Asiwaju Ahmed Tinubu, the President-Elect of the Federal Republic of Nigeria knew that the concocted naira redesign scheme and its timing were primarily aimed at hurting his chances of winning the 2023 presidential election or to scuttle the already struggling democracy. What he must also know and prepare to deal with is the yet untold disaster done to the economy when Mr. Emefiele and his co-travelers ‘shot thousands of MSMEs in the head’.
The irony of this saga is that Mr. Emefiele had contributed positively to the growing of the ‘goose laying the golden egg’ since March 4, 2013 when he became the governor of Central Bank of Nigeria. Alas! Thousands and if not millions of the 41 million strong MSMEs responsible for about 48% of our GDP and employing 84% of total workers in Nigeria are now on the proverbial ‘stretcher’ and almost lifeless.
While researching this issue, l was introduced to Mr.Taiwo by Managing Director of a Micro- Finance Bank. Mr. Taiwo is an account graduate and a very enterprising poultry farmer with over seven years experience specializing in egg production. According to Mr. Taiwo, “the Covid-19 was a baptism of fire. But the naira redesign debacle is a shot in the head of small and medium scale enterprises. At first, it was like a film. We were supplying on credit to our customers. Later nobody could lay hand on any cash as our rush to exchange cash at hand for new notes failed utterly. And, with a bag of feed going for N8, 500, couple with other inputs, we got stuck. Time came when we had to bury bad eggs. It was devastating and painful. That was when I realized that the end has come”. Rhetorically, Mr. Taiwo asked me; “Where did you see small cages of chicken sold along the roads and at street corner shops during the last Christmas period or Easter or the Eid? Emefiele has ruined us finally” said he.
Could the CBN had implemented the policy differently and achieve good results? Of course they started well with the cashless policy in 2012 with a stipulation that a daily cumulative cash withdrawal limit of N500.000 for individuals and N3 million for corporate bodies. The goal then was to gradually work the economy to become one of the best 20 economies in the world.
Fast forward to November 24-25th 2022, the CBN held a landmark conference at the Transcorp Hilton Hotel, Abuja to showcase their achievements in the financial inclusion vision. Those who attended the occasion included high level speakers and major dignitaries at home and from abroad including Queen Maxima of Netherlands. Speaking that day, Mr. Emefiele said “the 2012 strategy was revised in 2018 and that from 2012 to date, over 59 different policies and initiatives have been implemented by stakeholders to achieve the objective of financial inclusion”.
Also, speaking on behalf of the president of Nigeria at the occasion, Alhadji Muhammad Musa Bello, Minister of the Federal Capital Territory Abuja said, ‘’The Federal administration understands the impact of financial inclusion on economic growth and development’’. Further he applauded the financial inclusion service Stakeholders Such as Shared Agent Networks Expansion Facilities (SANEF) for their work in deepening financial inclusion as they have leveraged on Digital Financial Services (DFS) to provide financial services to Nigerians.
This is exactly the crux of this write-up- Financial Inclusion as a strategy to achieve a ‘ Less Cash Economy’. The pace to achieve financial inclusion since 2012 may be slow but it was working. The benefit during the Covid-19 was great both for the general public and the MSMEs. The negative impact of the pandemic especially the lockdown tactics were tough but it was well managed regarding finances. SANEF, and other stakeholders had performed creditably and very well.
To be clear, Shared Agent Network Expansion is an initiative of the Central Bank of Nigeria and was incorporated as a limited liability company in 2019. It is supported by Deposit Money Banks (DMBs), Nigeria Inter- Bank settlement systems (NIBSS) and all Licensed Super Agents. SANEF remains a brilliant idea and is led by a brilliant actor in the person of Mrs Ronke Kuye.
According to CBN figures, an estimated 45 million Nigerian adults are unbanked. In other words, they have no access to any financial services such as loans or start –up capital. They are said to operate exclusively with cash. We all know them- the peasant farmer, vulcanizers, pepper sellers, and even carwash operators to mention few. The strategy is to find ways to include these 45 million individuals in the financial system gradually and frictionless.
