As Nigerians have been cut off from access to their own money amid a banknote redesign, Bitcoin is the best chance to reinvent the system.
This is an opinion editorial by Ray Youssef, a founder and CEO of Paxful and a founder of the Built With Bitcoin Foundation.
Imagine standing in endless lines, fighting to get ahold of your own money. Read that again and try to make sense of it. This is life for millions of Nigerians right now, who face a redesign of their banknotes, the naira, which means old naira bank notes will be useless after February 10. This is a problem because while Nigeria hopes to move closer to a digital-cash economy, the country is still heavily cash dependent. The policy is causing a flood of people at bank offices and ATMs, desperate to swap their old bank notes for the new redesign.
Adding fuel to the fire, the Central Bank of Nigeria (CBN) has imposed a weekly cash withdrawal limit which, as of January 9, was 500,000 naira for individuals (around $1,087) and 5,000,000 naira (around $10,087) for organizations. While these weekly limits already seem insane, the actual amount Nigerians can pull out depends on what’s available at each location.
What’s Unfolding On The Ground In Nigeria
My team in Nigeria is witnessing all-day queues — with many people walking away empty handed. Some bank offices and ATMs do not even have cash to dispense. Nigerians are bringing mattresses to ATMs and others are arriving at ATMs at 4:00 a.m. to be 115th in line for when they open at 8:00 a.m. Scarcity is an even bigger issue in some rural areas and individuals have not been able to access any new notes. I’m hearing that, after returning the old notes to the banks through their kids or agents because most are unbanked, they are unable to get new notes. This puts a halt to their day-to-day transactions and livelihoods. And for the individuals who are able to get naira, point-of-sale (PoS) transaction charges skyrocketed by 400% in most cities across the country. This is causing a lot of fear as inflation is already over 20% and Nigerians are struggling to keep up with the cost of living.
This is all coming to a head during a massively-important general election on February 25. The monetary and political collision is causing its own chaos — as political parties in Nigeria are threatening an election boycott if the February 10 deadline is pushed back again. They believe that less cash in circulation will cut down on election fraud and vote buying. Beyond the election, advocates for the redesign also believe that Nigerians are cash hoarding — and by getting a better sense for the money circulating in the economy, they can better tame inflation.
Bitcoin Can Solve This
Nigeria has shown the world that Bitcoin can be the solution. Mass adoption will not happen overnight, but it will put an end to these terrible bottlenecks. Money is a human right and people should not be waiting in day long queues for their own money. The beauty of Bitcoin is that while it is not tied to a central authority, it can strengthen a national economy. Bitcoin has proven to do this by lowering inflation, giving more people access to the economy, increasing transparency and acting as a universal translator of money. Through the Lightning Network, Bitcoin can also bring in international wealth and employment — by plugging into global value chains, Nigerians are able to receive payments for their services virtually instantaneously and for free.
Breaking The Global Monopoly On Wealth
For too long, the people of countries like Nigeria have had a gun held to their heads. If the Nigerian government tried to move its economy forward by putting its people to work and flooding its economy with money, it would get a call from the International Monetary Fund (IMF) telling it that they need to buy Western currencies at a premium to fuel its economic upswing. If not, the IMF could use its control of price discovery to ruin the local currency.
This isn’t unique to Nigeria, it’s happening all across the Global South. It’s the reason why the region remains poor while it’s seeping with natural resources and a strong, growing youth population. So, sadly, there will be no Global South version of The New Deal, that right is only reserved for the West. But instead of enacting policies like cash withdrawal limits and currency swapping, I implore the Nigerian government to lean into Bitcoin and allow its economy to flourish. Through Bitcoin, it can open the Nigerian economy up to more international employment, shield Nigerians from economic volatility and lessen its reliance on international centralized power. Prosperity for everyone, powered by Bitcoin.
This is a guest post by Ray Youssef. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.