the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA) said it is needlessly disrupting the economy.
Giving forecast the impact of the situation on the real sector, Director General, Manufacturers Association of Nigeria (MAN), Mr. Segun Ajayi-Kadir, said the cash flow difficulties have been affecting sales of finished domestic goods.
He stated: “The continued scarcity of the new redesigned Naira notes is quite worrisome. With our growth prospects heading further south, we can ill afford a downturn in our GDP. The negative impact it portends for local producers, the agricultural and distributive segments of our economy is huge and may worsen the bashing our economy has received from both external and internal shocks in recent times. “This unpleasant situation actually confirms the apprehensions we had when the plan by CBN to introduce the new note was announced in October 2022, without a clear roadmap for ensuring a seamless transition. We had cautioned that adequate measures should be put in place to ensure a smooth currency transition, particularly in the unbanked areas in Nigeria.
“It would appear that those measures were either not taken on time or they have proved inadequate and failed to prevent the near bedlam that we are witnessing across the country. When you now take this together with the petrol scarcity, the crippling effect on business and household country-wide is enormous.
“I would put a rough estimate of 25% drop on Monthly sales of domestic goods if the situation should persist for the next three weeks. As the purchases from the retail end that are mostly transacted in cash dries up, you will immediately notice a sharp drop in wholesale purchases and instant buildup of unsold inventory in your industries.
“This situation is not good for anyone, the industry, the government and the ordinary citizen. You will have a compounded crippling lack of patronage for the domestic manufacturer; the denial of government revenue that would have accrued from consumption taxes and the disruption of the daily life and needs of the average Nigerian.
“We hope that the resumption of payment across the counter in the banks and the intensification of CBN special cash swap arrangement in remote areas may yield positive results.”
Also speaking, the Director General Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA), Mr. Sola Obadimu, while commending CBN for the 10 days extension, noted that the exercise has been largely and needlessly disruptive to the economy.
His words: “The management of the currency exchange exercise could certainly be better.
“The past few weeks have been quite traumatic for a lot of Nigerian citizens and small businesses particularly – coupled with the fuel issue.
In his comment, President, Association of Small Business Owners of Nigeria (ASBON), Dr Femi Egbesola, said the effect of the exercise is twofold.
His words: “On one hand, nano and micro businesses in rural and hinterland areas that largely depend on cash for virtually all transactions are largely affected by the cash crunch. This category of businesses are not used to digital and online e-commerce banking transactions, hence quite a number of them just couldn’t transact their normal day-to-day business activities. There’s no cash anywhere. Even to pay transporters to move their farm goods and products from the farm to the town becomes a great challenge as transporters need to be paid in cash.
“The resultant effect of this is that many of these perishable goods are sold at give away prices. This indeed is a big loss for businesses in such sectors.
“The PoS operators that serve as a bridge or banking agents are also catching in on the gap and exploiting the micro businesses that have no other option than to patronize them. Quite a number of these POS operators charge as high as 10% which is even far higher and above the imaginable profit on the businesses their clients undertake.
“This, no doubt, ends up eroding the meager working capital of these nano and micro sector operators.
“On the other hand, the cash crunch has hitherto brought to fore the awareness and need for the nano, micro and small businesses who are yet unbanked to now see reason to open bank accounts, embrace online and digital banking and be able to send and receive online cash transfers.
“In the long run, this will no doubt improve business operations, make business accounting much easier and reduce dependence on physical cash.
“As of today, we now have meat sellers, pepper sellers, vegetable sellers, artisans etc being ready and willing to collect bank transfers for the micro business transactions.”