By Onwuka Keynes
CBN governor Emefiele is the author of two grandiose failures, the second more damning than the first.
His e-currency was a foray into silly fad. Hailed as a ground breaker that would invigorate the economy, it simply fell to the ground. No great harm done except the waste of millions of dollars creating something the nation did not need. That whimsical experiment should have taught Emefiele a lesson. But the mediocre banker refused to learn.
With the cash swap experiment, he has engineered an artificial economic disaster of epic proportion. If his goal were to make history, he succeeded. In so doing, Emefiele has graduated from being a mere nuisance to becoming truly notorious, much like the plague has etched itself into the public’s psyche. If there were to be a vote on the most dangerous central banker on the planet, Emefiele would win by a landslide. This would be the rare acknowledgement Emefiele did not have to buy, unlike the fake awards he frequently buys for himself. This recognition would come to him gratis. The Nigerian public is already paying dearly for it.
Emefiele’s long time insistence on a cashless society shows that he wanted to restrict individual privacy and l freedom. For a Christian like me, his position was a bit eery for it smacked of being unable to buy or sell without the mark of the evil one. However, I was willing to forego this religious interpretation of things to give the CBN governor the benefit of a doubt. With this latest calamity, doubt has been erased. He is clearly the hidden, fifth horseman of the apocalypse. He is Poverty itself, caustically masquerading as an agent of prosperity.
Only Poverty itself could accomplished the remarkable feat of enervating Africa’s largest economy in a matter of days. Many astute observers estimate normal commerce and business activity are down 20-40 percent because of the blotched currency exercise.
Across the nation, markets operate at reduced capacity. Few people can get new notes. Those holding old notes must suffer a discount of 40 percent to purchase essential items such as food. In what amounts to an exorbitant tax caused by the CBN governor’s lunacy, people find that their old notes have lost almost 50 percent of their value. Using old notes to buy new ones is an exercise in pain. The sales are being done at a 5:1 ratio or worse.
Used to a harsh financial reality, farmers are being squeezed like never before by the banks and local middlemen.
The only positive monetary sign from all of this is that the black market exchange rate has gone from roughly 750 to 650 naira per dollar. This 14 percent appreciation is only due to the abject lack of naira. In other words, the CBN governor suppressed the naira supply such that economic activity has fallen to 20-40 below normalcy just to get a 14 percent rise in the exchange rate. So much for that egregious experiment using the national economy as a lab rat. It produced as unfavourable an economic trade-off as can be imagined.
Tossing a brick in the window of Emefiele’s price theory, inflation for many goods has soared. The exercise has reduced people to a hand-to-mouth existence that often translated into hand-to-hand physical combat in fierce competition for the scarce naira.
People have absented themselves from work. They cannot pay transportation costs or must forego work in order to hunt naira to buy food. Business are uncertain about where their consumers are and whether they can buy as before. They do not know how long the currency suppression will last.
What we do know is that many small businesses, already operating on the margins, will never recover. This exercise has bankrupted many and forced more into joblessness. It will take years for these people to return to the status quo ante. Many will never get back. Emefiele has drowned them with poverty.
The surreal nature of the contrived disaster is off putting to the average person and legitimate investors alike. The average Nigerian will have to suffer as he will. An investor can simply invest his funds elsewhere. The damage to Nigeria will last beyond the transient.
What is curious is that Emefiele had to know of the disastrous banknote exercise that took place in India in 2016. Then, the Fifth Horseman galloped through India, wiping out small landowners and farmers by the millions. No rich person suffered great loss. The same thing now takes place here. It is as if Emefiele wanted to repeat the Indian debacle.
If so, he has what he wanted. People are hustling to hold to a few new notes. Little villages of anxious, waiting people have sprung up around ATMs throughout the country. The mayor of these “ATM villages” is Despair and the chief constable, Utter Frustration. Both pay homage to the fifth horseman, Poverty.
The governor insisted that he will forge ahead even as his scheme melts the economy. One has to ask why someone supposedly devoted to the growth of the economy, would so perversely decimate it?
Talk of a quick recovery is misleading. The longer the people and the economy endure this pain, the longer it will take to recover. Within a quick period, the worse consequences of penury can take hold of people who were just marginally making ends meet. For them there is no cash and no ends to make meet. Keeping cash away from the well-insulated rich will only inconvenience them. Separate a poor man from the little money he has. You just have dropped a weight on him that will likely cause irreparable damage.
Clearly, the CBN governor is unsuited for his position. He should go. Just to singe the fingers of a few political opponents, he is eager to turn the rest of the country into a hot mess. No decent person would do what he has done. No official, especially an unelected one, should have such power that the fate of an entire nation rest upon his whim.
A moratorium should be placed on this exercise. Both currencies should be used at their face value until the old notes are gradually taken from circulation, giving sufficient time for the distribution of new notes. Someone whom the public trusts should replace Emefiele. Already, we contend with too much bad and wrong things in life. There was never the need for the Fifth Horseman to trample over Nigeria with this punitive endeavour. Our troubles were already enough. Now. The CBN governor has brought us within an inch of the gates of the economic underworld.