Nigeria: 2023 Year Of Cash Crunch And Naira Swap – Analysis

2023 started on a cautionary note as the cash crunch from the preceding year festered into the new year and now the year is ending in a similar mode with the Central Bank of Nigeria insisting that hoarders are behind the current cash scarcity being experienced across the country. What’s more, insider abuse by bankers has also been identified as a major factor responsible for cash scarcity. As the yuletide approaches many ATM galleries across the country are empty and cannot dispense cash, leaving Nigerians stranded. 

Without a doubt, many Nigerians would describe 2023 as an annus horribilis, or terrible year. It was a year of naira scarcity with its attendant consequences of pain, hardships and extreme suffering. Indeed it was a tough and rough year in many respects. The situation further worsened as the Central Bank rollout and redesign of the naira and currency swap of October 2022 spilt over to 2023, which resulted in the mop-up of over 85 per cent of 3.23 trillion naira outside the banking system. To be sure, the policy was hastily formulated and poorly implemented. It seems the policy was birthed in error and implemented with a touch of vileness. Through this policy, the CBN also hoped to reduce the amount of currency in circulation and move towards a cashless economy. At the same time, it used the exchange of banknotes to reduce fraud. By placing a ceiling on daily withdrawal from banks, the apex bank hoped that this would help control liquidity and reduce inflation. 

Observers believe the policy which was targeted at politicians and aimed at curbing vote-buying during the February 25 general elections failed to consider all the ramifications involved in an operation of such magnitude that would affect the commonality of the people before it was eventually rolled out. True, vote-buying had been a major problem in the general elections, but the timing of the cash swap was considered ill-timed and ill-motivated.

Moreover, the policy was executed in the breach because supply was scarce as the banks claimed the CBN did not supply enough of the new notes, hence they struggled to provide cash, which turned the banks into a venue of violent fights and exchange of fisticuffs as hapless customers struggled to collect their hard-earned deposits. Even some banks were vandalised by irate customers. This situation which was unprecedented in the annals of the nation, resulted in people using money to buy money, creating unimaginable hardships and trauma, costing some their lives because they had no access to their deposits in the banks and could barely afford to make purchases of foodstuffs, drugs and sundry items in the markets, shops and pharmacies.

Again there were riots due to the cash crunch in some major cities. The rioters had attacked bank ATMs and blocked roads in three Nigerian cities as anger spilt on the streets over a scarcity of cash, just days before the general elections.

After a lot of agitations by the populace, later the CBN said citizens had up till January 31 to dispose of old notes. A second deadline of February 10 was issued by the apex bank which was later challenged at the Supreme Court by some state governors. Relief came for millions of Nigerians when the Supreme Court ruled that the extension of the cash swap should end by December 31, 2023. Meanwhile, the apex court has ruled that the use of the old notes along with the new notes will continue indefinitely. 

Now the table has turned and the architect of the cash swap, the former CBN Governor, Mr Godwin Emefiele has been detained since June. The DSS has slammed several charges against him including the illegal possession of firearms and other misdemeanours. Emefiele has been remanded in Kuje Prison pending the perfection of his bail conditions. Earlier the president had stated that the CBN under Emefiele was ‘rotten.’ The president named the Chief Executive Officer of the Financial Reporting Council of Nigeria, Jim Obazee, as the special investigator.

The President asked the Special Investigator to investigate CBN and key Government Business Entities, adding that the investigator would report directly to the President’s office.

Meanwhile, Olayemi Cardoso, a former chairman of Citibank Nigeria has been appointed the new CBN governor. Cardoso served in government as the first commissioner for Economic Planning and Budget for Lagos State, where he championed the financial reform process which led to the state’s development of independent tax revenues.

Also, the former Chairman of the EFCC, Abdulrasheed Bawa who was detained without charges by the Department of State Services, DSS has been released after spending three months in detention. He was released on October 25. His freedom came months after President Bola Tinubu suspended him as the chairman of the anti-graft agency.

Bawa’s suspension was due to grave allegations of abuse of office levelled against him, according to the office of the Secretary to the Government of the Federation (SGF). However, no charges were brought against Bawa.

In another breath, the year witnessed the consolidation of civil rule. For the first time in our political history, military adventurers granted us relief and spared us the pain of truncation of civil rule, resulting in 24 years of uninterrupted democracy since the military returned to the barracks in 1999. It would appear the military have subordinated themselves to civil authority. 

