Naira scarcity persists despite apex court verdict

The acute shortage of cash in Nigeria continues to pose a challenge despite the Supreme Court's ruling on the legal status of the old naira notes. Uncertainty looms as the Central Bank of Nigeria (CBN) is yet to issue any fresh statement regarding whether individuals and businesses can use the old notes for transactions. The Foreign Portfolio Investment transactions for 2022 ended on a positive note with a surplus of 12.3 billion naira, a significant improvement from the deficit of 24.7 billion naira recorded in 2021. However, the ongoing cash scarcity issue has had a profound impact on the economy, leading to disruptions and fears among stakeholders. The lack of communication from the CBN has only exacerbated the situation, with many feeling the brunt of the cash crunch. Damilola Akinbami, Senior Manager of Client and Industries at Deloitte, shed light on the current scenario in a recent interview with CNBC Africa. Akinbami highlighted the implications of the Supreme Court's ruling, the potential risks of running old and new notes concurrently, and the need for clear communication and timely actions from the CBN to address the cash scarcity. The challenges posed by the cash shortage have reverberated across various sectors, impacting businesses and consumers alike. Amid concerns over the potential inflationary effects of the dual currency circulation, there is a growing need for swift resolution and proactive measures to stabilize the economy and restore confidence in the monetary system. As Nigeria approaches the first quarter's end amidst political uncertainties, the looming question remains on the CBN's next steps and the potential outcomes of the upcoming monetary policy committee meeting. Akinbami emphasized the importance of aligning with the Supreme Court's directive and ensuring the adequate supply of new notes in conjunction with the old ones to prevent any disruptions and mitigate inflation risks. The CBN's monetary policy decisions will play a crucial role in shaping the economic landscape and addressing the challenges posed by the ongoing cash scarcity. Additionally, the Foreign Portfolio Investment (FPI) numbers for 2022 reflect a market recovery, yet the volume of foreign transactions remains subdued, signaling underlying concerns and uncertainties. Policy ambiguity, election risks, forex liquidity issues, and repatriation difficulties continue to dampen investor sentiment and hinder market growth. Akinbami stressed the need for addressing these fundamental challenges to boost investor confidence and attract more foreign inflows. As the year unfolds, navigating these hurdles and implementing effective policy measures will be essential in shaping Nigeria's economic trajectory and fostering sustainable growth.