The Centre for the Promotion of Private Enterprise (CPPE) has urged the newly appointed acting governor of the Central Bank of Nigeria (CBN), Dr. Olayemi Cardoso to suspend the Naira redesign policy.
CEO of CPPE, Dr. Muda Yusuf who disclosed this in a statement, noted that the naira redesign policy should be suspended indefinitely and it should not be a priority at this time.
“There was really no compelling argument to undertake the naira redesign in the first place. The approach was very disruptive and inflicted unbearable hardships on businesses and the citizens.
“Economic activities need not be disrupted to achieve a reduction in cash transactions in the economy.
“Nigeria has one of the best rankings in cash dominance metrics. Cash as a percentage of GDP in Nigeria is one of the lowest globally at less than 2%. For many other developing countries, the percentage is as high as 10%.
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CPPE warned that the tenure of funds in the country’s banking system is extremely short as over 85% of deposits in the banking system are less than one year tenure.
“This maturity structure of funds cannot support economic growth. What it means is that long-term investment cannot be supported by our banking system.
“In 2021, the banking industry recorded a negative asset-liability mismatch of N45.6 trillion, according to the NDIC. This is not healthy for the banking system and the economy.”
They added that this is why there has been a dominance of development finance in the economy, citing a need to address the macroeconomic fundamentals to correct this maturity structure of funds in the banking system.
CPPE noted that Steps should be taken to reduce concentration risks in the banking system as a strategy to manage systemic threats to the bank system, adding that the top ten banks account for over 80% of bank assets, total loans, and deposit liabilities.
“Dr. Olayemi Michael Cardoso was recently nominated by President Bola Ahmed Tinubu, and has on Friday, September 22, 2023, formally assumed duty, in an acting capacity, as the Governor of the Central Bank of Nigeria (CBN), pending his confirmation by the Senate.
This follows the resignation of Mr. Godwin Emefiele as Governor of the Central Bank of Nigeria (CBN), Similarly, the Deputy-Governors-Designate have also assumed duty, in acting capacities, the sequel to the formal resignation of Mr Folashodun Shonubi, Mrs Aishah Ahmad, Mr. Edward Lametek Adamu, and Dr. Kingsley Obiora as Deputy Governors of the CBN.“