Fact Check

CBN’s Policies Threaten Investment, Growth Amid Naira Commoditization Crisis

Economic experts have raised concerns over the Central Bank of Nigeria’s (CBN) decision to implement a 27.25% interest rate, citing its potential to hinder investment and economic growth.

They argue that the steep rate could stifle business expansion, reduce borrowing, and negatively impact Nigeria’s struggling economy.

Meanwhile, the Governor of the CBN, Dr. Olayemi Cardoso, has vowed to tackle the commoditization of the Naira, a practice that has become widespread and poses significant threats to the nation’s financial ecosystem.

Speaking at the inaugural Stakeholders’ Conference of the Committee of Heads of Banks Operations (CHBO) in Lagos, themed “Commoditization of Naira: The Way Forward,” Cardoso stressed the importance of preserving the Naira’s integrity as a national symbol and medium of exchange.

Represented by Fatai Kareem, his Senior Special Adviser, Cardoso explained that commoditization involves treating the Naira as a tradable asset rather than a functional currency.

“The Naira is not merely a currency; it embodies our national identity. Its stability is vital for economic growth and development,” he stated.

Cardoso highlighted the dangers of commoditization, noting that it affects not just the banking industry but also Nigerians who rely on the currency for daily transactions.

He emphasized that cash scarcity and hoarding have exacerbated this issue, leading to inflated costs for everyday transactions.

To address this, the CBN has outlined a multi-pronged approach:

Public Awareness Campaigns: Educating citizens on responsible currency use.

Cash Management Systems: Ensuring fair distribution of cash nationwide.

Enforcement Measures: Collaborating with law enforcement agencies to enforce regulations and punish offenders.

Digital Payment Promotion: Expanding digital payment options to reduce reliance on cash transactions.
Abraham Aziegbe, Chairman of the Executive Committee of CHBO, attributed the Naira’s commoditization to severe cash shortages over the past two years.

He noted that these challenges led to monetization practices, including paying premiums for basic transactions.

“This scarcity raises concerns about hoarding practices among banks and the overall availability of cash,” Aziegbe added, emphasizing the need for immediate solutions to restore the Naira’s functional role in the economy.

While the CBN’s strategies aim to address immediate concerns, experts warn that the high-interest rate and unresolved cash issues may deter investors and worsen Nigeria’s economic challenges.

They urge the government to balance monetary policies with initiatives that support growth and stabilize the financial ecosystem.

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