World Bank, Rewane disagree with CBN on cash withdrawal, Naira redesign policies

Bismarck Rewane, managing director and CEO of Financial Directives and also the World Bank has expressed concerns about the impact of the cash withdrawal policy and naira redesign.

Speaking on AriseTV, Rewane described the claim by CBN that the policies will reduce inflation, improve the value of the naira and reduce vote buying as counterfactual to economics.

The Central Bank of Nigeria (CBN) mandated in December that over-the-counter withdrawals by individuals and business organizations be limited to N100,000 and N500,000 per week, respectively.

While individuals can only get N20,000 daily and N100,000 weekly.

This followed an earlier introduction of redesign naira of 1000, 500, and 200 notes. The policies were widely criticized including the senate urging the CBN to review the limit.

However, Godwin Emefiele, Governor of the Central Bank insists there is no going back given that the President has expressed his support of the policy.

Emefiele also denied the policy is politically motivated but that it is for the good of the economy.

Emefiele said: “We can only just continue to appeal to Nigerians to please see this policy the way we have presented it. We will be reviewing from time to time how this is working because we are not going to be rigid it is not to say that we will reverse, or change the timing but whether it is about tweaking some amount to be a little bit higher or lower, we will do so because we are human and we want to make life good for our people."

In reaction, Rewane stressed that inflation does not respond to the change in the color of any currency but to its capacity to enable the exchange of goods and services, BusinessDay reports. His words: “The last time I checked the value of a currency was appreciated because of the colour if not the Lebanese currency, the Egyptian currency would have been the most valuable currency.

“They are very colourful. No team wins a game because of the colour of the jersey. But people win a game because of the capacity. Between France and Argentina, the colour of their jerseys is going to be blueish but that won’t determine. It depends on the ferocity and the tenacity of Mbappe on one hand and Lionel Messi on the other hand.”

Renowned economists also noted that the policy would be responsible for any change in the current economic situation of the country is in.

He added: "All cash is money but not all money is cash. The total cash in circulation which is in the banking system and outside the banking system is N3 trillion while the money supply is N50 trillion."

Also, the World Bank has cautioned that the newly redesigned naira, which entered circulation last week, may have a detrimental impact on economic activity, particularly for impoverished Nigerians, due to the timing and short transition time.

The Washington-based bank revealed this in a new report titled, “Nigeria Development Update.

The World Bank, in its analysis, however, warned that the new regulation would significantly affect small firms especially those with day-to-day cash transactions.

The World Bank, in its analysis, however, warned that the new regulation would significantly affect small firms especially those with day-to-day cash transactions.