In Nigeria, expected the unexpected

Also, what's happening at Patricia?

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What a week!

Before I get into it, let’s pay some bills!

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Making sense of an eventful week

If you’re at a media publication and didn’t publish a million stories this week, you need to take a long look in the mirror and do something else. We had a lot to talk about, thanks to President Tinubu’s unexpected declaration of an end to fuel subsidies.

My position on fuel subsidies hasn’t changed, and it was exciting to see the NNPC CEO, Mele Kyari, speak smartly about some of the issues. It’s often easy to see in online discourse that there’s a severe knowledge gap in how Nigeria’s fuel subsidies are. Beyond Nigeria’s woeful finances, the problem with subsidizing fuel is that we’re borrowing a ton of money yearly. In 2022, Nigeria spent some N6 trillion on subsidies alone. 

Also, the World Bank gave a brilliant argument last year that removing fuel subsidies would reduce income inequality. In one newsletter, it prompted me to say that if Nigeria loves the poor, it would remove fuel subsidies. Kerosene and diesel, two other essential products, are subdivided, and we’ve made our peace with them. I think it’s also time we made our peace with petrol prices that are market driven. This is not to say that there won’t be hardship accompanying this—after all, inflation is 22%. It means we won’t mortgage our economic future simply for cheap fuel. 

Sensible but tough economic decisions like this, which many expected Buhari to make primarily because of the goodwill he enjoyed in his first term, are crucial if we’re not going to continue piling on vast amounts of debt. The Buhari administration already made sure that we have a mountain of debt to worry about; we’re in a place where we best not add to it. In continuing the theme of the surprising week and the start of the Tinubu presidency, there have been talks about unifying Nigeria’s multiple exchange rates.

There are many valid concerns about Nigeria’s last two presidents (and former presidential hopefuls) speaking on foreign exchange policy, given the independence of the CBN. Yet, Nigeria’s FX policy in the last eight years has effectively discouraged foreign direct investment. FX shortages and an artificial rate mean that even if a private investor makes $10 million in profit here, there’s no way to get that money out—it turns those returns into paper profits. Foreign airlines and multinationals have had problems getting USD out of Nigeria at different points in the last year. Also, the CBN’s current FX policy causes uncertainty, which is the one thing that no business wants to deal with. 

So, having a government that’s talking the talk about a market-determined rate is essential. Before Emefiele’s time as CBN governor runs out, we might start to see a crawling peg. The gradual move towards one exchange rate—if it happens while Emefiele is still CBN governor—would make for a complex legacy for the CBN governor. Emefiele started with some promise and was the first person to serve two terms as governor of the Central Bank. Yet, his time as governor has seen questionable FX policy, record-high inflation rates, and a loss of credibility for the institution. No one has seen the Central Bank’s books since around 2016. I can’t wait to read the definitive article on Emefiele’s complex legacy. 

Before we move on to something else, you’ve got to wonder: what will Notadeepdive write about on Sundays when the subsidy is removed and we have a single exchange rate window? Don’t answer that. Moving on!

What’s happening at Patricia?

Crypto’s tough year in Nigeria has been well-documented. Lazerpay shut its doors a month ago, Fluidcoins got sold, and I haven’t caught a glimpse of Buycoins (is the product now called Accure?) in a minute. Yet, last week’s news that Patricia was hacked and money stolen—I wrote that report—was one of the strangest from this year. 

The long and short of it is that one year after a hack, Patricia disclosed to customers that it had lost money. Patricia had played it off as though the hack only happened recently and admitted that some money was lost. It didn’t say how much. New sources told me that the hack actually happened from October through to December 2021 after a payment processor that the retail trading app had just integrated paid out some N700 million to five unnamed persons. While that is still nothing the company will admit given that they’re now taking legal steps against said culprits, there’s more that looks worrying. 

Within a period of one year, six of the company’s C-suite execs have also left the business. The company’s CFO, CMO, and two heads of engineering have all left the business, which begs the question: what’s actually happening at Patricia? While I’m still on the hunt for answers, feel free to email me with scoops! 

What I’ve been reading:

This cheeky article on what happens if you put Warren Buffett & SBF in the same room

Also, this lengthy but delicious piece about Saudi Arabia’s ambitions

And if you’re a journalist or a writer, this fun one on the best Pulizter ledes/leads of 2023

That’s it for this week. See you on Sunday!