The skit maker chose an auspicious location to pass the message across. Crossing the Lagos-Ibadan Expressway, with the fast-moving vehicles on top speed in both directions, she struggled to climb over the divide in an attempt to cross to the other side. She was on call and passing a message as loudly as she could. Speaking in Yoruba, she informed her brother in a telephone conversation that Nigeria has changed from what he knew it to be. Whenever he is sending money again, he should add PoS operators share because out of the N20,000 he sent, only N17,000 was given to her.
She shouted repeatedly that the brother must not forget this important part of the sharing of money that the PoS operators now remove at source. What else to add? The message clearly captures 2023 Nigeria where variance and dissonance occasioned governments policy of absurdity and bizarre.
Two months into 2023, the economic machine has already ground to a halt and responses from the minders of the economic can best be described as products from clouded minds.
The United Nations speaking about the micro, small and medium-scale enterprises’ day on June 27, 2022, notes that “policymakers must move beyond recovery and consider ways in which to lower and eliminate barriers faced by MSMEs, improve the business environment and access to finance, markets and technology in these fragile times.’’
It further states that it is critical that countries and their development partners continue to support and empower MSMEs and unlock their full potential through inspiring innovations, creativity and decent work for all.
However, it is left to be seen how Nigeria’s economic and monetary policymakers, especially the Central Bank of Nigeria have been coming with their own inspiring innovation and creativity to make the MSMEs happy in Nigeria. Rather, the reverse is the case where monetary policy formulation is hardly thought through and not really subjected to economic health checks to fully identify and appreciate implications of such policies and effects of patchy implementations on the masses and enterprises.
What Nigeria is currently witnessing is not what they bargain for. Ordinarily, before the CBN will embark on the slapdash implementation of the new naira notes and the cashless policy, it ought to learn about possible outcomes of such an exercise from the economies that had towed the same path. In 2016, India embarked on demonetisation and the outcomes had been abysmally destructive to the MSMEs in the country. Years after, many of the micro and small enterprises have yet to recover from the damaging effects of India’s 2016 demonetisation.
Gleaned from Indian experience, not only will badly implemented demonetisation leave the rural economy paralysed, the backbone of an economy, the micro and small businesses in urban metropolises are bound to be negatively affected. The capacity of cash crunch to lead to non-availability of money to pay for foods speaks volume about what reaction to expect from the people. The Indian 2016 experience is enough to teach Nigeria’s policymakers good lessons. But it is hard to see that they really consulted the book before embarking on the naira notes swapping (rather confiscation of peoples cash) at a time the economy is already wounded by intractable fuel scarcity.
According to the outcome of a report carried out on India’s demonetisation (which was reported and published online by Business Standard), two years after getting hit by demonetisation, MSMEs in the country continue to limp. Going by the outcome of a survey conducted across 25,000 units that comprised nearly 50 per cent of micro and small industries, and 25 per cent each of medium and large firms, they found themselves suffering from the demonetisation debacle. Enterprises and value-chain players, especially in the leather industry, who used to collect raw leather and sell mostly for cash payments, have almost disappeared today. Their businesses have been wiped out. Since November 8, 2016, Indian micro, small and medium enterprises and traders across industries are still wallowing in the aftershocks of the money swapping policy- from jobs loss to dissolution of businesses, the impact of the drastic economic measure is being felt continuously.
The demonetisation in India caused panics and chaos in the country. The same scenario is playing out in Nigeria. Save for the North, down South, public unrests are witnessed in cities and towns with the attendant destruction of banks and other public property when people submitted their meagre cash amounts to banks but couldn’t get their money back. What ought to be cash swapping had turned to something else. It really shows the CBN could not gather useful data that can help it perform its policy implementation without hitches. One hopes what the CBN has unleashed will not degenerate to India’s level where daily wage workers were thrown into despondency and many were out of work as employers could not pay them in cash due to the attendant cash crunch the demonetisation caused.
Already, negative impacts on disposable income and the consumption patterns of the people are already being affected. Though less currency circulation may reduce inflation and curb kidnapping, what has yet to be seen by economists and financial analysts is the possibility of the government’s assertion that the naira redesign will check the influence of money on the outcomes of the general elections. From all indications, and the current appalling financial state of the masses, little amount of money may be required to induce voters now compared to when there is free flow of cash.
As plausible and laudable some of the reasons adduced for the naira notes redesign and the cashless policy may seem, that the masses as well as micro and small enterprises are thrown into untold hardships means that the CBN failed in its primary responsibilities; and must, as a matter of urgency, come up with palliative measures to cushion the effects of its latest monetary policy that is annihilating at great speed the badly affected micro and small scale enterprises.
In an article titled, “Redesigned bank notes, cashless policy and urgent tasks before CBN governor,’’ I identified some probable responses from the masses if the CBN failed to do a good job of the cash swapping exercise. I proffered that where the cashless policy is forced on the masses through scarce bank notes, the banking sector is looking for poor people’s trouble which is not going to be palatable for the country; and to the ordinary person on the street. If banking becomes a problem, it is better to keep their money at home where he would be seeing and monitoring it closely. The current situation has asserted itself as the country held its presidential election. The CBN is failing in its duty to ensure a hitch-free supply of cash to the people who had turned in their old naira notes before the initial January 31, 2023 deadline. With the current cash crunch and the inability of daily income earners to earn their livelihood, coupled with PoS operators cashing in on the situation, the CBN needs to act quickly to put a decisive end to this anarchy immediately. Not only must cash be released to flood the banks for unhindered onward release to the people, incentives must urgently be introduced if the cashless policy is to succeed. More importantly, palliatives must be rolled out for the micro and small enterprises without much delay to enable them recover from what had hit them. Due to non-patronage, many micro and small business operators who rely on daily sales to make ends meet have eaten their business capital. Not a few have resorted to trade by barter to find food for their families.
Monetary policies must not be anti-people and the banking sector should not make itself an enemy of the people. The question before all of us is, is Indian demonetisation exercise a success or a failure? The fact that some segments of the country’s economy have not recovered six years after the decision to scrap the high-value currency notes is proof of how spectacular failure the policy is. Nigeria shouldn’t be another bad example.
