The Insighty by Lateef Adewole
“He who the gods want to kill, they will first make mad” – African Proverb
The financial crisis that has engulfed the country in the last few weeks is unprecedented. It was occasioned by thoughtless cash swap policy of the Central Bank of Nigeria (CBN). The twin of naira redesign and cash limitations, which, despite being possibly a good policy, was ill-thought out and very badly implemented, have resulted in what has never been experienced in the country before or for a very long time: the scarcity of local currency, naira. There is now black / parallel market for naira, just has we have seen with foreign currencies. People now use naira to buy naira of same numerical value at higher rate. To get small cash has become a tug of war. Nigerians pay through their nose.
SEE: Mixed Reactions continued to trail redesigned naira notes
People spend a whole day on queue at the banks’ ATMs, only to get as low as N1000 or a little more. The highest that many ATMs could dispense is N5000. Those who could sacrifice their time and energy to get it, can then decide to sell it to those incapable of going through the stress at higher amount. To collect N5000. from such persons or POS, one might have to pay as much as additional N1000 or a bit less. So, you either collect N4000 for your N5000. or pay N6000. for it. Sometimes, you may not even get any at all. This became preponderance just before the last deadline of January 31st. In my few decades on earth, I have seen dollars and other foreign currencies perpetually like that. But I have never seen our own national currencies becoming so scarce and unavailable.
In the last few weeks, my personal small business has suffered greatly and has been negatively impacted. Our operations have been practically grounded because of the difficulties we face in accessing cash. We buy goods from rural communities using cash. These farmers don’t have bank accounts. There are no banks. All transactions are in cash. We pay transporters (okada riders and small vehicles) in cash. With the cash crunch, the business has been shut down substantially. This is a business we borrow money (loan) to do. The lender expect pay back as and when due. People who invested into it expect returns on their investment. This is my personal experience as it affects my business. Let me not talk about getting money for daily needs of the family, which is affecting everyone.
I cited this example because some people think everything is politics. I know of people and I have seen others who are happy with what is going on. They have the feeling that the policy will affect candidate or some candidates and their party’s fortune in the next elections. These are people in opposition or supporting other opposition candidates. They are unconcerned about the hardship that many Nigerians are going through. How selfish and wicked can people be, just because of politics?
They are insensitive to the many distress the people, which they claim to love and want to govern, are facing due to this unavailability of cash. Some even went to court to stop the CBN and FG from extending the stipulated deadline of February 10, for the exchange of the old naira notes for new notes. They care less, despite seeing people crying inside banks because they could not access their hard-earned money, which they voluntarily kept in or returned to bank for new notes. They care not about full grown man and woman going naked inside the banking halls out of desperation and frustration. They are happy with the chaos that the finacial sector now faces. How the banks and bankers have now become targets of attacks.
I saw a video where the children of the man who went naked in the banking hall waylaid one official of the bank as she was driving home. She was thoroughly assaulted but lucky that the boys were not real criminals who could have harmed her more violently. They removed one of her car tires. Scattered all the items she had in her car and all sorts, just to show their grievances. They told her categorically that it was because their father couldn’t collect just N5000. of his money that he desperately needed from her bank, which led him to strip publicly and disgracefully.
Riots are breaking out. Banks are attacked. Bank workers scale fence to escape lynching. Zenith bank shuts down all his branches all over Nigeria. Who knows how many others would do the same in the coming days and weeks if the situation persists. What compounded the woes was challenges that online transactions, which must have suddenly escalated, are facing.
Since Tuesday, I transferred some money to my wife to buy basic needs. I was immediately debited but as I write, after 96 hours (4 days), she is yet to receive the money and it has not been reversed to me. Imagine that was the last money we had to survive as a family. Imagine that was for a transaction in some far location where the buyer and seller don’t know each other. What would have happened? Confusion. Desperation. Agitation. Such is the challenge people now face due to the mess we are in now.
Let us be clear. No one has said the policy is bad if genuinely conceived for the good of the country, and not out of vendetta. Anything done in anger will lead to regret. Cashless policy is not new. It was introduced by former CBN governor, Lamido Sanusi, in 2012. So, all the reasons the current CBN governor, Mr. Godwin Emefiele, is giving do not show altruism. He claimed that they found out there was over N3 trillion in circulation outside the bank in 2015. So, they want to mop up the liquidity.