Voter registration took on a feverish pace as the Independent National Electoral Commission (INEC) announced it had registered 10.49 million new voters, with 84 per cent of those aged 34 and below expected to vote in the February 25 general elections. The young voters were galvanised by the candidate of the Labour Party, Mr Peter Obi. 

Out of the total 93.47 million registered voters, only 24.9 million persons voted in the Febuary presidential and National Assembly elections. This represents a meagre 26.72 per cent voter turnout, the lowest since the return to democracy in 1999. 

Nevertheless, democracy seems to have come of age as the nation witnessed a smooth transition of power from the Buhari administration of the All Progressives Congress to the National Leader of the party and former governor of Lagos State, Asiwaju Bola Tinubu who emerged victorious in the presidential elections and declared winner by the Independent National Electoral Commission, INEC.

As usual, the presidential elections were disputed and the two standard bearers, Alhaji Atiku Abubakar of the Peoples Democratic Party, PDP and Mr Peter Obi of the Labour Party ported to the Presidential Election Petition Tribunal, PEPT to ventilate their grievances and challenge the declaration of Bola Tinubu as the winner of the presidential elections by the Independent National Electoral Commission, INEC. This case was unprecedented as Atiku Abubakar went as far as the United States of America to seek evidence that Tinubu did not attend Chicago State University and that the certificate he presented to INEC was forged. Also, drug-related charges against Tinubu were pursued with relentless vigour. At the end of the day, Atiku’s voyage to America was not helpful as the evidence he brought back was rejected by the Supreme, saying it should have been pleaded at the PEPT and that it failed the litmus test in the sense that election petitions are time bound, hence Atiku’s fresh evidence brought before the court had been overtaken by time. Before this, the PEPT had knocked out prayers and reliefs sought by both Atiku Abubakar and Peter Obi to disqualify Tinubu on the strength of their petitions against him, and the Tribunal subsequently upheld Tinubu’s election. Both Atiku Abubakar and Peter Obi had argued that both judgments at the PEPT and the Supreme Court were tilted towards the law instead of justice.

Barely three months in office, President Bola Tinubu emerged as the new Chairman of the Economic Community of West African States (ECOWAS) at the 63rd Ordinary Session of the Authority of Heads of State and Government held in Bissau, Guinea-Bissau in July.

Thereafter he was confronted with a major test as the military took over power in the Niger Republic sacking President Mohammed Bazoum. ECOWAS read the riot act to the junta, warning that it would not hesitate to take military action to restore President Bazoum to power. The junta rebuffed ECOWAS. The regional body followed up with sanctions, which has the regime to its knees. Despite the junta’s intransigence, Tinubu has held firm disavowing military rule and calling for the restoration of democracy in Niger and other parts of West Africa.

However, Tinubu’s first act on his inauguration was to declare that fuel subsidy was gone forever. By that singular pronouncement aimed at economic reforms, Tinubu further threw the economy out of gear as there was an immediate market reaction, which resulted in the unprecedented review of the price of petroleum motor spirit, PMS from 198/ 200 naira per litre to 680 naira per litre, which is about 300 per cent price hike, forcing local consumption to drop. 

The daily consumption figure now stands at 46.38 million litres, down from the 65 million litres per day before the cut in subsidy. An analysis of daily truck-out data published by the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) shows that petrol consumption has reduced by more than 24 million litres per day on average. The subsidy removal revealed that Nigeria was subsidising petroleum products consumption in neighbouring Niger, Chad, Cameroon and the Benin Republic.

It bears restating that the Buhari administration only made provision for fuel subsidy up till June 2023, hence Tinubu was only stating the obvious but harsh reality that stared the nation in the face by announcing the end of the fuel subsidy regime. Granted the removal of the subsidy was long overdue because it was riddled with widespread corruption. Besides fuel subsidies had risen from 500 billion naira annually to over a trillion naira per annum, and were no longer sustainable, which was why the majority of the presidential candidates had agreed that it had to go.

The aftermath of this was the spiralling cost of transportation and skyrocketing food prices. As a corollary, inflation jumped from 23 per cent, an all-time 18-year high in July to 27.3 per cent in October. The latest reports say inflation has jumped to 28.4 per cent in November. In short, the cost of living went through the roof with many families struggling to put food on the table and the misery index rising astronomically. To compound the existing problem the reunification of the foreign exchange rate regime led to the devaluation of the naira with the official exchange jumping from 435 naira to 820 naira at Nigeria Foreign Exchange Market, NIFEM, Central Bank rates. The dollar to naira exchange rate has doubled since Tinubu assumed office and it has barely found its feet as it continues to swing like a yoyo ranging from 800 to 1000 naira at Nifem. 

