Mixed reactions have continued to trail the Central Bank of Nigeria’s claim that about 20 per cent of currency in circulation was fake.
The Managing Director and Chief Executive of First Registrar, Mr. Bayo Olugbemi, said the figure is too high, adding that if it is that much, it will indirectly affect the economy such that the masses will bear the brunt, with serious multipliers effect, noting that the damage will be enormous.
“The individual will certainly bear the loss. For instance, if I have about N2,000 and I bought goods with it and pay. You will find out that about N4,000 of the money I tendered will be fake. It also means that I will have to repay additional money.
Fake currency is not tenable anywhere in the world; this is why we encourage people to make use of the banking system when they want to make use of cash. You can buy a lot of things via the PoS, the danger of carrying cash is too much,”
he said A market analyst with Magnartis Finance and Investment Limited, Mr Olukiran Oluwaseeni, said that the implication of a 20 per cent of fake currency in circulation, on an emerging economy like Nigeria, is that it shows there is probably excess liquidity in the system and even right now that the Federal Government is trying to mop up liquidity, these development will mitigate the fight against corruption.
He noted that “the effect of this is that it will continue to increase the inflationary rate in the country which will have an adverse effect in the economy.” He however urged the regulatory body to be proactive in checkmating this phenomenon, which is becoming a threat to the economy.
”We urge the relevant bodies since they are still printing our currencies from overseas, to look at policies that have been put in place to mitigate such kind of development. It means if we have that type of currency in the country, it might even be higher and if people cannot readily distinguish the difference between fake currency and the original note, whatever the government is putting in place to fight inflation, will just be rubbishing its efforts,” he said.
A former Deputy Governor of the CBN, Obadiah Mailafia, at a public hearing on the 2017 budget held by the National Assembly had said that 20 per cent of currency in circulation was fake.
Mailafia, who was speaking while presenting a paper at the opening of a 3-day budget public hearing at the National Assembly on Tuesday, said such fake currency has serious implications on the country’s economy.
The former CBN deputy governor, whose paper was titled: ‘Public Finance in the Context of Economic Recession: Innovative Options,’ said the authorities concerned seemed to be nonchalant about fake currency.
“When fake currencies of that magnitude circulate, original currencies become scarce. Bad money chases away good money,” he said, adding that fake money would cause great injury to the country’s economy in future if no concrete action was taken.
He added that the ongoing economic recession in the country was as a result of a number of factors, including drastic fall in global oil prices, dwindling foreign reserves, poor banking practices, stock market crisis, speculations, among others.
He said at the rate things are going in the country, the government should not contemplate any increase in interest rate, because “it would further compound the hardship Nigerians are facing.”
Attributing the current recession to several factors, Mailafia maintained that the naira also became weak due to the gap in public policies. Other factors he listed were poor banking practices, stock market crisis, speculations, regulatory failure, corruption and fraud and weak macro-economic management, even as he urged the executive and legislative arms of government to stimulate the economy.
