Ex-finance minister blames CBN for new naira crisis

A former Minister of Finance, Dr Idika Kalu, has faulted the logistics of the Central Bank of Nigeria for the crisis that has characterized the distribution of new N1000, N500 and N200.

Speaking on Channels Television on Friday, he noted that the new naira scarcity was a result of a huge logistic mistake.

He said, “It is obvious that what we are dealing with is huge logistic mistakes that have been made.”

Kalu added that the CBN ought to have done its preliminary assessment of how long and what it would take to ensure the efficient distribution of the new notes.

“You have to assess the timing, which is predicated on how long it will take to do the exercise that you want to do. So, that is where it is really up to the central bank and its advisers to come up to the government to say, you have agreed we will do this. This is how much time we need, every aspect of it, procuring the papers for printing, whether it is imported or locally made, the printing process itself, the logistics of identifying the various constituencies, the banks, the communities, the rural areas and all segments of this country.

“The people are not interested in all these details but you have to take into account how you are going to deliver. Is it by air, road, train or a combination of all that?,” he added.

He explained that the reason the new notes were not in banks when people needed them was due to poor logistics.

“The logistics have to be very carefully put together. It is very apparent that we did not do that. I think the logistics are really the problem not the question of jurisdiction,” Kalu noted.

He further faulted the CBN’s reasons for redesigning the old notes, stating that countries don’t change their currencies because they want to improve the effectiveness of monetary policies.

He also noted that there were other policies that the CBN and the Federal Government could have introduced if they wanted to tackle corruption and the high amount of currency in circulation.

Kalu also said that the naira redesign plan of the CBN would likely lead to a contraction in the economy.

He further questioned the metrics of inflation used to measure the effectiveness of the naira redesign policy.

“If you curtail the money supply, it will bring down inflation. But they will have to check on what it does to production and employment. So, it is not a one-dimensional measure of success,” he said.

He further described the naira redesign policy of the CBN as draconian, noting that there was something wrong with what the CBN was trying to do.