Running the Central Bank of Nigeria is a challenging job. Most people think that the CBN governor has a magic formula to deepen the strength of the economy and the currency without efforts from the ministries of science, agriculture, etc. So, if the Naira falls, call the CBN governor. Unfortunately, in all nations, the strength of currencies comes from warehouses and factories (the old industrial type of Dangote Cement and the modern type we see in startups like Egoras). Yet, we see the money shrine in Abuja as the best temple to decide the fate of Naira.
Of course, the CBN has a role to play on how those factories operate through monetary policies which affect many things in the economy. As we evaluate those, Godwin Emefiele comes into that view. When he called the deal to change the Naira notes, I had expected many to just THANK HIM.
But it seems there is nothing he can do that will win the hearts of the majority. That policy is a hat trick even though there were goals against, but generally it is a game we can all enjoy to see how it plays out. But that may not be the only thing.
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Yes, “The Central Bank of Nigeria has said it would launch a national domestic card scheme on January 16, 2023.The scheme will be launched through the Nigeria Inter-Bank Settlement Systems (NIBSS) in partnership with the Bankers Committee….The bank said apart from fostering innovation within the Nigerian domestic market, the scheme would allow banks to offer a variety of solutions including debit, credit, virtual, loyalty and tokenized cards amongst others. …But a national domestic card is expected to rival Visa and Mastercard, the market’s biggest players.”
If this card system goes ahead, Verve from Interswitch will have a major competition. You can also say that for Visa and Mastercard cards within Nigeria. But it is not clear how the CBN card will be integrated into the global payment system.
While we commend CBN for these ideas, it has to watch how it is reshaping competition, and making it likely not exciting for private sector banking players to have motivations to invest in innovation. We have e-Naira. Now, they are bringing a domestic card scheme which I think is a great idea except that allowing the apex bank to run it, instead of going through the consortium of banks, may send the wrong signals.
Emefiele is playing many drums, he is hoping that Nigerians will dance along. He needs to watch carefully as he can create uncertainty that many will not care to invest in the financial sector since it appears the government via CBN can do everything. This is not to say that a domestic card scheme is bad in any way!
All Together {LinkedIn Summary)
Not sure how to summarize this one here. But I want to note that the Central Bank of Nigeria (CBN) has had a lot of music out there recently. We have the eNaira which may freeze commercial banks if it had succeeded. Now, it wants to run a card issuance scheme (local version of Visa and Mastercard). If it succeeds, Interswitch Verve may have a problem ahead.
While we welcome new ideas, the apex bank must evaluate how these activities will affect interest on new investments in the economy. I do not believe that CBN will beat the commercial banks on innovations even if the products are made free for users.
CBN should focus on catalytic initiatives and not these marginal interventions which our commercial banks can band together and execute. I support a local card issuance scheme but I do not want it driven by the central bank. The Bankers committee can lead these initiatives under the supervision of CBN. They have got great results in BVN and other initiatives.
Sure – the message is clear: mop up all Naira notes by changing the notes, force people to comply with the digital-economy regime, and then give them the local cards to complete the end-to-end playbook. We get it and I commend Emefiele. But he needs to calibrate so that as he beats these drums, the music will be clear for the right dance steps.
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Godwin Emefiele’s previous job was in a commercial bank, and from there – he became the CBN governor. That commercial bank mentality was not weaned from him, so he carried it to the apex bank; now he’s competing in the same space he ought to be supporting and regulating.
Either way you look at it, it’s a bad call. We cannot be talking about privatization and concessions on the one hand, only to have a CBN that basically works hard to take jobs away from the commercial banks. The CBN is now a player and regulator, it should not be that way.
It’s like having the NUC establishing and running its own universities, and at the same time regulating other universities. A public institution must have a nuanced and robust knowledge of its powers and limitations, else everything will be abused. You do not go ahead to something just because you can do it, you also have to deeply think through how your actions can affect those who draw life from you, their own existence must be guaranteed as well.
I do think that we have lots of irrational people in the highest decision-making organs of our national affairs, and the sum total of their bad judgments is exactly why Nigeria has continually failed to advance.
A reset is inevitable.
Thank you jare. The author was just beating around the bush instead of condemning in vety strong terms, a Central Bank’s Chief’s attempt to sabotage an economy in sycophantic service to his Boss Buhari.
How a Central Bank Governor can be allowed to undermine the structure of economic policy making and roll out a gestapo-style ? redesign beats me.
Not even the banks who are supposed to help in the distribution to local people, or the Minister for Finance, who is supposed to interface with the Nigerian people, were carried along.
Emefiele grounded by fiat, commercial activities across Nigeria. Market women across Nigeria, one of the most active commercial activity chain, lost billions of ?aira on a daily basis.
You cannot force cashlessness on a society that cannot guarantee 24 hours of uninterrupted electricity.
Quite unfortunate.
Thankfully, i don’t expect any of that to happen under President Tinubu.
It will be difficult to dribble him. Or confuse him with those terms and terminologies that these economic experts and gurus have used to ‘mentally molest’ sitting Presidents.
Tinubu is as savvy as the best of them.
MD.
Your analogy is wrong if CBN policy on redisgn and implementate Then Nigeria will head to the right position of economic recovery However the beginning will be rough.
The only exit plan is to bring privately owned vault back to the commercial banks.
Dr Raymond Asemakaha CFA.