Cash Shortage: Nigeria Risks CBN-Induced Recession, Governors Warn

The 36 state governors claimed that the lack of naira notes has had significant economic ramifications, including a naira black market and extreme food inflation.

The Nigeria Governors’ Forum (NGF) has issued a warning that the ongoing shortage of the N200, N500, and N1,000 new notes could cause an economic downturn and extremely high food inflation.

The Forum bemoaned that although the Attorney General of the Federation, Abubakar Malami (SAN), stated that the Federal Government would abide by the Supreme Court of Nigeria’s order invalidating the February 10 deadline for the validity of three old notes, Nigerians have not seen any change thus far.

“The inability to use the new notes has had far-reaching economic effects, leading to the emergence of the Naira black market, severe food inflation, variable commodity prices based on the method of exchange, and long queues as well as crowds around Automated Teller Machines (ATMs) and banking halls across the country with individuals hoping to get a fraction of their money in new notes to meet their daily livelihood,” the communique signed by the Forum Chairman stated.

The possibility of a CBN-caused recession exists throughout the nation.

“While we accept the Attorney General of the Federation’s assertion that the Federal Government will abide with the Supreme Court’s order barring the use of outdated currency notes, we have not yet noticed changes in the financial system.

Therefore, before the harm to our economy gets too bad for the next administration to fix, we urge the Federal Government and the CBN to follow the Rule of Law and pay attention to the voice of reason being spoken by Nigerians and a number of other stakeholders, including the Council of State.

The Central Bank of Nigeria (CBN) had extended the deadline for the swap of old N200, N500, and N1,000 from January 31 to February 10, but the Supreme Court ruled that the Federal Government, the CBN, and commercial banks must not continue with the deadline pending the outcome of a notice in regard to the issue on February 15.

In relation to the deadline for three outdated naira notes, at least five states have filed lawsuits against the federal government.