Still on cash crunch, financial discipline

The cash scarcity that has negatively affected economic activities in the country and the imperative of financial discipline in the day-to-day activities of people became the subject-matter of discourse. According to the Lagos Chamber Chamber of Commerce and Industry (LCCI) has warned of the dire consequences of persistent naira scarcity and structural rigidities on the Nigerian economy. According to the President of LCCI, Asiwaju (Dr.) Michael Olawale-Cole, the most challenged on the issue of naira scarcity are the Micro, Small and Medium Enterprises (MSMEs), which are key drivers of our economy. Some of them are not just strained, but are folding up.

“Generally, much productive time, energy, and man-hours are wasted in unneeded long queues for cash. It is, unfortunately, a productivity downtime for Nigeria and Nigerians. This cannot be the desired position for any economy as it often leads to crippling effects on the economy – a fall in the Gross Domestic Product (GDP) numbers, a drop in wealth creation, and a rise in the poverty measures, amongst others”. Dr. Olawale-Cole observed that the nation’s democracy and economy are fragile and need protection, but the way things are going is very worrisome for the Organised Private Sector, as the chamber is concerned about the state of affairs.

In another vein, the LCCI has informed that the Central Bank of Nigeria’s Monetary Policy Committee (MPC), in its March 2023 meeting, hiked the benchmark interest rate by 50 basis points to 18.0% from 17.5%, but retained the asymmetric corridor at +100 and -700 basis points around the policy rate. Cash Reserve Ratio (CRR) and Liquidity Ratio (LR) are held steady at 32.5% and 30%, as this is the sixth consecutive rate hike since April 2022. The Director-General of the chamber, Dr. Chinyere Almona stated that this consistent hawkish stance by the monetary authority is in response to the high inflationary pressure. The DG added that at 21.91%, the inflationary rate is more than twice the targeted range (6-9%) set by the CBN.

Since April 2022, inflation has increased from 16.82% to 21.91% in February, 2023. Despite the 6.5% points increase in the key rate over the same period, inflation does not seem to be letting off. The last Consumer Price Index (CPI) figures released by the NBS indicated that inflation slightly increased to 21.91% in February from 21.82% in January 2023. The price rises that continue to hit the system appear non-transitory. While the CBN has the overarching mandate of ensuring price stability, we suggest it should not be done in a manner that compromises growth, more especially in the face of high unemployment. Furthermore, the instrumentality of monetary policy alone appears quite insufficient to guarantee the desired results of low, stable, and predictable prices.

Inflation chips away at purchasing power leads to inventory stockpiles, undermines growth, and creates a lot of economic uncertainties. Taming it, however, should not be done at the expense of growth and the most vulnerable sectors”, Dr. Almona stated further. In another development, Nigerians have been charged to be financially-disciplined in order to enjoy a better future. The Director, Cooperative Services, Ministry of Community Development and Cooperatives, Ogun State, Mr. Samuel Mustapha gave this charge while delivering his keynote address during a one-day seminar, organised by the UNAAB Staff Cooperative Multipurpose Society (CMS) Limited with the theme: ‘Building a better future through cooperative’, held in Abeokuta, Ogun State. Mustapha, who was represented by the Deputy Director of the Ministry, Mr. Akeem Ayodeji, maintained that the future of cooperative society “is industrialisation and creation of jobs for the masses”.

He urged members to pay back their loans as and when due, not to deny others of their own benefits, stressing that the seminar would address issues that would positively affect the cooperative society. Also, the President, Ogun State Cooperative Federation Limited, Alhaji Abdulwasiu Olaleye said the seminar was one of the pillars of the cooperative society, stressing that any cooperative society “that is doing well, would not joke with education”, even as he encouraged members to pay prompt attention to experts’ advice. In the same vein, Mr. Tanimola Bodunde, President, Ogun State Salary Earners Co-thrift and Credit Union Limited, lauded the cooperative society for organising the seminar, saying it would help educate on how to give loans to cooperators.

The President of UNAAB Staff CMS, Mrs. Margaret Omisope, said the seminar was timely and coming up during a period of confusion, hopelessness, frustration and untold hardship, being experienced by the citizenry in the last few months, due to bad public policy. She alleged that insensitive attitude of policy makers is a pointer to the fact that cooperative society members have the obligations, at individual and cooperative levels, to build a better cooperative society, to save the future from any form of hopelessness. The Nigerian economy is primarily cash-based. Debatably, over 80% of transactions in volume terms are conducted via physical exchange of the Naira, hence the more reason why the challenges of cash crunch should be addressed swiftly while people should always be financially-disciplined.

Source: www.blueprint.ng