That famous writer wrote water everywhere but not a single drop to drink as he looked at the ocean. In Nigeria, I can paraphrase to money everywhere but not a single kobo for the common man or woman. Indeed, Nairametris explained it all: “Data from the central bank of Nigeria reveals Money Supply is now at a record high of N50.5 trillion as of October 2022. This is the highest level ever reported for one of the most important monetary-related statistics tracked by Nigeria’s central bank or any central bank in the world. The increase in money supply was N1.26 trillion in October alone, the third highest month after April and May this year. The amount of money supply in the country has risen by N6.1 trillion this year alone, having closed at N44.4 trillion at the end of 2021.”
People, this seems like an optical illusion. How is it that I cannot lay my hands on this Naira when it is raining everywhere? The Central Bank of Nigeria (CBN) explained:
- “Significant hoarding of banknotes by members of the public, with statistics showing that over 85% of currency in circulation are outside the vaults of commercial banks.
- To be more specific, as of the end of September 2022, available data at the CBN indicate that N2.73 Trillion out of the N3.23 trillion currency in circulation, was outside the vaults of Commercial Banks across the country; and supposedly held by the public.
- Currency in circulation has more than doubled since 2015; rising from N1.46 trillion in December 2015 to N3.23 trillion in September 2022. This is a worrisome trend that cannot be allowed to continue.”
Simply, there is a “bank” outside the formal banking system which “keeps” more than 85% of currency in circulation. The CBN has used this point to make the case to redesign the Naira notes. I support the redesign of the Naira.
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Yet, I also extend my small suggestions that CBN must not pump money into selected private companies as it has been doing for years now. It is better to make the system work for everyone, instead of selecting winners.
Nigeria has introduced many artificial processes where some selected companies get intervention funds at single interest rates while the other 99% are left at high double digit rates.
The companies receiving these cheap funds do not really need tons of money; they just need electricity, security and a decent transportation network. If the government and the apex bank focus on providing those, you will serve the society better.
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