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Cash Crunch: Nigeria Risks CBN-Induced Recession, Govs Warn

The 36 state governors said the scarcity of naira notes has had far-reaching economic effects like naira black market, severe food inflation, amongst others.


By Kayode Oyero

The Nigeria Governors’ Forum (NGF) has warned that the continuous scarcity of the N200, N500 and N1,000 new notes may lead to economic recession as well as severe food inflation.

The Forum, in a communique issued at the end of its meeting on Saturday, lamented that though the Attorney General of the Federation, Abubakar Malami (SAN), said the Federal Government would comply with the order of the Supreme Court of Nigeria nullifying the February 10 deadline for the validity of three old notes, Nigerians have not experienced any change so far.

“The inability to use the new notes has had far-reaching economic effects, leading to the emergence of the Naira black market, severe food inflation, variable commodities prices based on the method of exchange, and long queues as well as crowds around Automated Teller Machines (ATMs) and banking halls across the country with individuals hoping to get a fraction of their money in new notes to meet their daily livelihood,” the communique signed by the Chairman of the Forum and Sokoto State Governor, Aminu Tambuwal party read.

“The country runs the risk of a CBN-induced recession.

“While we acknowledge the submission of the Attorney General of the Federation that the Federal Government will comply with the ruling of the Supreme Court which calls for the halting of CBN’s plan to end the use of the old currency notes, we are yet to observe changes in the financial system.

“Consequently, we call on the Federal Government and the CBN to respect the Rule of Law and listen to the voice of reason expressed by Nigerians and several other stakeholders including the Council of State, before the damage to our economy becomes too great to fix by the next administration.”

The Central Bank of Nigeria (CBN) had extended the deadline for the swap of old N200, N500 and N1,000 from January 31 to February 10 but the Supreme Court held that the Federal Government, the CBN, commercial banks must not continue with the deadline pending the determination of a notice in respect of the issue on February 15.

At least five states have sued the Federal Government over the deadline for three old naira notes. 

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