The question then is: why wait till after 7 years before you begin to mop them up? Why begin to do it just few months to a defining moment in Nigeria, close to major national elections? A justification that it will help prevent politicians from vote buying was another ludicrous excuse. If so, why not in 2018 as we moved towards 2019 general elections? Was there no potential of vote buying at the time? Or because President Buhari was on the ballot for his reelection? How does that make sense?
This is the reason why many are insinuating that Mr. Emefiele is on a revenge mission against the politicians, especially in the ruling party, APC, where his deluded ambition of becoming president got crashed. The failed project was said to have angered him and it is driving him in these missteps he has taken, plunging the country into needless agony and about to create national crisis. Do we blame him alone? No, ofcourse. Greater blame should go to President Buhari. He is his boss and have supervisory role over him as it affects the country as a whole, irrespective of the autonomy that the CBN enjoys by the acts that created it.
Afterall, Emefiele has said he got the approval to go ahead from the president, even when other stakeholders, including the supervisory Ministry of Finance and or its Minister, Mrs. Zainab Hamed, was not carried along. Emefiele has been on one-man show. He has been carrying on as if he owns the country and the citizens are his subjects, and not just an employee of the country. Shouldn’t he have been sacked for even dabbling into the murky water of politics as a sitting CBN governor who is expected to be apolitical? This is why the blames go to Buhari. To imagine that all the INEC sensitive materials are kept in CBN and its head is now a politician, an interested party at that. That should concern Nigerians.
Another absurd reason that they could have sold to President Buhari, which would have excited him, was that it will help fight corruption. Those who know the president know that that is his “mojo”. Just tell him anything is to fight corruption, he won’t think twice before agreeing and approving it, without thinking through and considering wider implications. The claim that billions of stolen money are stashed in various locations by criminal looters and politicians, civil and public service employees, is not untrue.
Since the introduction of the policy, we have seen obscene scenerios where cash were being moved with trucks. Many of them damaged already. We have seen money kept for over a decade suddenly appear in banks. We have seen money collected from a bank that has closed shop 14 years ago, surfaced at the bank. And many other wickedness in display. That is typical Nigeria. All such humongous money hidden, useless and unproductive for years while citizens wallow in penury. Some of these money were hidden in villages where poverty is their definition. How evil can people be? This is a commendable result.
However, how did CBN intend to balance the cash needs of people who work hard for their money and genuinely need them for their daily survival like in my case and millions of others? How many of the over 200 million people belongs to the corrupt individuals who have stolen public funds and hid them at home or in the bush? What could their percentage be? I am very certain that they cannot be up to 5%. What happens to the rest of 95% of us?
The tweet by Senator Shehu Sani is apt. The senator in a statement he issued last Friday in Kaduna said “the redesigning of the National currency and the cash withdrawal policy introduced by Godwin Emefiele, governor of the Central Bank of Nigeria (CBN), is an economic disaster and a poisonous idea aimed at unleashing hardship on the masses. If the Buhari administration really wants to target the few corrupt, it doesn’t have to wait this long and it doesn’t have to impoverished punish the poor. Emefiele set a forest on fire in the name of catching a few rats.”
Everyone knows that it is not this few months that remain for Buhari as president that corruption will be fought and ended. But they know that is how they can “get” the president to do their bidding. Many are beginning to believe the insinuation that there is sinister motive behind these actions, when it is combined with the fuel scarcity that is also biting the people very hard. That’s a very combustible combination. We can only thank God that the country has not exploded in the last few days. But for how long can the resilience and patience of the people be tested?
Let us now look at some empiricals of all of this. The statistics have it that the the total liquidity in the economy is about N52 trillion. The cash component is the N3.1 trillion Emefiele has been mouthing. That is a mere 5.8%. When this is put as ratio to the economy (GDP=$450 billion), it is 1.5%. This is for a population of over 200 million people. So, what’s so extraordinarily abnormal in that figure. USA has 10% liquidity, UK has 3%, India 3% when compared to their GDPs. We can see that Nigeria is nowhere near any of these more advanced countries, with needed infrastructures to handle cashless policy. So, what is Emefiele talking about?
Again, this is not the first time that currency will be redesigned, though, nothing is redesigned in this one than changing colours of the notes, yet, we never had such crisis in the past. Nigeria is not the only country that has changed her currency. Where in the world does a country change her currency and allowed for only 45 days for all the old notes to be exchanged for new notes? Nowhere! Saudi Arabia changed theirs and it’s still running for 7 years. The old and new currencies are allowed to run concurrently while the banks tactically withdraw the old notes by not issuing them out once they get into banks but replace with new notes.
