Connect with us

Money market

Cash-to-GDP in Nigeria one of lowest in the world — Muda Yusuf

Published

on

The Director of the Centre for Promotion of Private Enterprise (CPPE), Muda Yusuf has said that Nigeria’s cash-to-GDP ratio is one of the lowest in the world at 1.5 per cent.

He stated this while speaking on 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.

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 per cent. How much more cashless can you be?

“In the United States, cash to GDP ratio is about 10 per cent, in the UK it is about three per cent but in Nigeria, it is 1.5 per cent. 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 per cent of that. So is that too much?”

He said he hopes that the National Assembly will allow for a proper public hearing because the bill covers all sorts of issues, adding, “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 Reps 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 assent 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 assented to the Appropriation Act but he didn’t assent to the Finance Bill and that has gone back for further consultation.”

Money market

Naira will continue to appreciate against dollar – Shettima

Published

on

Vice President Kashim Shettima has expressed optimism that the Naira would continue to appreciate against the dollar at the forex market.

Spokesperson of the Vice-President, Mr Stanley Nkwocha, in a statement on Saturday, said Shettima stated this at a meeting with officials of the Lagos Chamber of Commerce and Industry (LCCI), at the President Villa, Abuja.

He said President Bola Tinubu ended the fuel subsidy and ensured the unification of the multiple exchange rate because the former arrangement was producing billionaires overnight.

“Naira went haywire and some people were celebrating but inwardly we were laughing at them because we knew that we have the leadership to reverse the trend.

“Asiwaju knows the game, and truly the Naira is gaining and the difference will drop further.”

He recalled that the quality of leadership provided by President Tinubu as governor of Lagos laid the foundation for the massive development witnessed in the state.

Shettima assured that the Tinubu administration is doing its best to address challenges in the power sector.

According to him, Tinubu’s administration is aware that power is absolutely essential for development.

“We are determined to ensure that we generate jobs for our youths. Honestly, the President’s obsession is to live in a place of glory, to transform this country to a higher pedestal.

“He wants to leave a legacy, one of qualitative leadership because the hope of the black man, the hope of Africa rests with Nigeria.

“I want to assure you that President Bola Ahmed Tinubu is one of you. He understands your ecosystem. In this government, you have an ally and a friend.”

Earlier, the President of LCCI, Gabriel Idahosa, emphasised the need for the Federal Government to consider more innovations to address the insecurity challenge in the country.

He also urged the Tinubu administration to ensure a significant upswing in the pace and scale of alternative policy measures that promote credit access, stimulate investment, and support entrepreneurship.

“This could include targeted interventions such as concessional lending facilities, loan guarantees, and interest rate subsidies tailored to the needs of SMEs and key sectors of the economy like agriculture, manufacturing and power technology.”

Continue Reading

Money market

LCCI advocates discipline, export to sustain Naira appreciation

Published

on

LCCI advocates discipline, export to sustain Naira appreciationThe Lagos Chamber of Commerce and Industry (LCCI) has emphasised the importance of maintaining discipline in the foreign exchange market to sustain the steady appreciation of the Naira.

The President and Chairman of the Council of LCCI, Mr Gabriel Idahosa, made the call in an interview with newsmen on Wednesday in Lagos.

Idahosa praised the efforts of the Central Bank of Nigeria in imposing discipline, attributing the recent Naira appreciation to curbing speculative activities.

“On the monetary side, the CBN is doing it. The primary efforts should continue to impose discipline in the foreign currency market.

“The abuses in the foreign currency market were prevalent and most of the fall in the value of the Naira in the last six months is not because there was any sudden calamity in the Nigerian economy.

“It was primarily because of very reckless speculations, that people were just speculating in the dollar, they had nothing to export, nothing to import, they were just buying the dollar for speculative reasons.

“And once the Central Bank started to impose discipline in the foreign currency market, we saw the value of the Naira rising very quickly by stopping speculation,” he said.

According to him, the strategies of the Central Bank, now, are designed to achieve a sustained discipline in the foreign currency market.

Idahosa highlighted the need to continue reducing the number of Bureau de Change operators, stressing that many operated without contributing to international trade.

He applauded the Central Bank’s move to enforce documentation and identification of buyers and sellers at BDCs, aiming to deter reckless speculation and curb illicit financial flows.

On the fiscal side, Idahosa urged President Bola Tinubu to prioritise a nationwide export drive, citing it as the key to bolstering the Naira and providing essential foreign exchange.

He emphasised the importance of fostering a culture of export among Nigerians across all scales of enterprise to reduce reliance on imports and strengthen the country’s economic resilience.

Continue Reading

Money market

Foreign reserves decline to $32.29bn

Published

on

The foreign reserve has depleted to $32.29 billion, which is a six-year low in the Central Bank’s course to save the naira.

This is the lowest level the reserves have been since September 25, 2017, when it was $32.28 billion.

The country’s foreign reserves declined by 6.2 percent, losing $2.6 billion since March 18, when the naira started its rebound from record-low levels against the dollar to $32.29 billion as of Monday, based on the latest available data from the CBN.

At the beginning of the month, the reserve was at $33.57 billion, then further dipped to $32.6 billion by April 12.

This comes as the CBN has attempted to save the naira through various interventions such as raising interest rates to 24.75 percent and managing foreign exchange trades.

It stepped up its intervention in the FX market with sales at both the official market and to BDC operators who sell dollars on the streets.

The apex bank, which sells $10,000 to each BDC every week, mandated them to only sell at a spread of 1.5 percent, which comes to N1,117 per US dollar.

The rate sold by the BDCs has set a defacto floor for the naira in the black market since the apex bank resumed sales to them in February.

Also, last month the CBN said it had cleared a backlog of $7 billion since the beginning of the year. That was built over the years as the central bank pegged its currency against the dollar, leading to a scarcity of foreign currency that deterred foreign portfolio investment. However, it’s unclear how much dollar debt the CBN retains on its books.

Akpan Ekpo, a professor of economics and public policy, said the CBN’s managed float system in which it is trying to ensure supply and curtail demand is not sustainable in the long term.

He said the CBN needs to be careful with how it depletes the foreign reserves as its main source is oil revenue.

“We need to manufacture non-oil goods and services, export them, and get foreign exchange and not depend on oil income,” he said.

Continue Reading

Trending