Why Nigerian masses should support cashless policy

The masses! The masses! The poor people! This hapless demographic has always been the excuse, the crutch with which those who have truly held down Nigeria have gotten away with many things. We keep going round and round in circles, making policies while our situation gets worse. However, if we simply follow the money, we will begin to unravel our worst problems in Nigeria. I have also begun to let people know that indeed nothing lasts forever – not even the issues that beset our motherland. At some point, something must give and we must make progress. And for those who have made it their mantra to blame the government for any and everything while they do nothing to help the Nigerian situation (rather than taking advantage of her), they should note that every country still requires the government to develop, and no matter how bad a government is, even a dead clock is correct twice every day.

In some of my previous writings, I had urged that the government deploy the instrument of finance after some of the problems that plague us as a country. This is the “follow-the-money” strategy. Whether we are talking of low revenue, corruption, revenue losses in the public sector, tax evasion, crimes of every type, or illegal economy like drug business, kidnapping, banditry, and what-have-you, by following the money trail government is able to get a handle on affairs and reassert its supremacy. That is also how countries develop. The foreign nations that our people now ‘Japa’ to in droves did not do anything extraordinary in sorting out their affairs. They just got the data, went after the money, and made it untenable, impossible, and totally dumb for people to dip their hands in public funds.

Of late, almost every country in the world has activated the next level – which is to dematerialise money. Data is king. And in the age of big data, we generate petabytes of data every minute. A government that knows its onions positions itself at the very intersection of data and obtains as much as possible to aid decision-making, revenue generation for short, medium and long-term planning. For countries like ours, this is the surest way of accelerating progress. I am drafting an article that will explain clearly how our economy can grow in double digits year on year. This cash policy will be very catalytic to that ambition. It is by getting a handle on the cash flow of the country that targeted monetary policies can be made for everyone’s good. It is also by so doing that income may be redistributed.

People in progressive nations have realised that as far as prosperity goes, the more, the merrier. Whereas those who have will likely continue to have, progress is when everyone is able to attain some above-average standard of living. Nigeria has so much to do in this regard, as too many of our people still exist in unacceptable, sub-human conditions, which brings shame and opprobrium to all of us. But again, nothing lasts forever and with this masterstroke, Nigeria may be on the road to somewhere. The government is trying to get more data on everyone (especially financial data). The government wants to ensure that crime is no longer as attractive as before. The government wants those who make a profit doing business to pay a small portion for everyone’s good. The government wants to run kidnappers and bandits out of business because it will be impossible to bring huge amounts of cash in a spur. Those kidnappers who have relocated to Nigeria (the land of slush funds) from all over north and west Africa should begin to rethink. The government is also looking to make it harder for her own functionaries – politicians and civil servants – to continue collecting huge bribes from contracts. Except they want transfers into traceable accounts they had better think twice. The government is also trying to reduce the pressure on the naira. The more cash floats around the country, the higher the tendency to speculate on the value of the naira by buying dollars to keep.

I had advised in the past that we try and focus on our naira for domestic transactions and take our minds away from the dollar. That dollar game is a game no one in Nigeria will win. Focusing on the naira will slow down inflation and naira devaluation. We will be forced to do what we have to do to build our own economy. Our externalised view of our economy will be tamed as well. I like how the Central Bank of Nigeria has now determined that the maximum payable from automated teller machines (ATMs) will be N200. I type this from the UK where the largest denominator you can take from an ATM is the £20 note. In the USA, only $20 notes get disbursed from ATMs. Only select machines disburse the $50. None disburses $100. That is why we have more £50 and $100 notes in Nigeria than they have in circulation in the UK and USA respectively. We are the ones giving these countries what they call seigniorage – which is the difference between the amount used to print a single paper currency and the value written on it. We’ve given those countries billions, maybe trillions, in profit.

By limiting the denomination we get from ATMs, the cost of managing currency is reduced as the higher denominations are scarcer. Everybody is forced to use electronic (transparent) means of transactions. If any nation needs this on earth, that nation is Nigeria. They say there are many ways to catch a thief. Equally, there are many ways in which we can tame our own excesses. I am not saying we are thieves, please. But if we can run this new system for some years successfully, even the perception of this country in foreign nations will change. The cashless idea is meant to cool down an overheated economy with so much cash moving around in a cyclone manner even though there is little going on in terms of productivity. Also, many of what we call businesses – including many in the financial sector – are only into money laundering.

In the end, a cashless policy will have the effect of an elite consensus. Nigerians who believe that they are poor should support it but are confused by those who want the continuation of the status quo. President Buhari is on his way out and will support the policy to the end though. I trust him on that. This is something he could have done in the middle of his tenure though. This is also a major win for much-lampooned Emefiele who may also round up in a blaze of glory – even if hated by money launderers, tax dodgers, criminals and all those guys who have always given Nigeria a bad name among nations.

A summary of the gains includes:

1. It will enable govt track money launderers. Electronic transfers are traceable and open.
2. It will enable govt increase revenues by tracking taxes, rents, rates, fees, levies, duties, fines etc. Honestly, the next administration should be thinking of tripling revenue.
3. It will be a major blow against high corruption because it will just be impossible to deliver tens of millions or billions to anyone as bribes. And getting dollars will be as difficult since you need naira for that purpose. If the BDC sector is well reformed it will be a slam dunk on corruption and a major win for Buhari.
4. It will reduce the amount of naira chasing the dollar for no reason and therefore close the gap between the so-called black market and official rates. Also, the official market will be more stable and the naira could even gain value.
5. It will enable us to concentrate on the naira as our official currency and also potentially strengthen the currency as we will have less speculators and ‘shorters’ of our own naira. ‘Shorting’ a currency is simply the process of ‘selling’ it to ‘buy’ another currency’ – like the dollar – not for trade purposes but for speculation. It is a high crime in China and frowned upon by US authorities.
6. It will help curb inflation by reducing the amount of cash in circulation and cash chasing fewer goods. It may also be a bit more difficult for sellers to simply jerk up prices on buyers the way they presently do. There are psychologies in the market that we have not properly analysed and which have got us to this sorry point as a people. For instance, if fuel prices go up 20%, bus drivers increase fares by 50%! Why? Partly because commuters have no choices. The cashless policy will give commuters some power to fight back and more impetus for sellers to be more reasonable. That is how economies operate in progressive climes. Also, electronic commerce has a calming effect on inflation because people can pay exactly what they need to pay without having to round up to the next 1,000 or 100 if they were paying cash.
7. It will enable further integration of our economy with the rest of the world via the upcoming universal card and e-Naira. We may be able to spend e-Naira in any country and move away from current restrictions which treat Nigeria as a pariah nation. We have been totally locked out presently.
8. It will enable the CBN to plan monetary policy better, tackle inflation, reduce interest rate levels for borrowers, and also bring to reality the consumer credit revolution promised by Bola Tinubu. I don’t know what other candidates have planned in this regard, but Nigeria is due for this consumer credit revolution – especially for goods and services produced in Nigeria.
9. Private sector will begin to think seriously about how to invest slush funds in long-term projects that develop Nigeria visibly – such as mass housing, power etc. Banks will do better and have money to lend at cheaper rates, while the government will also have more money to invest in infrastructure and the deficit areas of the economy. A new day may have come.

So, dear Nigerian masses. Don’t let anyone deceive you. You are not meant to be beggars forever, waiting on cash gifts from those who care enough. The government can also reorder things and get more responsible to your plight. I believe the cash withdrawal limits could always be adjusted based on how it affects the very vulnerable. But for now, this is a very brave thing to do and worthy of support.