Same thing happened in UK. They gave over 12 months. This is the standard practice all over the world. We don’t know where Emefiele got his own template from. He is happy and boasting of being able to have withdrawn over N2 trillion now from the N3 trillion. Yet, it was said that just only about N400 billion new notes has been printed. Even if all have been released, which is not, that is a mere 25%. How do we fill the 75% currency gap? Or Emefiele wants to tell us that N1.6 trillion belongs to looters, so, it shouldn’t get back to the circulation? Does that make any sense?
How do you begin a policy without putting all the needed infrastructures required to effectively and efficiently implement it in place before you start? The MINT is said to have optimal capacity to print just N1 trillion per annum. So, it will take 3 years for them to print N3 trillion. Yet, you want this done in 45 days. Is that not madness? Hear him: “The Mint has run out of papers to print N500 and N1,000 notes. They have placed orders with a German firm and De La Rue of the UK (for papers), but they have been placed on a long waiting list, so their orders cannot be met now”. Is this not admission of failure?
Or, does he now expect the online transactions to take care of the balance 75% shortfall, without prior preparation by the telecoms who might need to upgrade their infrastructures to support such sudden surge? This is why we have the glitches in our online transactions now, just as I experienced.
Again, like the communities where my company buy goods, hundreds of local governments across Nigeria have no single bank. There are states, especially in the northern Nigeria, where only 2 or 3 out of 20 local governments, have banks. What happens to the rest of the people living in these rural communities? It is estimated that about 66% of Nigerians are unbanked. It means they have no alternative to cash in the immediate. What should they do?
Unfortunately, this mismanagement of such lofty policy could actually be counterproductive. Apart from the disastrous economic consequences as being seen in how many Micro, Small and Medium Enterprises (MSME) are shutting down or contracting because of the cash crunch, this can and will actually trigger masive vote selling in the coming elections.
Imagine someone, who has been suffering for weeks because of this policy, is offered money on the election day to vote for a particular candidate, will such person not accept it? And if anyone thinks the big, powerful and influential politicians wouldn’t have amassed enough new naira notes they need for their elections, that person must be a joker. So, thinking someone or some politicians will be affected is absurd. You can’t beat politicians in their game.
This brings me to another watery excuse being peddled for the incompetence and failure of CBN leadership. It is claimed that the scarcity is because the politicians collected all available new notes. A question one friend keeps asking is: “Is the money they collected and kept not their personal money, if at all it is true? Did they collect anyone else’s money?” As cheeky as this question is, it is the truth. That Mr. A collects his money should not preclude Mr. B from collecting his own. They are or should be mutually exclusive. Why should a politician’s withdrawal of his N500 million affect my ability to withdraw my own N5000? “Se he withdraw my own join his own ni”? That’s rubbish.
If there is sabotage along the supply chain, it is the responsibility of the CBN as the supervisory body to find out, sanction such banks and remedy the situation. To tell me that is the reason I can’t withdraw my money I kept in the bank is unacceptable. CBN created such opportunity in the first place with the very high shortfall in the quantum of money it printed and circulated. The insufficiency was the incentive for the hoarding that created further scarcity, which unscrupulous bankers and people take advantage of to cash in on the naira exchange.
There are warnings from different angles, both from within and outside the country. The Manufacturer Association of Nigeria (MAN), Nigeria Labour Congress (NLC), the 36 state governors, which include APC, PDP and APGA, the National Assembly, the citizens, have all called on Emefiele and the president to address the issue very quickly before it gets out of hand. The International Monetary Fund (IMF) raised alarm that the 2023 elections are at risk of being affected by the manner of implementing the currency swap and the fuel scarcity.
I hope the president will not allow himself to be led further in this ignoble path that could set the country ablaze. There are already insinuations that some evil elements want to scuttle the elections. That they don’t want elections to hold and want to bring an illegal “Interim Government”. This will not be acceptable to the people after all the sacrifices they made to get our democracy to where it is today. President Buhari should not allow himself or his name go down in history as the last president who destroyed the country he governed. It is only an “aja ti yio sonu, ni ko ni gbo fere olode” (a dog that is doomed to get lost, that will not hear the hunter’s whistle).
A word is enough for the wise, Mr. President.
May God continue to protect us and guide us aright.
God Bless Nigeria.
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February 11, 2023.