By Felix Oboagwina
What an irony! The operational network of Zenith Bank has collapsed for over a week now. No customer can transfer a farthing of their own savings out to other banks. Neither can they fish out as much as one kobo for their own use through Zenith ATMs. Gripped with ignominy, the bank’s officials are seen on video scaling the fence at the back to escape irritated customers massed up in the banking hall. This bank was where the current Governor of the Central Bank of Nigeria (CBN), Godwin Emefiele, left as Group Managing Director to take his current seat in 2014. Directly or by proxy, Emefiele part-owns Zenith Bank, even if he is a ghost shareholder.
Today, the same Emefiele has declared cashless banking a do-or-die affair.
He has directed the banks and CBN to mop up all available cash from the public. However, like the insatiable tomb that takes but never yields, Emefiele has refused to return people’s money. They should go cashless, electronic. Grannies. The disabled. Blind. Agberos. Petty traders with no more than N2,000 wares on their trays. The sick. Farmers who had never felt the AC of a bank on their cheek or the clattering of the computer keyboard in their ears. All these unbanked must open bank accounts TODAY! They should go electronic.
Seeing a windfall, POS operators quickly turned to cutthroats: N1,500 to collect N5,000. This weekend, someone paid N80,000 to cash N400,000 he needed to pay his daily-paid labourers. Many, in protest, threw away their dignity, stripping naked and weeping openly in banking halls. Somewhere bank staff turned to spiderman, clambering over high fences at the back to escape customers clogging the front of their cashless bank branches.
Despite the reports, Emefiele could not be bothered. His supporters organised pro-Emefiele marches. Some went to court to secure injunctions to back him up. For Emefiele’s intransigence, many suffer. Many have died, are dying and will die. The man from Agbor has blood on his head. Lack of cash has overnight turned Nigeria into a ghost town. It has not helped matters that apart from the cash dearth, there is no fuel and no business. But the man and his paymasters have decided not to care a hoot. Zenith Bank is a metaphor lost on Emefiele. Is this banking system ripe for a purely cashless economy or should it run a hybrid until banks are ready? The log in Emefiele’s eye will not let him see the answer blowing in the wind.
Since Emefiele took over the driving seat at CBN in July 2014, the Naira has fared the worst. From N190 per dollar, this undertaker and his masters have seen its devaluation to N750 today. General Buhari took power in May 2015, and the CBN Governor, who had outlived his original employer, Goodluck Jonathan, chose to wriggle his waist for the new Sheriff in town. In a most befuddling twist, defying even elementary economics of demand and supply, Emefiele and Buhari immediately forbade banks from accepting foreign currencies over the counter. This strange policy made nonsense of commonsense. Starved of this fertile source of foreign exchange, the banks fell behind in supplying forex. As a result, the only source of legitimate forex was through the federal oil receipts, which dwindled, and the Black Market.
Quickly, the value of forex rose. That destroyed the value of the Naira. The local currency never recovered. It plunged into the bottomless pit, inching very close to N1,000 to the dollar at a point. It took Vice President Yemi Osinbajo a few weeks as Acting President to force the CBN to open the vaults and introduce a weekly window to make foreign exchange available for defending the suffering Naira. That helped. The Naira gained some weight.
At one point, Emefiele banned the payment of incoming dollars to local recipients. At another point, he reversed that policy so the banks began to give incentives for dollar incomes. Does this man know what he is doing?
Emefiele later took the fight to AbokiFX. In a most curious submission, Emefiele opened his buccal cavity on national TV and pronounced that AbokiFX, a site devoted to publishing the official and Black Market rates of the Naira in relation to other international currencies, had become persona non grata. Emefiele blacklisted the site and declared its London-based operators wanted for the devaluation of the Naira. Imagine Chelsea’s coach blaming his club’s poor play on the BBC commentator. AbokiFX humoured Emefiele. AbokiFX went off air. Thanks to this ingenious discovery of Emefiele’s, didn’t the Naira become N1 to $1? Yeye dey smell.
At a point, Emefiele took the war to cryptocurrencies and got the government to ban cryptos. Say, what business did the CBN have with an international digital currency over which it had no control?
Under him, the CBN printed billions of Naira untied to any productivity, to help fund the budget, just as Idi Amin did in those days he ruled Uganda. Yet someone is wondering why the Naira lost value… and ramming a CASHLESS ECONOMY down the throat of 200 million people whose lives he helped to complicate.
THE REAL WAHALA
Emefiele forgot the glaring log in the government’s eye and instead went to chase shadows. How did Nigeria get the forex diarrhoea that kept the Naira shrunken? Government imports. That is the real wahala. Buhari as Minister of Petroleum remains the sole importer of fuel into the country –via the NNPC. Colossal monies went into funding oil imports, in addition to substantial monies paid on subsidies. The keepers of these elephants eating up the forex ignored the elephant in the room and instead took to “shelltoxing” mere millipedes and ants. Nigeria continues to spend billions in forex to import fuel. This is a country with four refineries. None works. Instead the country shamelessly spends a yearly N120 billion to keep four idle refineries that yield zero cash returns. Buhari is the Minister of Petroleum. Under him kerosine officially prized at N50 under Jonathan now sells at N2,400, with expensive aviation fuel leading to an insane hike in airfares. Diesel today sells for N880, from the N195 Jonathan and his “fantastically corrupt” Petroleum Minister Diezani Alison-Madueke left it in 2015. Today, Buhari, who vilified the 2014 subsidy payment of N971.1 billion under the Jonathan-Diezani regime is the Minister of Petroleum. Someone wrote a piece saying, “10 Years After ‘Occupy Nigeria’, Buhari Battles Fuel Subsidy.” In 2022, Buhari spent N4.39 trillion on fuel subsidy.
