Greetings from St. Valentine
I was genuinely surprised to see how many people took February 14 to heart. Forgive the pun. I had imagined that the naira scarcity would distract people from celebrating love, but I was wrong. If anything, the opposite happened, as various status updates across my WhatsApp showed. True, there weren't any over-the-top proposals or outrageous gifts on display. And yet, I was pleasantly surprised to learn that many of you were in blossoming relationships despite this Buharious economy. Kaare o.
I'm going to act like Arsenal didn't get a trashing last night and segue on to what could be a controversial point of view. Writing convention dictates that you save the nut graph of an article for a couple of paragraphs further down. I'll buck that trend and lay it out here: Godwin Emefiele isn't all to blame for the naira fiasco.
There you go. This is where you either (a) exit this page hissing and wondering why you even bothered opening this email or (b) give me a chance to explain myself. The boy might be on to something. Who knows, eh?
Ok, ok you have three minutes to get me interested
Let's state the verifiable facts of the matter. In this piece, I laid out the timeline of the new naira banknotes. I argued summarily that the CBN needs to come out openly to tell us how much it released in circulation, which has always been the standard.
When the CBN announced on October 26 that there'd be new notes in circulation, it was eager to tell us that it wanted to take control of the economy and quoted statistics saying that around ₦2.73 trillion of it was outside the confines of the banking system. What did Meffy not say? He told us the banknotes needed a new look because the ones in circulation were ugly. He told us he wanted to fight inflation, choke kidnappers, deal with counterfeiters and boost the adoption of the e-Naira (which I criticised at the time it was introduced, more on that later).
On December 7, I spoke to a macro and investment analyst who shared some insightful thoughts on the naira redesign policy. Among other things, he argued that the redesign as a measure to address monetary policy made little sense. His words:
"Cash won't affect monetary policy. Banknotes in circulation relative to total money, that is, money available to be spent, including the deposits in your bank account, is just 6%. So when you say 6% of the money you have in your economy is what is slowing down the effectiveness of your economic policy, it doesn't make any sense."
Hate to say I told you so, but he was right. On November 24, I wrote that the CBN raised the interest rate to 16.5%, which was very worrying. This was almost a month after the CBN announced it was mopping up the old notes. Two months later, on January 24, the CBN raised the interest rate to 17.5%. To explain this in simpler terms, the cost of borrowing has increased. If you take a loan of ₦10 billion from the bank (which they won't give you anyway), you'd have to pay back the ₦10 billion with an additional ₦1.75 billion at the end of one year.
Let's look at another macroeconomic indicator, inflation. I'm going to report this in the exact words of Trading Economics.
Essentially, if you hypothetically borrowed that ₦10 billion, you'd be doing so at an unbearable loss because inflation exceeds the interest rate. I mentioned earlier that I'd come to the e-Naira. Well, Meffy has told us that its launch was a success. I'll be generous and say the jury's out on that one. Here's what I wrote on that last month.
Overall, the naira redesign policy has yet to have its intended effect. I'm careful not to say it's failed because it takes time for policy implementation to take effect. Yet, based on early impressions, it's concerning.
However, the blame is only partially on Meffy. Now's the time to introduce the big bad wolf, President Muhammadu Buhari.
Hmm. Have another four minutes
If you look at Meffy's policies purely from an economic lens, you'll scratch your head to see how it makes sense. Between October and now the CBN has gone into overdrive trying to do many things all at once which begs the question of why? Why are you launching new notes this close to the elections? Even if we were to ignore that, why's there a rush to get these old notes out so quickly? Why's the CBN introducing debit cards?
It's easy to forget, but this is the second time Meffy's launched new notes. He came to office under former President Goodluck Jonathan in March 2014. This came about following GEJ's dismissal of his predecessor, Sanusi Lamido Sanusi. Meffy must have observed how things went then and learned something. The most important lesson is that the CBN governor and his policies are subject to the whims of the President.
In December 2014, Meffy launched new ₦100 notes commemorating Nigeria's centennial anniversary. Then, unlike now, it was a phased introduction which is the global standard. There was no rush to get the new ₦100 notes. The CBN only had to stop printing the old notes and gradually mop them out of circulation. So it begs the question, why didn't Meffy use a tried and tested template? The apparent answer is Buhari.
In an article from last week, Farooq Kperogi — a man I have a love-hate relationship with — highlighted what he suspects is the real reason for the currency redesign.
Some may argue that it's all hearsay with a little factual basis. Except that Bola Tinubu in Abeokuta spoke publicly about being frustrated by the naira and fuel scarcity, intimating that it was a ploy to set voters against him. Although his comms people have said he wasn't calling out the presidency, we heard what we heard, lol.
The rumour mill, particularly from opposition supporters, is that Buhari is doing Nigerians a favour by using the redesign policy to stem vote-buying. I believe this is futile and even counterproductive. The growing frustrations of many voters unable to access the new banknotes might force them to sell their votes come election day if the naira scarcity persists.
Another salient point that Nigerians need to remember is Buhari isn't doing you any favours. For the moment, his interest might appear aligned with yours but don't for a second mistake it for strengthening the electoral process or whatever the running narrative is. Buhari has been consistent with the mantra that he belongs to everybody and nobody. He’s all about himself.
Ok, what’s your conclusion?
Several, take your pick. One, that this isn't the first time Buhari's championed the redesign of the naira — he did it in 1984 and fired the guy who got in his way. Two, Emefiele is inept as a CBN governor and has foolishly enmeshed himself in politics. Which fool advised him to run for President LMAO. He's, however, ideally suited for the role as a stooge or a yes man if you prefer.
The result of this point is that contrary to what Oshiomole would have us believe that the President has no agency and got the idea for the redesign from Meffy, Buhari was the policy originator. His address to Nigerians this morning confirmed it.
The follow-up to this is that the President's address has bleak implications. One which was brought to my notice by a friend is Buhari has said the old ₦500 and ₦1000 notes are no longer legal tender. This runs contrary to the Supreme Court set to rule on the matter conclusively on February 22. One of two things will happen, none of which bode well. Either the Supreme Court rules against the President and another drama unfolds, or the Supreme Court sides with the President, in which case they'd be doing so under executive pressure. Interestingly, Buhari mentioned in his speech that he was aware the matter was in court, but as the big bad wolf, his word's final.
Another conclusion I gleaned from his address is that the President is daring anyone, be it the Supreme Court, Nasir El-Rufai (who recently turned on Buhari), and any other disgruntled elements within his party, to take him on. Buhari, a term-limited president in the twilight of his presidency, has nothing to lose, and he's letting anyone know that he's the nigga in charge.
My last conclusion is that Buhari has shown unflinching loyalty to Meffy, which is admirable — but only from afar. Meffy has been at the centre of various storms, from state governors to the Senate, the House of Representatives, the DSS and angry Nigerians. In all of these, Buhari hasn't made Meffy the fall guy (hi again El-Rufai). This is the same Buhari who doesn't send Nigerians despite their hardship, whose bromance with long term ally BAT, has gone sour, and who relegated his own wife to the other room when she questioned his leadership.
For good or ill, the story of these two are interwoven permanently. While Meffy is the patsy made to take the blame for the naira redesign, the pantomime villain pulling the strings behind the scenes is none other than President Muhammadu Buhari.