Due to the cash crunch which affected economic activities across the country, the Central Bank of Nigeria (CBN) has disclosed that the currency outside the bank vaults as at the end of February rose to N843.311 billion.
This is against N792.184 billion recorded in January 2023, representing a 6.45 per cent increase. This was even as the apex bank further revealed that credit to the private sector rose to N83.29 trillion in the first two months of 2023.
According to data obtained from the CBN’s money and credit statistics for the month of February 2023, credit to the private sector so far in 2023 gained 16.03 per cent in its Year-on-Year (YoY) growth from a reported N35.99 trillion in February 2022 to N41.75 trillion in February 2023.
Findings showed that credit to the private sector in 2022 crossed the N41 trillion mark and experts have predicted further increase, driven by government expansion in budgets, among other factors. However, the currency in circulation in the country rose to N1.68 trillion at the end of March 2023. The currency in circulation in the country had dipped by 235.03 per cent to N982.09 billion at the end of February from N3.29 trillion recorded at the end of October 2022, on the back of the naira redesign policy.
However, the CIC grew by 71 per cent in one month to stand at N1.68 trillion as against N982.09 billion recorded in the previous month. This development stemmed from the CBN’s aggressive monetary policy to phase out old currency notes and introduce the new notes in circulation.
This also came on the back of the huge notes deposited by Nigerians ahead of the initial January 31, 2023 by the apex bank.
The CBN thereafter extended the deadline to February 10, 2023 after much pressure. But the Supreme Court after hearing pleas from governors, ordered the Federal Government and the CBN to accept the designated denominations of naira notes as legal tender until December 31 2023, an order the apex bank obliged.
It will be recalled that the CBN governor, Godwin Emefiele, at the last Monetary Policy Committee meeting in Abuja, noted that the naira redesign and cash withdrawal limit policies have resulted in a sizeable reduction in currency-outside banks, indicating an expected improvement in the potency of monetary policy tools. However, analysts said the current figures may have been due to the Supreme court’s ruling which distorted the apex bank’s plan to reduce the currency outside the banking vaults.
Speaking during a programme monitored by our correspondent, Fiscal policy partner Africa tax leader at PricewaterhouseCoopers (PwC), Taiwo Oyedele, said the CBN should go back to re-strategise and tap into data to solve the problem.
Oyedele said, “The CBN should tap into data to solve this phenomenon. They can also partner key stakeholders and involve relevant agencies from the government and especially from the tax system as tax is a primarily objective and anti-graft agencies, infrastructure providers and get to know how much time they need to get this problem done.
Data is absolutely key to this current development, if they have clear details of the amount of the notes (both old and new), then they can go about the solution in the right way”.