The Central Bank of Nigeria and the federal government are trying hard to prove some Nigerians wrong on the naira redesign policy. Many of our citizens, initially, believed that it was a good policy that would yield some good benefits.
But in a twist of fate and political gymnastics, the key operators in this melodrama have succeeded in convincing these Nigerians that the policy was, after all, not really a good one; or that it was a good policy poorly conceived and equally poorly implemented.
After several weeks or even two months of the implementation of this policy, any fair-minded Nigerian, who is not highly connected in any way, will be asking for the real gains of the currency redesign exercise. Why were ordinary Nigerians simply made to pass through the furnace of hardship? Many things went wrong with this policy and the designers and implementers must share the blame in full. In the months to come it will become the subject of many academic research projects that will have enough time and space to put its many shortcomings into proper perspectives. I believe that one conclusion from such studies will be that this naira redesign is an example of how not to design and implement a policy in any modern economy.
Many things went wrong with it. First, CBN told us it was not going to be a money exchange programme, where, if you returned to your bank N200,000 of your old naira notes you would expect to get the same about back in the new notes. Fine, we accepted that in good faith, but never did we imagine the kind of drama that was looming: that after you had obeyed and turned in all your money to your bank, the bank would close its r doors against you. They turned their back on their customers both at their physical locations and on electronic platforms. Accessing one’s money from the bank has become the hardest job to do in Nigeria right now.
Today, we have a banking system without money. I have seen women remove their wrappers and spread them on the floor, near bank ATMs, and lay there waiting for the machines to begin dispensing money. Meanwhile, on one occasion, the branch manager was lecturing the crowd of customers that even he did not know whether money (that is cash) would be delivered to his branch that day. If money would come, he said he did not know when it would be sent and how much. Those variables had become top secret in the banking system, he explained. Meanwhile, the customers had taken numbers reaching up to 300.
Some people are already saying that the fintech industry is a major gainer from the policy. This has to be put in the correct perspective. This sounds like someone telling us that they have just invented the wheel. If we are making such a claim in 2023, what would our Kenyan friends be saying? In the East African nation, M-PESA, the revolutionary online money platform, has been a household name for decades as it straddles the fintech space there, making electronic money transfer an everyday affair. M-PESA, which literally means mobile money, was launched in Kenya in 2007, as an alternative to receiving and sending money in that country.
Launched by Safaricom, Kenya’s biggest telecom company, it runs on the same mobile telephones that Nigerians have. But the difference between our forced mobile (or cashless) money policy and what has happened in Kenya is too wide to imagine. Did we really have to go through the pain for the fintech industry to grow?
What has happened to the concept of planning in Nigeria? While the naira redesign programme is a monetary policy, it definitely needs contributions from and support from other sectors of the economy to succeed. It would be interesting for CBN to explain or show to Nigerians the programmed interface between the naira policy and the supporting infrastructure on which it was expected to run. What, for instance, was the level of technological readiness of the banks to undertake the responsibility imposed on them overnight?
So, what we are just passing through is the pure failure of national policy coordination. Our monetary authorities were planning for the transition of millions of Nigerians from the brick-and-mortal banking model that they are used to, to the click-and-send-or-receive model without any consideration as to whether they had any reliable means to power their phones for that purpose.
In Kenya, again, solar power has been a household name for years. In rural Kenya, you can see solar panels displayed on thatched rooftops for the villagers to power their electronic and electrical equipment. In short, solar energy has impacted positively rural Kenya; and combined with the revolution by M-PESA, it has changed life in the countryside. A study by MIT has revealed that M-PESA has been responsible for moving two per cent of Kenyans out of poverty.
Here in Nigeria, the authorities talk about lifting Nigerians out of poverty in speeches and in budget statements. But the reality is totally different. Instead, Nigerians are sinking further into poverty, as evidenced by the Multidimensional poverty report released by the National Bureau of Statistics, which said that as many as 133 million Nigerians, are multidimensionally poor. But there are simple, ordinary market-driven activities devoid of government interference that can take care of this.
Poverty, a creation of government inefficiency, cannot be eradicated by another inefficient policy. It will only worsen it, as this naira policy has done. It has certainly thrown more Nigerians into poverty by taking away their means of livelihood; killing their petty businesses, and setting them backwards by many years.
This policy was hijacked by opportunists who have smiled away with their economic rents, while the silent majority cringed as they become excluded from the mainstream economy. The beneficiaries are largely gatekeepers (not journalists), who could dictate prices or conditions for certain services to be rendered. This explains why PoS operators suddenly became so powerful, charging as much as N4000 for a transfer of just N10,000. In the transport sector, union leaders suddenly became money lenders because they have command over the daily taxes paid by bus, Keke, and Okada drivers.
This is what happens when wrong policies create artificial scarcities. The wrong people benefit, leaving the voiceless majority excluded.
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