The math is not mathing
Despite the cash scarcity in Nigeria, there’s plenty of cash outside the banking system
Good morning, Big Brains. I wasn’t feeling it at first, but I think I’m getting round to this year’s Christmas; I made a couple of plans with my friends over the weekend, and the world feels right again. Yayy me!
- Chigor
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This Week’s Big Question: “What is your favourite Christmas memory?” Share your responses with us! If we find them fun enough, we’ll feature them in the newsletter :) So be on the lookout.
Let’s get into today’s edition:
Despite the cash scarcity in Nigeria, there’s plenty of cash outside the banking system
An EndSars activist has been arrested for calling out the government
The Big Deal
Despite the cash scarcity in Nigeria, there’s plenty of cash outside the banking system
We are starting today’s edition of the newsletter with a deep heavy negro sigh because Nigeria isn’t just a comedic gift that keeps giving; it’s also a logic-defying wonder.
Big brains, this news might sound untrue (especially if you’ve been living in Nigeria for the past few months), but numbers have a reputation for not lying, and what they’re telling us this time is that there is increasingly, more money in circulation and that a majority of it isn’t within the banking system.
This information is courtesy of data from the Central Bank Of Nigeria’s (CBN) money and credit statistics. According to the stats, there is currently a total of ₦4.14 trillion in circulation, with 94.3% of that money outside the banking system.
The quoted figures are from September 2024, but apparently, this is not a one-off; the amount of money outside the banking system has been on a consistent increase for a minute now.
In September of 2023, for instance, the percentage of cash outside the banking system was 87.5%. In September 2024, the amount rose to 93.1%. This is not the only thing that’s been on the increase. The CBN data also shows that the amount of cash in circulation has increased. In February 2024, the amount in circulation was ₦3.69 trillion. In March, it increased to ₦3.87 trillion. By May, it had gotten to ₦3.97 trillion; by July, it had gotten past ₦4 trillion and continued to progressively climb to the current amount it’s at now.
Why is this a big deal?
The fact that cash scarcity has progressively increased alongside the amount of money in circulation shows that there are problems in Nigeria’s banking system. One of the most obvious ones is that Nigerians still seem to be super reliant on cash even though there’s been increased effort to boost cashless transactions through digital banking.
Since yearly and monthly data has shown that the money outside of the banking system had consistently increased as the CBN increased the amount of cash in circulation, it seems obvious that the cash scarcity currently being experienced by Nigerians is not something that the release of more cash can easily solve— the more cash the CBN releases, the more cash move outside of the formal banking system, and the more banks are unable to provide regular people with cash. It’s like an endless cycle of doom.
For months, the media has tried to find answers to the cause of cash scarcity, but the closest thing it’s gotten to an answer has been the trade-off of blame between banks and the CBN. While banks allege that the CBN is causing the cash scarcity by not releasing enough money, the CBN swears that it does its part by releasing enough cash and that Nigerians should blame the people in charge of the distribution (banks).
There have been reports of banks selling released cash to POS agents, and those reports have refused to go away. The CBN seem to agree with this narrative because quite recently, the apex bank has been taking some measures to make banks behave; from releasing help lines for people to report cash scarcity to starting a “mystery shoppers” initiative to catch banks selling mint notes to POS agents, the CBN seem to be saying it’s trying its best but if we are being straight, the “best” is not working and will not work (as the numbers have shown) unless the CBN tracks down the reason why Nigerians have yet to get on board digital banking.
Even though the inconvenience of looking for cash has been the biggest consequence of the cash scarcity problem, there are other hidden consequences to this madness undermines monetary policy, reduces bank liquidity (which in turn affects their ability to give out credit to businesses and households, as well as capital for entrepreneurs). It will also encourage an informal economy and boost corruption and money laundering, among other things.
However you look at it, the CBN just has to find the root cause of the problem; otherwise, the country's overall growth will be stunted.
An EndSars protester has been arrested for calling out the President
The Nigeria Police is in the news again, and it’s not for good reason. On Friday, December 13, an EndSars memorial protester was arrested by the Police in Lagos State for cursing the children of Nigeria’s President, Bola Tinubu and the Inspector-General (IG) of Police, Kayode Egbetokun.
This all started on October 20, 2024, when the arrested activist, Olamide Thomas, started a Facebook live where she cursed the children of the President and the IG of Police after she inhaled the teargas used in dispersing EndSars memorial protesters at the Lekki tollgate in Lagos State.
Why is this worrisome?
Ms Thomas wasn’t just arrested; she was denied bail and transferred to Abuja, where she was reportedly handed over to the cybercrime unit of the Federal Criminal Investigation Department (FCID).
According to the Socialist Workers League (SWL), to which Thomas belongs, the Police were able to track her down by arresting her uncle, who was then “coerced to lead them to her.” They also said that before then, “one of her colleagues as well had been arrested through the police infiltration of a WhatsApp group. But he did not know her residence.”
The way that the Police went about this arrest just seems to send a strong message that criticism of the government is not allowed, and this is bad for democracy. What’s more worrisome is that Thomas is likely going to be tried using the Cybercrime Act, as she has been handed over to a Police unit in charge of that— there have been concerns that the government has weaponised this particular law in silencing civilians and media voices saying things it does not like and this latest move seems to confirm those concerns.
Aysat Abiona told African Arguments in June 2024 that the “Act is ambiguous with no clear definition, which makes it easy for it to be weaponised to target journalists and dissenting voices in the country.” Another worrisome thing is that a section of the act “allows law enforcement agencies to access and intercept data from any computer system or network without a court order.”
It’s bad enough that the Nigerian government has consistently used the Police to block protesters at the Lekki tollgate since 2021, it is now reportedly using the law enforcement agency to suppress free speech and criticism. If Thomas is successfully tried and jailed using the Cybercrime Act, it will clear the path for even more ugly things.
The Police are currently not saying anything to the media concerning Thomas’ arrest, but you’ll hear it first here when they do.
The big picks
AfDB approves $30m for solar power plants, others: The board of directors of the African Development Bank has approved a $30 million equity investment in Africa Finance Corporation (AFC) to enable it to finance climate action projects across Africa.
South Korea’s President Impeached over Declaration of Martial Law: following his December 3 martial law drama, South Korea’s parliament has passed a motion to impeach President Yoon Suk Yeol.
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It saddens me that in a democratic government, people can't speak their mind
The other I wrote an article, and because it sounded like I was slandering the president (which I was), I received a call to take it down from his supporters
God help us, o