Of course, being an import-dependent nation, prices of goods have been marked up to reflect the new reality of the exchange rate regime with the result that prices of goods have quadrupled. Generally, the standard of living has dropped drastically for millions, with many living from hand to mouth and most workers now depend on loans from fintech companies to make ends meet.

However, to cushion the effects of the economic reforms, the Tinubu administration has crafted a raft of measures to alleviate the current economic hardships. Part of the measures include cash transfers to 15 million households. The government also approved cash relief of 35,000 naira across the board for all civil servants pending the approval of a new minimum wage in 2024. Also, there’s the presidential initiative in which the federal government has provided 5 billion naira as palliatives to the states as well as 7 billion naira in infrastructural funds to help bridge the gap in infrastructure development at the sub-national level.

At this stage of our development, many would say it’s an achievement to have hitched our wagon to the democratic train and that 24 years of democracy should be applauded and celebrated. While politicians and their cohorts are living it up basking in their new-found wealth, on the contrary, the majority of the population is wallowing in penury and want, barely eking out a living. For the vast majority, democracy seems a mirage, an unmet wish and unfulfilled expectation. What’s more, the several years of democracy have further pushed the people to the margins, resulting in a progressive deterioration in the standard of living while millions have sunk into the depths of poverty. Many are beginning to wonder if the clamour for democracy has been worth all the trouble, considering that there’s little to show for democracy. But then some would say the worst civilian administration is far better than a benevolent military dictatorship.

As things stand, some of the key indicators of progress and development which include health and education have suffered the most. The parlous state of education has witnessed the progressive deterioration of tertiary education and things have gone from bad to worse due to poor funding which has led to frequent recourse to strike actions by academics fighting for improved funding for that sector. On the other hand, the health sector is in a deplorable condition and this has been made worse by the mass exodus of doctors and other healthcare workers to Europe and the United States of America in search of greener pastures. 

Due to economic challenges, there’s been a major wave of migration, commonly called japa by the youths and the middle-aged to Europe and the United States of America in search of better living conditions. Even some retirees have voted with their feet as the economy continues to bite harder.

In light of this, President Tinubu has called for sacrifices saying the temporary pains would usher in bounteous gain in future. Yet the political leadership has not matched words with action. The administration acts as if the nation is buoyant and has constituted the most bloated cabinet in Nigeria’s political history with 48 members in Tinubu’s cabinet, despite a haemorrhaging economy. Worse an insensitive National Assembly went ahead to procure SUVs estimated at 160 million naira apiece for its members, this is despite protestations by the generality of Nigerians. As the economy continues to bite harder and the Tinubu’s economic reforms unfold multinational companies are cutting back their presence in Nigeria or pulling out altogether as currency problems hamper their operations and hurt consumers. Many of the largest companies have reported that the macroeconomic conditions had hit their earnings. 

Ever since his inauguration in May, Tinubu has been on the road trying to woo investors across the world and assuring them that they would be able to repatriate their earnings without any hindrance. Tinubu is seeking to make the country attractive to investors in a bid to revive an economy bedevilled by slow growth, rising inflation and huge debt. In any case, Tinubu’s reforms have received approbation as Nigeria’s economy has just been upgraded by Standard and Poor’s and Moody’s. 

While some multinationals are reaching for the exit door others are coming in as well. TotalEnergies has disclosed plans to invest the sum of $6 billion in the coming years on offshore oil projects and gas production across all terrains. 

Also, new trade agreements were signed with Germany, including a deal that called for the nation to export liquid natural gas.

Under one deal, Riverside LNG of Nigeria will supply 850,000 tons of liquefied natural gas to Germany each year, working with German firm Johannes Schuetze Energy Import AG. The first delivery of gas is expected in 2026, and the president’s office said gas exports may increase in future years.

Despite conerns such as rising inflation, interest rate hikes, and apprehension surrounding the fallout of the 2023 general elections, investor confidence remained strong, leading to increased buying activity, reports Nairametrics.

“The positive sentiment among investors can be attributed to several factors, including the peaceful transition to power following the 2023 elections, favourable policies introduced by President Bola Tinubu’s new administration such as the removal of fuel subsidies, streamlining of exchange rates, and the floating of the naira,” Nairametrics concluded.

