After an unsuccessful CBDC launch, Nigeria’s central bank is now trying to cut off liquidity. Bitcoin can help Nigerians regain their sovereignty.
This is an opinion editorial by Heritage Falodun, a Nigeria-based Bitcoin consultant and IT specialist.
Nigeria, Africa most populous countryintroduced a central bank digital currency (CBDC), eNaira, in its financial system at the end of 2021, an action that paved the way for different sets of financial policies, regulations and restrictions from the country’s central bank.
In an attempt to push consumers towards alternative options, like its CBDC, the Nigerian government has now imposes restrictions on the amount of money that can be withdrawn. It has limited cash withdrawals from banks to around $225, or around 100,000 naira per week, with a daily limit of around $45. This is another example of how the financial terrain of Nigeria has been a roller coaster of economic sabotage since the launch of eNaira.
In the words of Godwin Emefiele, the Governor of the Central Bank of Nigeria, the whole interest of CDBC is “to ensure that more people in this country are financially included. You see, a lot has happened in terms of the evolution of money from commodity to metal to paper to plastic and now we’re talking digital. And so, we have to keep pace with the changing world.
In his view, Nigerians should have found the CBDC to be the solution to their financial difficulties such as inflation, currency censorship, stringent payment rails, epileptic cross-border payment channels and rigid access to currencies, among others. Unsurprisingly, the reverse has happened, as the situation on the ground in Nigeria at the moment is gradually shifting from “banking the unbanked” to “unbanking the banked”.
February 2, 2023 – just two days after the first January 31, 2023 deadline set by the Central Bank of Nigeria for all Nigerians to return the old naira denomination of 200, 500 and 1,000 banknotes — a Nigerian by the name of Oluwasegun Kosemani tweeted“I have just spent 1000 naira from my Naira @Mastercard through @gtbank to buy 10,000 naira in cash from a @palmpay_ng outlet. The Nigerian government is intentionally forcing its citizens into a Keynesian cashless economy while they position their watchdog CBDC – eNaria as the final destination.
As this example shows, knowledgeable Nigerian youth, who happen to be 70% of the Nigerian population, understand that these regulations relate primarily to financial control. This is to promote a cashless policy in which the government has full control over all citizens while having the luxury of tracking every transaction.
Judging with less than 0.5% adoption rate on eNaira Since its launch about 16 months ago, it seems that only government actions, such as the cash restrictions that Nigerians are currently struggling with, will force people to use the CBDC.
Nevertheless, the disposition of Nigerians is visible to the blind and audible to the deaf as the country topped the lists for the highest bitcoin and crypto exposure.
How Nigerians are adapting to new financial realities
To learn more about the balance between bitcoin adoption and being forced into eNaira, I spoke with a few business owners in Nigeria. Eric Ogbekene, who works there in the media and tech industry and also runs a bespoke menswear business, said: “The cash swap policy has been ridiculous to say the least. Today, February 4, 2023, alone, you could not get physical silver in all of the ultra modern Garki Market in Abuja, Nigeria. People are unable to deal with small business transactions, such as money for services, transportation, etc. It’s so bad because even traditional banking apps seem to be overwhelmed by the sudden surge in transactions and can’t cope.
I interviewed an OTC bitcoin liquidity provider named Oluwatimilehin Kayode, popularly known as “Pander” by his customers and merchants.
“How have you coped with business amid this new policy and cash shortage?” I asked.
“Bro, it’s not easy like that oo, but we’re pushing it, if I’m going to be honest with you,” he replied in Nigerian dialect. “It’s crazy, it affected our P2P transactions on exchanges a bit because most of the transactions keep showing bank network errors and there are also limits on transactions and high fees. But as you know , Bitcoin will always find a way out for us amidst all the restrictions.Although we have little access to cash over the counter, we continue to conduct P2P transactions with Bitcoin and Tether using our existing conventional methods.
Mary Imasuen, Bitcoin podcast host, has tweeted that, “If vendors were open to accepting bitcoin payments, we wouldn’t have to deal with the craziness that’s going on in the country right now.”
Sharing his odyssey amid money and transaction difficulties, Imasuen saw people withdrawing 20,000 naira with 3,000 naira as fees paid to traders. She has said that “Silver is sold for silver right now.”
Nigeria has always been a cash based society and with the current problems people cannot get cash from banks or ATMs. Those who get money have to pay more, and the prices of things have skyrocketed.
Puzzled as I am at the actions of the government, I feel like Nigerians are resilient. It’s no wonder that Ray Youssef, the CEO of Paxful, wrote that “Nigeria’s youth taught me to think beyond Western financial systems and look for alternative means of payment to buy Bitcoin”.
Nigerians need to know right now that the CBDCs are here and slowly but surely the government will continually limit their access to money until it is gone and has completely taken away everyone’s financial freedom.
To provide sustainable solutions, the best bet and only solution for Nigerians towards a decentralized and cashless economy is through Bitcoin, which is fundamentally different from the financial slavery cage run by CBDCs. Bitcoin’s blockchain democratizes proof-of-work finance by enabling transactions in a distributed, open, and transparent ledger, while CBDCs offer a centralized, closed-source fabric that gives full control and issuance to the government.
Until Nigerians decide to inherently separate money from state actors, the masses will remain slaves to central authorities. Ultimately, this is more of an opportunity for Nigeria to step back and break the shackles of financial restrictions with bitcoin.
This is a guest post by Heritage Falodun. The opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.