Missing in action: No one has seen Nigeria’s new Naira Notes

A.k.a How to bungle a simple policy

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Missing in action: No one has seen Nigeria’s new Naira Notes

This week, Nigerians had front-row access to watch a replay of how the CBN governor, Godwin Emefiele, bungled Nigeria’s FX regime. In Emefiele’s years at the CBN, we’ve not only seen three different exchange rate windows, but we also saw the ban on accessing FX for importing 49 products. Despite the World Bank recommending that the Central Bank move towards a single FX window, Emefiele in all his wisdom figured that trying to control demand was a better solution. So today, while the CBN says $1 = N446, most people know the real rate is $1 = N754. Curiously, the Central Bank has doubled down on its methods despite the results.

So this week, the Naira became a scarce commodity in the only country where it is a legal tender. As someone on my Twitter timeline put it, nothing in economic theory or research could have prepared us for this. Except that, everyone could have told you exactly how this would have ended. 

It started with all of the puzzling justifications that always precede bad policy in Nigeria. The CBN governor said that a large percentage of the Naira in circulation was outside of the banking system. No one knew why this was a bad thing, but it was the kind of thing that got people going. Soon, on social media channels and on Whatsapp statuses, people suddenly started to show videos of Naira notes that were printed in 2006 or some other old date. To many people, this was proof that the CBN governor was right and that the policy would help fight corruption. You learn quickly that invoking anti-corruption sentiments is a way to get people on board with questionable policies (I’m looking at you, border closure policy).

Today, we know that Nigeria doesn’t have significantly more money out of the banking system than is normal in most countries. Which begs the question: why did the CBN move ahead with the currency redesign at this time? Let’s throw the anti-corruption theory in the bin. The theories are that this is a move to mop up “dirty money” as said by the CBN governor. The last one is that this is a sly push of the cashless economy agenda. 

The big problem is that, no matter what theory you favour, we don’t have to look too far to see an example of how demonetization can be such a terrible idea in a country that is reliant on cash. In India, the shock demonetization process in 2016 led to the deaths of dozens of people and in the end, it didn’t achieve the government’s set objectives. It’s a wonder why our policymakers aren’t conscious of it.

With fuel scarcity heading into its seventh month and a sharp jump in the price of petrol, inflation remains high and food inflation is just as worrying. If you add the numerous fuel queues found at ATMs and banks this week, then this feels like the country is sitting on a keg of gunpowder. I expect that it’s only a few more days before people start to force their way into banking halls. In a country where the informal sector is large and there’s already a distrust of banks, one can only wonder what the CBN is thinking. 

Without a drastic improvement in making cash available in the coming week, I expect that the pushback from citizens will be tougher than the government envisages. Informal retailers will see dips in sales because only a few people have cash, and the general scarcity means POS operators will charge a premium for people who want to withdraw new notes. That’s enough said on the CBN and its horrid mismanagement of a currency redesign process. Moving on! 

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Gokada’s many struggles

This week, I spent a lot of time speaking to employees who lost their jobs at the logistics company, Gokada. While the company did not confirm the number of people who were fired on January 27, it’s said to be at least 50 people. Shocked employees told me that the layoffs did not comply with the terms of their contracts and a few of them said they would not turn in company property in their possession. 

In these situations, employers often argue that there’s not much they can do to make these difficult situations better. But sending emails to employees at 8 pm on a work week feels like the kind of thing that makes people question if they were ever important to the business. Beyond the cliche communication material that sometimes follows these layoffs, it will help companies to speak honestly to employees about where the business is. These layoffs can also be conducted with more empathy without these company lines.

Let’s bring it home. This week has shown me that as bad as the layoffs were in 2022, January has been brutal. There have been more unreported layoffs and I can only imagine they may get worse. Parting question: do you think there’s an overreporting of these layoffs, and do you think we could all be better off not obsessing over it? Let me know what you think in the comments! 

What I read this week: 

This brilliant article on how TikTok will probably go down the road as other social media networks 

Nigerian founders and the media (not me!) are always at each other’s throats. This article talks about it. 

“Every hiker is called to the trail for a different reason, but we all share a common goal: We all want to finish.”

See you on Sunday!