How the economy lost almost N10trn to naira redesign – former NBS chief

A FORMER chief executive of the National Bureau of Statistics (NBS), Yemi Kale, said the Nigerian economy lost about N10 trillion as a result of the negative impact of the Central Bank of Nigeria’s currency redesign policy.

Kale, who is now a partner and chief economist at the KPMG Nigeria said the N10 trillion loss would be evident when the first quarter (Q1) gross domestic product (GDP) report is released.

The former Statistician-General was a guest on the Business morning programme of Arise Television, which was monitored by our correspondent on March 27, 2023.

He said, “About 40 per cent of the N198 trillion economy is informal, which 90 per cent is cash based. Another 30 per cent of the formal sector is cash based. This translates to an estimated N106.9 trillion of Nigeria’s annual GDP cash based that were affected by this policy.

“I estimated the N10 trillion lost based on the model of measurement basket we have used while I was at the NBS. When I say N10 trillion, I don’t mean it’s going to shrink. I mean, if we are expecting the GDP figures of Q1 to grow to N54 trillion from N44 trillion, it may settle for may be N46 trillion.The nominal GDP will grow, but not as expected.This is a huge problem because the real GDP is deflated.”

Kale noted that part of the negative consequences of the naira redesign policy would see the GDP growth at less than 2 per cent in the Q1.

“I will be surprised if GDP grows more than 2 per cent in the Q1. This is because the economy is largely dependent on cash to the tune of 40 per cent,” he noted.

Commenting further on the negative impact of the policy, he said, “Informal sector has a huge cash components and those who did transfer through electronic means also have challenges using the portal. Cash and electronic transfer both have compounded problems. Those buying farm inputs were also affected by cash. All these would be more witnessed in the Q1 GDP report.

“Assuming there is a decline in inflation rate, which I anticipate (though marginal) when the National Bureau of Statistics publishes its inflation report, we can then compare if the gains in inflation in Q1 2023 outweigh the expected decline in GDP, and in possibly other macro and socio-economic variables,” he added.



    CBN had last October announced it would be redesigning the N200, N500 and N1,000 notes. The new notes were introduced into the system on December 15, 2022, with the CBN initially setting January 31, 2023 as the deadline, as legal tender for the old notes being rested.

    Read Also:

    One of the reasons the CBN gave for its naira redesign decision was its resolve to strengthen Nigeria’s cashless economy.

    But the policy has brought so much agony to individuals, families and businesses as the new notes have remained scarce.

    The CBN has not helped matters with its decision somersaults on the swap of the old with the new.

    Harrison Edeh is a journalist with the International Centre for Investigative Reporting, always determined to drive advocacy for good governance through holding public officials and businesses accountable.

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