The Central Bank of Nigeria (CBN) late last year launched the redesigned N200, N500 and N1,000 notes. The bank also capped the withdrawal of the new banknotes at N100,000 weekly for individuals and N500,000 for corporations. Later, it raised the limits to N500,000 for individuals and N5million for corporations. The apex bank says one of the reasons for the redesigned and replacement policy is to tackle inflation, which is running at 21 per cent, by reducing the amount of cash in circulation. The policy seems not to have lived up to its bidding as developers, realtors, artisans, suppliers in the construction sector are lamenting, writes OKWY IROEGBU-CHIKEZIE.
PERHAPS, no issue hasgenerated some much acrimony among Nigerians in recent times than the redesigned Naira notes policy introduced by the the Central Bank of Nigeria (CBN) Governor Godwin Emefiele.
Though, while introducing the policy, Emiefele stated that it would cure the country of its infationary problems as there is too much liquiduity outside financial system, which would be withdrawn while the policy lasted, among other reasons, this was not to be as the notes were scare.
While Nigerians obeyed the Federal Government’s clarion call to surrender their old notes, the government did not reciprocrate the gesture as they did not get the equivalent notes they returned.
Amid pressure from many Nigerians over the scarcity of the new notes, the apex bank extended the deadline for the phasing out of the old notes from January to February 10. Still, the problem of unavailability of the notes remains.
Some out of frustration took laws into their hands by destroying banks they feel refused to pay them the pittance they occassionally doled out to the cashstrapped.
Assessing the situation, a former Director-General, Lagos Chamber of Commerce & Industry (LCCI), Dr Muda Yusuf, said construction workers and artisans were the worst hit by the policy as they collect their income in cash and were not used to cash transfers being promoted by the Naira redesign policy.
Yusuf, who is the Chief Executive Officer (CEO), Centre for the Promotion of Private Enterprise (CPPE), said: “This class of people is the biggest victims of the cash redesign policy. Many have no bank accounts.Therefore, sourcing cash to pay them is an issue. Even where they have accounts, redeeming the electronic payments into cash is a nightmare. Very little cash is available at the Automated Teller Machines (TAM) channels and the POS charges are atrocious.
“Yet most of their needs. especially food and transportation are cash based.
He further stated that the network congestion is also slowing down the tempo of economic activities across all sectors.
Yusuf maintained that the cash redesign policy is repressive.
According to him, economic activities have been negatively impacted across all sectors. Demand is depressed and sales have slowed.
He noted that the entire real estate ecosystem is populated by ordinary Nigerians who depend on daily income to survive. It is widely known that these set of people, including site labourers, artisans, suppliers depend on daily income because they are the most vulnerable, he added.
Also, a former National Secretary, Nigeria Institution of Estate Surveyors & Valuers (NIESV), Offiong Sam Ukpong, said the effects of Naira redesign were enormous. He said: “How can you buy Naira with Naira, sometimes the cost is up to 30 per cent? What is the propensity to save? It’s zero. The little income and savings people have been putting together over the years are spent on consumption and inflation has whipped out any left over.
“The middle class is whipped out and transferred to the poverty class. So, payment of rent is difficult and default in payment high. Developers are suspending their housing production until further notice because the cost of building materials is prohibitive and affordability is low.
“Has the income of workers increased? Are investors sure of the political terrain? The so called redesigned Naira is not available and the CBN has made the new Naira scarce such that for an ordinary person to get it, you will need to buy it. What the citizenry is going through is hellish and that can only happen in Nigeria.”
CEO, ROLAD Properties & Allied Services Limited, Dotun Oloyede, said they usually do not sell housing units on cash even at the best of times, but regretted that the new Naira policy have increased the cost of building materials and, ultimately, affected the cost of delivering the housing units.
He said: “The policy has affected our suppliers and sub-contractors such as those that supply sand, cement and other products.Those who engage labourers on our behalf tell us they have a big challenge in their hands because the artisans are refusing to be paid through bank transfers as they complain of huge payouts to collect their money through the Point of Sale (PoS) operators who are charging so much premium or interest before they can have access to their monies.
Unfortunately, at every level of construction we pay extra to get the artisans to work.
“Our block moulders that we usually pay N18,000 now charge N20,000 to make up for the cost of getting their monies from PoS and this goes for the artisans – be it block molders, bricklayers, labourers etc. In the same vein, those who supply sand insist on cash payment, saying that sand diggers don’t believe in money transfers as it may never come.
“In addition, some of them say that they don’t have bank accounts and prefer cash, so these challenges we face as developers affect the delivery price of our houses.We plead that something urgent should be done to ease the extra burden for developers.
“Before now, for example, those supplying sand can give us any tons we need. But now, they demand cash. They said those they buy from, mostly sand dredgers, insist on cash. None wants to accept transfers because of the fear that it may not go through. They complain that in most cases they will receive bank receipts signifying payment or alerts, but at the end of the day, the cash will not be there. All these lead to delays and higher costs in terms of the finished product.
“Ancillary costs related to housing production is where we have so much challenge because we have suppliers that supply and we get feedback from them. This indeed is not the best of times for people in our business segment because we can’t pay upfront to our suppliers, but that is what is happening, if we remain in business.
“To put it mildly, the new Naira policy has affected the cost of construction because our contractors cannot afford to pay labourers with cash. Yet, withdrawals through the PoS reduce their actual earnings as the operators charge.
“Furthermore, construction is delayed because of the sudden increase in prices of materials and labour. We believe that that government and CBN should take a closer look at the bottle necks regarding this policy.”