Oyeyemi Kale, former statistician-general of the federation, says Nigeria’s gross domestic product (GDP) would contract in the first quarter (Q1) of 2023, due to the naira redesign policy of the Central Bank of Nigeria (CBN).
Kale, who was recently made chief economist at KPMG Nigeria, projected that Nigeria’s GDP would reduce by about N10 trillion to N15 trillion due to the CBN currency redesign policy which has led to a nationwide cash scarcity.
“I am estimating a reduction in Q1 2023 nominal GDP by between N10-15 trillion due to challenges sourcing cash in Q1 2023. This is because about 40% of Nigeria”s N198tn GDP in 2022 is informal of which about 90% is cash based. Further 30% of formal sector GDP is cash-based. This means N106.9tn of total GDP is cash-based” he said in a tweet.
The economist, who served as the CEO of the National Bureau of Statistics (NBS) from 2011 to 2021, said this would affect Nigeria’s total GDP which stood at N198 trillion in 2022, as most sectors are cash-based.
“Of the 46 economic activities, agriculture, some manufacturing activities (especially food & beverage, textiles, apparels), trade, arts entertainment & recreation, accommodation & food services, road and water transport and other services expected to be the most affected,” the tweet read.
He noted that the currency redesign and cashless policy have their pros and cons, and the way forward is doing a “cost-benefit analysis looking at the overall impact of any policy & how and when it is to be implemented, across the economy”.