*Bismarck Rewane, economic expert and CEO of Financial Derivatives Company Limited, explains how the Naira swap policy of the Central Bank of Nigeria may impact the economy and affect the country’s GDP this quarter in 2023 ‘if nothing is done in a hurry’

Isola Moses | ConsumerConnect

Amid the current lull in economic activity, Mr. Bismarck Rewane, an economic expert, has projected a three-to-five percent drop in the Nigeria’s Gross Domestic Product (GDP) in the First Quarter (Q1) 2023 as a consequence of the Naira swap policy of the Central Bank of Nigeria (CBN).

Rewane, Chief Executive Officer (CEO) of Financial Derivatives Company Limited, Friday, February 10 shared some insights of the policy effects while featuring on a Channels TV’s special election programme.

Redesigned banknotes

ConsumerConnect had reported the CBN, October 2022, announced that it would redesign the N200, N500, and N1,000 banknotes with the initial January 31 ultimatum set for the old notes.

Subsequently, President Muhammadu Buhari launched the redesigned Naira denominations at a brief ceremony November last year.

Despite that the Bankers’ Bank recently extended the deadline by 10 days, resulting nationwide Naira cum fuel scarcity had resulted in widespread outrage amid Point of Sales (PoS) charge hikes and reports of several banking outlets hoarding the new notes across the West African country.

The Supreme Court later ordered the CBN to suspend implementation of the deadline.

Implications on economy, GDP

Rewane also explained: “The impact at the end of the day is that it will affect GDP this quarter, conservatively, by three percent, and aggressively it could reduce GDP in this quarter by five percent, if nothing is done in a hurry.”

Data made available by the economist showed that the average number of people in front of an Automated Teller Machine (ATM), in Lagos, had increased sharply.

According to the expert, the number of ATM users in Downtown Lagos (Ikoyi, Victoria Island, Lekki) used to be three to four. Midtown (Ebute Meta), the number of ATM users at average times was eight, while one uptown (Alimosho) typically had 15.

He further stated that the downtime to get one’s money out of the ATM used to be five minutes in Ikoyi, seven minutes in Ebute Meta, and 10 minutes in Alimosho.

“Fast-forward to now. The average number of people in front of an ATM in Ikoyi and Victoria Island is now 40.

“In midtown, Ebute Meta, it’s about 100 people. And in Alimosho, it’s about 600 people.

“The consequences are that flour sales in Lagos are down 30 percent.

“The rams in Kano are down 70 percent. And cement in Kogi is down 40 percent of sales,” said he.

Impact on elections

Asked if the fallout of the currency swap policy would have any repercussions on the forthcoming elections, the economist did not see any direct effects.

Rewane noted: “I’m not sure that it will have any direct impact on the elections.

“The only thing is that in this quarter, the same institution that is handling currency is also handling the movement of election material.”

Heeding advance warnings on ‘policy indigestion’

According to him, in another month from now, Nigeria will also be dealing with the census.

He as well explained that “in our note that we sent out in late November, I warned that even an efficient government will suffer from policy indigestion. Now, it has come to pass.

“The indigestion has come out and the country is now constipated.

“So, what we should be looking for is a laxative to take care of this problem.”