By Halimah Olamide
Former Statistician General of the Federation, Yemi Kale, has said Nigeria is likely to loose between N10trn to N15trn in its GDP in the first quarter of the year due to the impact of the new naira policy introduced by the Central Bank of Nigeria.
Kale, who went out through his twitter handle on Tuesday, said his prediction is based on the fact that about 40% of Nigeria”s N198tn GDP in 2022 is informal of which about 90% is cash based.
“Further 30% of formal sector GDP is cash based. This means N106.9tn of total GDP is cash based.”
For that he said “I am estimating a reduction in Q1 2023 nominal GDP by between N10-15 trillion due to challenges sourcing cash in Q1 2023.“
He explained further, “Of the 46 economic activities, agriculture, some manufacturing activities (especially food & beverage, textiles, apparels), trade, arts entertainment & recreation, accommodation & food services, road and water transport and other servicesexpected to be the most affected.”
The former Statistician General who was last week announced as Chief Economist at the KPMG, admitted that there is nothing new or wrong about currency redesign or insisting on cashless policy.
He however said this would only be good “if done for the right reasons and at the right time.”
He went further, “But every policy will have pros and cons and will benefit some but not others. There is no policy that won’t affect someone negatively. Or that won’t have costs. The idea is to do a cost benefit analysis looking at the overall impact of any policy and how and when it is to be implemented, across the economy and not just in one or a few areas and deciding if overall, the benefits outweigh costs.
“If yes, then the costs are acceptable. Then a policy maker can or should introduce palliatives to make the costs bearable to those that will be negatively affected by its implementation. If result of analysis is the implementation of the policy and it’s implementation will be more detrimental to the entire system than beneficial even if it benefits a particular area or sector then it clearly isn’t a good idea to go ahead.”
Recall that the CBN had last year introduced the new Naira policy giving a deadline that threw many into chaos.
States of the federation had dragged the Federal Government to court over the matter with the Supreme Court ruling that the old notes would remain as legal tenders.
There were allegations that the federal government refused to obey the court orders.
The president, Monday evening, said he knew nothing about the Attorney General of the Federation, Abubakar Mallami and the CBN Governor, Godwin Emefiele, disobeying court orders.