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How to create a few winners
A.k.a a lesson on reading the room
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Creating a few winners, but at what cost?
Confession: I roll my eyes whenever people bash capitalism and go on about how greed and a penchant for amassing are its only defining features. With my old Twitter account, I used to get into arguments about it, and I always assumed the person on the other end of the response was a too-naive idealist. But I find that my stance is softening these days, and I sometimes understand why people bash the greed that's a product of capitalism. Stay with me; I'm going somewhere with this.
Over the past two weeks, the Naira scarcity has dominated Nigeria's public discourse. I wrote about it on Sunday and analyzed some of the theories we've been hearing about why the Central Bank is bent on a currency redesign when the new notes don't seem ready. This week, Premium Times exclusively reported that "Mr Emefiele told the leaders [at an FEC meeting] that the Nigerian Security Printing and Minting Plc (The Mint), suffers capacity constraints resulting in the failure to print adequate new notes to replace the old N200, N500 and 1,000 notes."
You're reading that right; the Nigerian Security Printing and Minting Plc, which prints the Naira and is usually on top of its game, hasn't printed enough of the new notes. It's easy to infer that the CBN sprung the currency design on the Minting company, leaving it to be grossly unprepared for a job it's typically good at. That said, this also feels like the CBN is pushing responsibility to others for a currency redesign it's treating like a surprise marriage proposal. First, the banks were blamed, and now the Minting company, which is likely just as surprised as us, will probably have to explain themselves.
So, back to my point about capitalism. When the CBN first announced the redesign, there was some excitement from "mobile money bros" on my timeline on how this would force the adoption of whatever they're building. The argument was like this: Nigeria's cashless policy hasn't made any headway in the last decade, so brute force is the answer. Fast forward to this week, and NIBSS shared some data to show that mobile money transactions for January went through the roof. If pictures are your thing, Bloomberg did this nice graph here.
If you'd rather read some text, here's loosely what NIBSS said: Registered mobile users in Nigeria did transactions worth N2.37 trillion in January 2023, representing a 125 percent increase compared to the volume of transactions recorded in the same period last year. Cue the tech bros going:
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Read the room, people!
Bloomberg quotes MoniePoint's CEO as saying, "The policy is a major driver for digitization this year. Quality of payments that consumers are expecting will be going higher, which means fintechs that are well equipped."
All of this in the same period when Nigerians are spending hours in queues trying to get cash. This week, some banks closed branches over genuine fears of attack–Zenith bank said some of its branches were attacked by angry customers. In all of that, one bank even sent this "all man for himself" email to staff about safety
All the situations I've referenced regarding safety and angry customers are mostly happening in urban areas like Lagos and Abuja where there's already some adoption of mobile banking or mobile money. You've got to imagine life in villages like the one where my friend served in 2011, where the nearest bank was one village away, and cash is necessary. For city dwellers like me, the inconveniences I've dealt with this week are ordinary. Not being able to pump my car tyres (no one is taking N200 in bank transfer for this) and needing to pay at that pesky toll gate that leads to the local airport. It's a hassle, but it's hardly life and death like it is for people in more remote areas.
Against this background, it's odd for mobile money bros to grant interviews and stuff us with think pieces on how this is a great policy. If they need a reminder, policies like this aren't new in Nigeria, and all work out the same way. Nigerian farmers believed the border closure policy would make them richer. In reality, it created a few winners and led to wicked food and headline inflation. Poor policies created winners like Dangote, while Nigerians pay 240% above the global average for cement. Must the citizens always be collateral damage?
For sure, you're entitled to some happiness that this policy will drive growth. Still, it helps to keep in context that that growth is happening alongside a ton of indescribable suffering. It also helps to remember that Kenya, which leads the continent for digital payments, still has cash as the most commonly used payment option in the country. You don't have to put people through the grinder to move the needle on adopting digital payments.
There's no better place to end this than sharing my dinner meeting with Tomiwa on Friday at Eric Kayser. It was at Allianz Francais; the ratio of expats to Nigerians suggested this was upscale, and there was even complimentary valet parking. At the end of dinner, the waiter brought us a laminated sheet of paper that had seen better days. "The POS has stopped working," he tells us, "you have to make a transfer." And sure enough, Tomiwa's Stanbic mobile app didn't open, and my FCMB mobile banking app was also having an off day. Welcome to cashless Nigeria! And no, we didn't end up washing plate.
*I didn’t give a heads-up on not sending out Friday’s newsletter; my apologies! I had classes for the final week of my Masters degree and it was grueling. Here’s to inviting you to my convocation and renting out one big tent like a proper Nigerian. In the spirit of sharing, I also passed the first module of my CIM (Level 7) so have a congratulatory beer on me. Have a great week and see you on Friday!