The current naira crisis happening in Nigeria is predicted to cause problems on a national level. Mr-Bismarck-Rewane, the Chief Executive Officer, of Financial Derivatives Company Limited, has projected that Nigeria would suffer a total GDP loss of $18 million. This is as well as a total man-hour loss of 120 hours (five days) per month. He estimates that this will be due to the disruption in economic activities. The implementation of the Central Bank of Nigeria’s currency swap of old currency notes of N1,000, N500 and N200 for newly printed Naira notes is a likely trigger.
Rewane spoke during a recent presentation at the Lagos Business School, according to a report by The Cable.
“Total man-hours loss in a month will be 120 hours and total GDP loss in a month will be $18 million,” Rewane said, also attributing the decline in the GDP growth to the reduction in velocity of money in circulation.
“Trade is settled mainly in cash and POS, although 70 per cent of trading transactions are settled by cash.
“Therefore, the velocity of circulation in the trading sector (16 times) is approximately four times more than the formal sector.
“A decline in the velocity of circulation could reduce output in the trading sector. Hence its contribution to the GDP will fall.”
However, the current naira crisis is estimated to help strengthen the naira against the dollar.