REVEALED- – Major reasons behind Naira Scarcity
Elder statesman Olu Falae suggests that the cash shortage in certain regions of the country is a deliberate strategy by the Federal Government to curb inflation in Nigeria.
Inflation in Nigeria has surged, surpassing 27 percent in the past year, exacerbated by the elimination of fuel subsidies and the floating of the naira.
From late last year to the early part of 2023, the country faced a cash shortage due to the redesign of the naira. Falae contends that the current scarcity of banknotes in some parts of Nigeria is a governmental measure aimed at addressing inflation.
“I suspect that the scarcity of naira – which everybody feels including myself – is an attempt by the government and the Central Bank to manage inflation. If that is so, then I am afraid, they have to think again because you see, the high level of price inflation is not being caused essentially by excess liquidity,” he said on Thursday’s edition of Channels Television’s Politics Today.
“It is not what we call in economic parlance a demand-pull inflation that we have. It is a cost-push inflation. The cost of imports of raw materials, machinery, and spare parts. The increased cost of those items is what is causing the inflation we are facing today.
“So, trying to mop up liquidity in my view is not the right thing to do. There may be other reasons for making the naira scarce. But surely, the reason should not be an attempt to manage what is essentially cost-pull inflation through what I call a traditional solution to demand-pull inflation.”
Aside from this, the former minister of finance, budget, and national planning believes the devaluation of the country’s currency is the major cause of inflation in Nigeria.
“The devaluation of the naira is the main cause of inflation in Nigeria today,” he maintained.
