An economic expert, Bismarck Rewane, on Friday, projected a three-to-five-percent drop in the gross domestic product (GDP) of Q1 2023 as a direct result of the naira swap policy of the Central Bank of Nigeria (CBN).
The CBN, in October 2022, announced that it would redesign the N200, N500, and N1,000 banknotes with a January 31 ultimatum set for the old notes. President Muhammadu Buhari’s unveiled the redesigned notes the following month.
Though the Central Bank extended the deadline by 10 days, resulting nationwide scarcity fueled outrage amid point-of-sales (PoS) charge hikes and reports of several banking outlets hoarding the new notes.
The Supreme Court later ordered the apex bank to suspend implementation of the deadline.
Rewane, who is the CEO of Financial Derivatives Company Limited, shared some insights of the policy’s effects during a live appearance on The 2023 Verdict, Channels Television’s special election programme.
“The impact at the end of the day is that it will affect GDP this quarter, conservatively, by three percent, and aggressively it could reduce GDP in this quarter by five percent, if nothing is done in a hurry,” he stated.
Data made available by the economist showed that the average number of people in front of an automated teller machine (ATM) in Lagos had increased sharply.
According to Rewane, the number of ATM users in Downtown Lagos (Ikoyi, Victoria Island, Lekki) used to be three to four. Midtown (Ebute Meta), the number of ATM users at average times was eight, while one uptown (Alimosho) typically had 15.
He explained that the downtime to get one’s money out of the ATM used to be five minutes in Ikoyi, seven minutes in Ebute Meta, and 10 minutes in Alimosho.
“Fast-forward to now. The average number of people in front of an ATM in Ikoyi and Victoria Island is now 40. In midtown, Ebute Meta, it’s about 100 people. And in Alimosho, it’s about 600 people.
“The consequences are that flour sales in Lagos are down 30 percent. The rams in Kano are down 70 percent. And cement in Kogi is down 40 percent of sales,” Rewane said.
Impact On Elections
Asked if the fallout of the currency swap policy would have any repercussions on the forthcoming elections, the economist did not see any direct effects.
“I’m not sure that it will have any direct impact on the elections. The only thing is that in this quarter, the same institution that is handling currency is also handling the movement of election material.
“And in another month from now, you will also be dealing with the census. In our note that we sent out in late November, I warned that even an efficient government will suffer from policy indigestion. Now, it has come to pass.
“The indigestion has come out and the country is now constipated. So, what we should be looking for is a laxative to take care of this problem,” he said.