Meantime, off-season elections were held in Imo, Bayelsa and Kogi states in November. Both Governor Hope Uzodinma and his Bayelsa State counterpart Governor Douye Diri won their re-election bids. In Kogi, the candidate of the APC, Usman Ododo emerged winner defeating his closest rival Murtala Ajaka of the Social Democratic Party.

Still, insecurity remains intractable even though the security forces seem more proactive now and they appear to be on top of their game and ready to take the battle to the terrorists. Through a renewed onslaught on terrorists, the Nigerian Air Force has neutralized some terrorist kingpins. Also, with the heat on and the military turning the screw on terrorists, thousands of Boko Haram footsoldiers have surrendered and renounced terrorism. 

According to the Director of Nigeria Air Force Public Relations and Information, Air Commodore Edward Gabkwet, an air strike undertaken by the Air Component of Operation Whirl Punch on 6 December, in Shiroro Local Government Area of Niger State neutralised scores of terrorists, including the dreaded terrorist and kidnap kingpin, Yellow Jambros. The terrorists met their end while attempting to cross the Jikudna River in Galadima Kogo District, heading towards the Wurukuvhi axis of Chikun. Also, wanted terror kingpin, Ali Kawaje, alias Ali Kachalla, was suspected to have been eliminated after the airstrikes near Mangoro in Munya local government area of Niger State.

As the military continued to launch a series of offensives against terrorists, there was a drone strike in Tudun Biri, in Igabi Local Government Area of Kaduna State on December 3, that went awry, killing more than 85 people in the aerial strike. The bomb struck while the villagers gathered to commemorate Maulud in the village.

At the same time, kidnapping still poses a major challenge with several cases recorded in the northwest, northcentral and the Federal Capital Territory, Abuja as well as other parts of the country. Ransome payments are on the rise as kidnappers prowl the nation’s highways and byways.

Despite 24 years of civil rule, democracy continues to walk on a tightrope. The political crisis in Ondo State in which Governor Rotimi Akeredolu hung on to power despite the fact his failing health threw the state into a political quandary with gladiators in the state resolved to ensure that the constitutional process was scuppered and the Deputy Governor Lucky Aiyedatiwa barred from taking over as the acting governor. Efforts were made to impeach Aiyedatiwa but this came to nought as the Chief Judge of the state refused to kowtow to the demands of the state’s House of Assembly. In the end, common sense prevailed and Governor Akeredolu later proceeded on leave to attend to his failing health, which paved the way for the deputy governor to take over as the acting governor of the state. 

In Rivers State, both Governor Siminalayi Fubara and the former governor of the state Nyesom Wike are locked in a battle of wits. Fubara is determined to assert his independence and free himself from the clutches of his political godfather, Nyesom Wike. As they say, when two elephants fight it is the grass that suffers. The 32-man members of the House of Assembly are poised to do the bidding of Wike. Already 27 members of the Peoples Democratic Party in the House of Assembly have defected to the All Progressives Congress. Earlier they had started moves to impeach Governor Fubara but the governor moved against them by bulldozing the House of the Assembly to the ground, thereby denying the Wike loyalists the opportunity to impeach him. The political crisis in Rivers has taken a new dimension as ten commissioners who are Wike loyalists have resigned from the cabinet. The oddity of the situation in Rivers was brought to the fore as the governor presented his budget to only four members of the state’s Assembly at the Government’s House, Port-Harcourt. Without much ado, the budget was swiftly approved and signed into law within two days of the presentation of the budget to the four members of the state’s Assembly who are loyal to the governor. As the crisis gathers steam, the Federal High Court sitting in Abuja has stopped the Independent National Electoral Commission from conducting by-elections for the 27 defected Peoples Democratic Party’s lawmakers.

Meanwhile, the feuding parties in Rivers State have smoked the peace pipe following the intervention of President Tinubu. Both the governor and the members of the state’s Assembly loyal to Nyesom Wike will revert to the status quo ante. The governor will represent his budget to the full complement of legislators and also resubmit the names of commissioners who resigned recently from the Cabinet. To this end, all impeachment proceedings against the governor will be dropped by the legislators. Already the Rivers House of Assembly has withdrawn the impeachment notice against Governor Fubara.

The situation in Rivers State is of major concern and a test case for democracy and if not handled with care may eventually lead to a cascade of events the end of which no one may be able to predict.

