Bismark Rewane Says Naira Crunch May Cause $18m GDP Loss Monthly

Chief executive officer of Financial Derivatives Company, Bismark Rewane has  projected that Nigeria will suffer a total gross domestic product (GDP) loss of $18 million per month due to the negative effects of the naira redesign policy.

Rewane spoke during a recent presentation at the Lagos Business School.

The economist attributed the decline in GDP growth to the reduction in velocity of money circulation and total man-hours loss in the economy.

“Total man-hours loss in a month will be 120 hours and total GDP loss in a month will be $18 million,” Rewane said.

“Trade is settled mainly in cash and POS, although 70 percent of trading transactions are settled by cash.

“Therefore, 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 GDP will fall.”

The Central Bank of Nigeria (CBN) had fixed February 10 as the deadline for the validity of old naira notes.