In addition, round-tripping too has become a plague! The CBN sells dollars at the official N400-plus to the few well-heeled Aso Rock and Emefiele acolytes. Such beneficiaries dispose of this at the Black Market rate of about N746 nowadays. They make a kill! Meanwhile, those industries that really need the foreign currencies must patronise the bureaux des change and Abokis on the streets for machine and raw material imports.
REDESIGN: ILL-PLANNED, ILL-TIMED
Out of the blue, the CBN last October decided to redesign the Naira. No problem, countries do it. The policy demanded Nigerians to lodge their tons of cash with the banks, which would not immediately exchange the new Naira notes for the old ones. Then the CBN dropped the shocker. For whatever amount of cash deposited in the banks, Nigerians could retrieve only N20,000 per day and N100,000 a week. No one is spared in Emefiele’s capping of cash holdings –not even POS service providers, a new field opening up millions of employment opportunities.
However, the rationale behind the Naira redesign corrupted the entire affair. It would discourage payment of ransoms to kidnappers. That excuse amounts to the government indulging in reverse psychology. A government failing in its primary responsibility of providing security has turned around to blame the victim. Under Buhari’s watch, kidnapping has grown into a full-fledged industry. The only thing left is for the government to tax ransoms. Yet the poor victim gets the blame? If you ban the payment of ransoms in Naira, why won’t kidnappers demand forex or the new notes?
The other reason proved equally lame. It would stop vote buying. Na today? All that Emefiele spent on his doomed presidential ambition, how much went through e-money?
Apart from the politics, the Naira swap programme is clearly mired in CBN dereliction. It pans out as a half-baked venture that has unleashed a vortex of maddening confusion on the populace. For the N2 trillion notes returned to the banks, CBN has only produced N300 billion, a shortfall of N1.7 trillion.
This will only favour banks. Bank vaults and safes are bursting at the seams with recovered notes –useless from January 31 (shifted to February 10), the deadline set by ALMIGHTY Emefiele. You are taking money from people by fiat and refusing to return such. In volatile climes, that could spark a revolution.
It is the shortage that has brought hardship and confusion. The House of Representatives has pointed out to Emefiele Section 20 (3) of the Central Bank of Nigeria (CBN) Act that mandates the apex financial institution to redeem the face value of the recalled currency upon demand, even after the expiration of the notice of recall. In simple language, the Act says that after the expiration date, such Naira notes will no longer be legal tender, but months afterwards, even in June, any old notes presented to the banks shall be redeemed by the banks. He should borrow from the 2009 example of Professor Charles Soludo, who introduced polymer notes to replace the paper N5, N10, N20, and N50 notes. For a long time, both polymer and paper currencies served with no deadline.
POS MACHINES AS THE NEW GOLD
Now, there will be the wildfire stampede to acquire POS machines. As of April last year, we had 1.1 million nationwide. Demand will drive up the prices. For a machine whose screw we do not even manufacture, its importation will soar. Yet someone is complaining that the Naira is deadbeat? Ask Emefiele. The man who should be guarding the Naira value is the one further killing it. POS and ATM-producing nations are smiling to the bank at our own expense.
If Emefiele’s aim is to replicate the Indian cashless example here, then we are off the mark. Unlike Nigeria, India is a technological and ICT giant. We are not. In that department, we are non-starters.
One government financial agency says about 99 percent of bank customers have less than N500,000 in their accounts. So why are they the ones suffering? When the government can simply follow the money, why should a policy targeted at the bad 1 percent be executed in a way to punish the good 99 percent?
What about online fraud on individual’s personal and corporate accounts? Statistically, more money is stolen electronically than physically from bank accounts. How do you prevent that? Who bears the cost? What insurance has the CBN put in place to redress such incidents? What about power and network issues as happened to Zenith Bank lately? People can spend hours, sometimes days, pushing through a single transaction. Sometimes, unremitted but deducted sums take ages to revert. These constitute another log in the ostrich’s eye.
LACK OF CAPACITY
Simply put, this current problem stems from the fact that Emefiele, CBN and the banks have shown lack of capacity! Simplicita! This same tardiness Emefiele has inflicted on forex and the multiple policy somersaults the portfolio has suffered. Everything about the Naira redesign is a bad policy implemented badly! Timing. Deadlines. Datelines. Concept and conception. Logic. Support. Volume. Whatever the strength of the proposed system, Emefiele blew it. There are not enough minted notes. Get these notes out into the machines and POSs and you have a done deal. That should be the springboard for the policy. Create volume, capacity and circulation.
Meanwhile, if this cash mop-up was to discourage vote-buying, sorry o, Mr. Emefiele, you are coming into the game late. Since last year, politicians have been collecting PVC VINs, with (wait for it) ACCOUNT DETAILS! Legal and illegal payments will even be paid with ATM cards. So much for Emefiele’s cashless elections.
BACK TO THE ZENITH GLITCH
Taking Nigeria into the cashless zone should not be a hard sell. If it is good, people will buy it as they have done in other countries that have demonstrated capacity and efficiency. Here in Nigeria, phone and internet penetration remains not just poor but erratic. Internet coverage is just 12 percent.
It is this needful backbone for e-banking that we must first get right. Right now, Zenith Bank’s e-banking glitch shows that we cannot put all our eggs in this cashless basket just yet. Emefiele is a shareholder at Zenith Bank, whose e-portals have gone bunkum. Emefiele should begin charity at home, and remove this log in the eye of his own Zenith Bank.
The opinion expressed in this article is of the writer and not necessarily of the Publisher
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