In another development, the energy sector witnessed the commissioning of the Dangote Refinery, Lekki, Lagos by former President Muhammadu Buhari in May. The refinery is expected to come on full stream by January 2024. It is envisaged that the refinery will serve the nation’s energy needs and curb the import of refined petroleum products. Also, the NNPCL has promised that the Port Harcourt Refinery will come on stream in December. However, large-scale oil thefts still dogged the oil sector with rampant vandalisation of pipelines by sundry oil thieves. A summation of crude oil theft incidents recorded between episode 8 (May 2023) and episode 30 (October 2023), it was revealed that a total of 4,145 crude oil theft incidents were recorded between May 2023 and the second week of October 2023. Besides, the nation lost 2.3 trillion naira to oil theft in 2023.

On a positive note, Lagos State, touted as the fifth largest economy in Africa, continues to set the pace in terms of infrastructural development and growth. It became the first sub-national government to build an intra-city railway network in West Africa. The Lagos Blue Rail Line project commenced operations in September linking Marina to Mile 2. The second phase of the rail line linking Mile 2 – Okokomaiko has started in earnest. The 27-kilometre rail network has been a major relief for commuters in that axis of the city. By the same token, the 37 km Red Rail Line project starting from Ebute Meta to Alagbado is expected to take off before the end of December. When Red Line Rail starts, it is expected to carry 500,000 passengers per day.

On a similar note, the entertainment industry continues to be inundated with accolades and honour. Our artists remain a source of pride and inspiration to the generality of the people. Both Nollywood and the music industry have stamped their mark on the global scene with Nigerian movies and music receiving rave reviews. Indeed Nigerian music has captured the global market with Whiz Kid, Davido, Burna Boy, Asake, Rema and Tems headlining major global events. On 12 September 2023, music star Ilerioluwa Oladimeji Aloba, popularly known as MohBad died in Lagos, at the age of 27. The nurse who administered a Tetanus vaccine to him was arrested and found to be an unlicensed nurse on 19 September 2023 by the Lagos State Police Command. The sudden death of Mohbad was a devastating blow leading to an outpouring of grief and sorrow both at home and abroad. Investigation into the cause of death is ongoing by the police.

In sports, Nigeria had a superlative outing at the Confederation of African Football, CAF awards. Nigeria’s Victor Osimhen won the CAF 2023 Men’s Player of The Year award. Victor James Osimhen MFR is a professional footballer who plays as a striker for Serie A club Napoli, Italy and the Nigeria national team. Also, Super Falcons striker Asisat Oshoala won a record sixth African Women’s Player of the Year Award. Oshoala, who plays club football for Barcelona, beat South Africa’s Thembi Klagtlana and Zambia’s Barbara Banda to the award. Chiamaka Nnadozie was crowned the CAF Women’s Goalkeeper of the Year for 2023. Nnadozie beat fellow goalkeepers in the form of Moroccan shot-stopper Khadija El-Rmichi and South Africa’s Andile Olaminii. 

In sprint, Tobi Amusan, Nigeria’s track sensation, secured victory in the 100m hurdles event at the Diamond League held in Eugene, Oregon, USA. 

This achievement marked her third consecutive Diamond League championship. Amusan triumphed with a stunning time of 12.33 seconds, outpacing Puerto Rico’s Jasmine Camacho-Quin, who finished in 12.38 seconds. Tobi Amusan achieved a season’s best time of 12.33 seconds to claim victory in the women’s 100m hurdles. 

On the obverse, the US Securities and Exchange Commission (SEC) filed charges against Dozy Mmobuosi and three companies he leads as CEO, accusing them of inflating their financial performance to defraud investors. The charges filed in the United States District Court in New York described the scope of the fraud as “staggering.”

“Defendants have booked billions of dollars worth of fictitious transactions through two Nigerian subsidiary companies Mmobuosi founded and controls, reporting hundreds of millions of dollars of non-existent revenues and assets. For example, Tingo Group’s FY 2022 Form 10-K filed in March 2023 reported a cash and cash equivalent balance of $461.7 million residing in Tingo Mobile’s Nigeria bank accounts. However, authentic bank records for the same accounts show a balance of less than $50 for that period,” the court document read.

As the year winds down and 2024 beckons Nigerians can only hold on to hope as millions struggle to navigate the harsh and tumultous times. It is difficult to predict what 2024 holds in store but President Tinubu has assured the new year will bear the fullness of reforms undertaken by his administration. No matter what, having survived the outgoing year there’s every indication that with the usual doggedness and resilience Nigerians will overcome any challenge ahead.