In February 2020, I spent a weekend in Ghana.
The purpose of the trip was to enjoy some much-needed R&R with a comely consort in the decidedly less stressful environment of Accra. Prior to taking off from Lagos, I realized that I had hit my monthly $100 limit for dollar payments on my Nigerian card. I received an email in the departure lounge informing me that a $60 subscription payment had just bounced. It was not that I did not have the equivalent of $60 on the card, it was that per CBN restrictions, my bank had capped my monthly forex usage at $100.
I was still brooding about what to do when I arrived in Accra ahead of the aforementioned comely damsel. I decided to find a way to digitize the significant amount of cash I was holding, having just arrived in a foreign country and not wanting to take any risks. One way or another, I ended up at an Ecobank branch filling a form to take out a prepaid Visa card. All I would have to do was deposit the cash I had, which would be loaded onto the card, and I would have a fully functioning Visa card just like my Nigerian bank card.
Out of interest, I asked the customer service rep whether this card would work for international payments and if it had a limit. Yes, he said, it would work like any Visa card anywhere in the world, and it also had a limit. How much was the limit, I asked, not sure what I was expecting to hear. His reply? “$10,000 a month.”
When you chase, it runs away
When I managed to scrape my jaw off the floor, I found myself excitedly calculating the possibilities in my head – all my subscriptions and payments that had become difficult to impossible in Nigeria were now possible. All I would have to do was physically travel to Accra every now and again to load some cash onto a simple prepaid card not even linked to a bank account. Of course, I would never come close to exhausting the $10,000 monthly forex limit, so all was well.
At this point, I had to ask the customer service rep a question that he might not even have the answer to: “How on earth are you guys able to offer a $10,000 monthly forex allowance? Isn’t the Bank of Ghana afraid of capital flight like the CBN?” His answer was as simple as it was profound. Forex, he said, acts like a bird. If you put food out for it and leave it alone to come and go as it pleases, it will come to you by itself and become comfortable around you. If you desperately chase and try to capture it, on the other hand, you will never catch it and it will never trust you enough to hang around you. Ghana, he said, treated foreign investment and forex like a bird. That was the secret.
To attempt to control the hundreds of millions of peer-to-peer financial exchanges taking place at ground level outside of the regulator’s eyeline, is to attempt to shoot down a herd of zebra in the Serengeti
This elegant metaphor that a banker in Adabraka explained to me nearly 2 years ago, could very well be summarised as the reason why CBN governor Godwin Emefiele is seemingly destined to go down in history as the single worst occupant of that office in postcolonial Nigerian history. During his tenure, his sole and entire policy strategy has revolved around relentlessly and obsessively chasing the forex bird. Instead of catching it, the 95 percent decline in direct remittances into Nigeria tells an entire story on its own. He has neglected actual regulatory and economic duties as a Central Bank head to pick up a net and chase the nimble-footed chicken of foreign capital fruitlessly, but he has learned nothing from his extended failure.
Can’t catch the bird? Ban it too
Emefiele honestly and genuinely believes that he will become the first monetary or financial regulator in history to directly and unilaterally seize control of the entire mechanism of basic human economic interaction – the person-to-person exchange. Following the ignominious failure of his repeated attempts to catch the forex bird with his succession of ill-thought capital restriction policies and simple-minded bans, it should have become clear to even a moderately intelligent CBN governor that the fundamentally decentralized nature of Nigeria’s economy makes a total mockery of any attempts to introduce North Korean-style capital controls.
Read also: CBN’s N100bn healthcare fund lifts companies but forex hurdles linger
A mentor of mine, Dr. Richard Ikiebe, once famously described Nigeria’s economy to me as “the world’s largest black market economy.” To attempt to control the hundreds of millions of peer-to-peer financial exchanges taking place at ground level outside of the regulator’s eye-line is to attempt to shoot down a herd of zebra in the Serengeti using a single rifle attack on foot. Sure, you might hit one or two if that makes you feel better, but at the first crack of the gun, the entire herd will scamper rapidly at 4 or 5 times the speed your human legs can take you, and you’ll be left with 2 statistically useless zebra carcasses and a cloud of dust around you.
This is what is happening to Emefiele’s latest attempt to force his will on the forex market by going after peer-to-peer crypto traders. Almost as quickly as he launched his latest hare-brained honeytrap scheme to trap them up, the vast majority of professional and retail traders rapidly adjusted their operational models and left his small army of Yakubus and Hassans writing “15$BNB” on transaction descriptions redundant. This is what the market does. This is how capital operates. You would think that – of all people – an ex-bank CEO would be acquainted with how capital works, and what it is and is not possible to do with money and human behaviour.
But if there is one thing that the example of Godwin Emefiele will show to our children and grandchildren when the story of this era is told, it will be that in the geographical entity once known as Nigeria, it was possible for someone to rise to the very top of leadership positions without having the slightest understanding of what their job was.
After all, just look at the president.
