By Sahabi Abdul
Central Bank of Nigeria Governor Godwin Emefiele was reported this week as railing against cryptocurrencies, describing them as unregulated, computer codes made out of ” thin air.” He described cryptos as a means of exchange favored by people who operate in an opaque, dark world.
“These are people who deal in transactions that not only do not want a trail but indeed by its nature cannot be trailed,” he told lawmakers in Abuja on 25 February to provide further justification for the CBN’s directive to banks to shut accounts linked to digital currencies.
One can imagine the ancients saying similar things about the debut of paper money in comparison to cowries, the manilla, pure barter and other preceding, bulky representations of value. We all know who was proved right by history.
This isn’t a wholesale endorsement of cryptocurrencies. Far be it from that. But any curious mind can sense that there’s something interesting going on, both good and bad. Blockchain technology, on which digital currencies are based, offer a whole new range of possibilities that could be used for good and bad, like any double-edged sword.
Already, the bad guys are the first off the marks, and their exploits are now being used by the likes of our dear central bank governor to taint and circumscribe the potentials of a whole new world. Didn’t he hear that blockchain could be used to achieve secure elections? Or did he?
The fact is that Nigeria has a population in which more than 60 percent are under 30 years. Living in a globalized world, most are thinking beyond the local economy that has for decades been mismanaged by the very conservative establishment served by Emefiele. With the national currency plummeting in value, many Nigerians had sought other means of preserving their capital, including through offshore investments. The result was that Nigerians are only next to the United States globally in cryptocurrency trading. All these assets are being driven underground by CBN’s crackdown.
That is why Vice President Yemi Osinbajo’s intervention, stressing that it’s better to regulate than impede digital currencies, is both timely and welcome.
“Cryptocurrencies in the coming years will challenge traditional banking, including reserve banking, in ways that we cannot yet imagine, so we need to be prepared for that seismic shift,” Osinbajo said while speaking two days later to a meeting og the Bankers’ Committee, made up of heads of banks and the central bank governor. “But we must act with knowledge, not with fear,” he said.
However, the fact that Osinbajo publicly said that, in obvious upbraid of Emefiele just after his latest vituperations on cryptos, is another window into the dysfunctions of the Buhari administration. Emefiele has shown an ability to get by by pandering to Buhari’s authoritarian bent, even when they show medieval reflexes.
This was in display in the manner the regulator went about freezing the bank accounts of people suspected to be linked to protests against police brutality last October, even before obtaining the required court warrant. And part of the hostility to cryptocurrencies apparently stem from their being used by protesters.
What was unspoken but unmistakable is a certain fear by the central bank that this phenomenon, cryptocurrencies, is a strange beast yet to be deciphered, but which must be killed all the same, lest it turns inimical to the establishment. This stance damns whatever its benefits might be and just seeks to protect the status quo, throwing away the baby and the bath water.
Is that really what Nigeria needs at this point? To back up its position, the CBN has in the past reeled out a list of countries that have banned cryptocurrencies without mentioning those that didn’t. Of course, a common feature of those who banned is their authoritarian nature.
The CBN failed to mention that even in the U.S., the world’s biggest economy, the digital currencies aren’t banned. And as if to remind the Nigerian authorities, a day after the CBN gave its directiveto banks, the world’s richest man, Elon Musk, announced that his company had invested as much as 1.5 billion dollars in Bitcoins, the leading digital currency.
There’s no doubt that paper money was once a fringe article before it went mainstream. And so it is with many of life’s innovations, that start off as scorned outsiders. What the current CBN stance reflects is a fear of something new, a dread for change.
The CBN’s claim of protecting the investments of ordinary Nigerians doesn’t wash. If it was doing that, it would’ve shown more concern for the amount of assets Nigerians have already put into digital currencies, and would’ve moved to regulate rather than pull the plug.
Emefiele has shown a propensity to behave like a senior prefect more aligned with the school authorities than the students, even when wisdom dictates he should walk a fine line.
Sahabi Abdul is a writer for Nairaweb.ng