Meanwhile, according to Mrs. Ronke Kuye, the Chief Executive officer of SANEF; the SANEF is supporting the drive by CBN and other financial institutions to ensure that up to 95% of the population is financially included by December 2024. Meanwhile, the testimony is that as at 2018, about 63% of the adults in Nigeria already have bank account. The aim of SANEF to have 500,000 agents across the country in place by December 2020 has been achieved by over 1000% ; from 85,000 to over 1 million as of February 2022 in all the 774 local government areas of Nigeria.
Furthermore, SANEF agents had been able to process over 180 million transactions as of December 2021 and over 1.6 billion transactions took place at all agent locations all over the country. The figures for 2022 are yet to be computed before the naira redesign disruption took place.
Although it was not yet ‘Uhuru’, but steadily the goals were being achieved. We know that the ratio of agent per 100,000 adult was 80 in 2018, but by 2021 it has risen to 985. Making excuses at the wake of the disaster, the CBN said there was too much money in circulation and something has to be done about it. But a lot of things were being done. The Fintech companies were growing and competing successfully with the banks. Payment channels known as P.O.S, Mobile Apps, and NIP Electronic Fund Transfer were showing significant year –on –year growth in transaction volumes surpassing 600%.
We were getting somewhere. Then all of a sudden a scheme called ‘’Mopping up excess cash in the economy through Naira re-design’’ was clandestinely fostered on Nigerians. The covert tactics made sure that the banking ecosystem and all payment infrastructures were not carried along and therefore, were hugely unprepared. Of truth and sadly, cash circulation declined by about 70-80% between December 2022 and February 2023. That represented a Choke-hold on the neck of the Nigerian economy which had been largely cash driven for many years. If 3 trillion was seized and 3 billion was released, it means the scheme was planned to be an attack akin to a war situation. True to their plans, lives were lost literally and properties destroyed and companies bankrupted. The most unfortunate aspect of this disaster is that the targeted 45 million unbanked people are now very skeptical of the banking system. Worst still, most of them gave their cash to relatives, village heads and religious leaders in the rush to exchange their money for new notes but it is now so-so stories now. Most are yet to get their money and most won’t even touch the bank with a pole.
The whole matter was made worse by the lies emanating from the CBN that the Commercial Banks had received millions of new notes but were hoarding it. People thronged the banks and in anger burnt a few branches. As I write this article in April 2023, there are only 20 ATM machines to every 100,000 persons in the country. Queues remained in many banks and the cost of obtaining cash remains very high. In other words, we are still buying cash. The banks are already demonized and it will take a lot of time and a lot of money and innovative public relations and advertising to shift the entrenched bias against banks now.
The true cost of the scheme is yet to be known. But according to Yemi Kale, a former director-general of the National Bureau of Statistics (NBS),‘’ Nigeria lost between N10-15 trillion of national productivity in the first quarter of 2023, as a result of the difficulties created by naira redesign policy’’. Also in the worlds of a renowned economist and academician, Prof Akpan Ekpo, ‘’…the policy had crippled business activities of MSMEs. It will have a completely adverse impact and the GDP will reduce by almost 10% because of the non-contribution of the MSMEs…. You don’t mix politics with the economy, you have to be careful. Just because elections are coming and people are buying votes, you don’t punish over 200 million people because a few people are going to be engaged in vote buying.’’
Howbeit, in unison, all Chambers of Commerce and Industry in all the states of the federation are already ‘awake’ from the shock created by Mr Emefiele and his cohorts. They are waiting for the president elect, Asiwaju Bola Ahmed Tinubu to be sworn on May 29th 2023 before formalizing their demand. From what I am hearing, they don’t want cosmetic approach to the disaster. Rather they want the incoming administration to draw up emergency solution to cushion the impact of the disastrous Ponzi-scheme that has caused the MSMEs and indeed all Nigerians unprecedented hardship, harrowing and disconcerting and painful experiences. Will the Jagaban lead the war to extract collapsed and collapsing MSMEs from the clutch of untimely death? The RENEWED HOPE has to be quickly converted into blessings! However, time will tell!
