The Central Bank of Nigeria (CBN), on Thursday released figures for currency-in-circulation for the month of March, showing that total money outside of the nation’s banking industry stood at N1.808 trillion, the highest in the past few years.
Analysts are quick to blame this on the political season that saw the economy become awash with cash as politicians canvassed for votes in an election that saw the opposition All Progressives Congress (APC) defeating the ruling Peoples Democratic Party (PDP), the first time in the country’s 55-year history.
An analysis of the March figure shows that it rose by N185.926 billion or 11.45 per cent, when compared with the N1.622 trillion recorded at the end of the preceding month of February.
On a year-on-year basis, the figure represented a N234.27 billion or 14.88 per cent rise over the N1.574 trillion reported by the apex bank for March 2014.
Before last month, the peak for currency in circulation was in December last year when it stood at N1.797 trillion, followed by N1.776 trillion in the corresponding period of 2013.
Speaking in a telephone interview with Daily Independent on Thursday, Rasheed Alao, a lecturer and Head, Department of Economics, Adeyemi College of Education, Ondo, said the significant rise in currency outside the banking system is an indication of the reckless spending by government and politicians during the just concluded elections.
Hs words: “Generally, we should expect that in a country like ours where spending in politics are not regulated. The excess money in circulation is in total violation and disregard to the cashless policy of the Central Bank of Nigeria.
“They have been keeping the money before now. We were told of several unresolved cases of missing money. Don’t be surprised that that is what they spent during this period.
The pilot phase of the CBN’s cashless policy started on January 1, 2012, in Lagos and gradually moved to major commercial cities carefully selected based on records of cash takings by bank branches in the country. The policy was to reduce the use of cash for transactions by migrating Nigerians to electronic payment platforms thereby reducing the risk associated with carrying cash, just as it aimed at reducing the cost of managing currency by the CBN.
Also in a chat with our correspondent, Ambrose Omordion, Chief Operating Officer, Invest Data Limited, explained: “In any election year, this is not unusual, especially because it involved presidential election. Despite the huge money in circulation, the inflation rate was up marginally. This is contrary to analysts’ opinions.
“This means that the impact of the excess funds will start to be felt from April in the prices of goods.”
He urged the CBN to mop up the excess cash in the system to ensure inflation is effectively checked.
“This should be done because when we are having high interest rate and high inflation rate, it will not augur well for the economy”.
However, he said the good thing is the outcome of the election seen by many and credible.
He called on the incoming government of Gen Muhammadu Buhari to put in place good reforms that will sustain the tempo recorded after the election in exchange rate of the Naira, to support the macroeconomic indices.
This, he said, is in anticipation of rebound in the prices of crude oil going forward.
Meanwhile, the National Bureau of Statistics (NBS), on Thursday, released the Consumer Price Index (CPI) which shows that inflation rose by 8.5 per cent (year-on-year) driven by the increase in the food sub-index at 9.4 per cent for the second consecutive month. The March inflation rate was marginally higher than the 8.4 per cent recorded in February.
This is the fourth consecutive month of a increase in the headline index, as it reached the highest level recorded for the year, returning to last year’s high recorded in August.
While the pace of increase in food prices held firm for the second consecutive month, the faster increase in the headline index was driven by increases in the non-food divisions. This was also reflected in the core sub-index.
A statement by the Statistician General of the Federation, Dr. Yemi Kale, said while the pace of increase in food prices held firm for the second consecutive month, the faster increase in the Headline index was driven by increases in the non-food Classification of Individual Consumption by Purpose (CIOCOP) divisions.