A glitch on Google 12 hours before the 2019 presidential elections led to a surge in searches on AbokiFX, an online platform for live exchange rates. AbokiFX, and not a bureau de change operator, was first place many went to confirm if a dollar was really selling for N184. Details about who owns the website are sketchy. Abokifx Limited is a dormant company registered in the UK with one director, Olusegun Adedotun Oniwinde. Since 2016, after the first economic recession in 25 years arrived unannounced, the five-year-old website has become a reference point for Nigerians.
In retrospect, that singular event complemented with search interest in AbokiFX from Google Trends and demographic data on Nigerians living abroad shows the role of technology when events unfold these days. For a history buff, it’s also an opportunity to glance back at the past.
Data on the search history of AbokiFX for the past one year on Google Trends shows its popularity peaked between February 17 and 23, 2019 in Nigeria, the US and UK. People in Kano, Lafia, London, Maryland and Texas were just as freaked out about the overnight appreciation of the naira against the dollar.
In Nigeria, Port Harcourt, Lagos and Abuja are the cities where people are most interested in the website. Though Rivers retained the top spot in terms of states, Kano, Oyo, Ogun and Enugu generated more searches than Lagos. And tellingly in the US, the top 10 cities with the largest Nigerian populations were among the 30 cities where the site generated the most interest.
It’s easy to understand why the exchange rate of the naira to the dollar is of interest among Nigerians living in Kano, London and Texas. For some Nigerians the greenback is the default hedge against inflation or currency devaluation. Besides, a large proportion of the money Nigerians living abroad send home is from the US and UK (in 2017, UK-based Nigerians sent £3.7 million home). In the past 90 days, interest from Port Harcourt has dropped overtaken by Imo state. Abuja, Lagos, Maryland, New Jersey and Texas still search for AbokiFX; nothing compared to the February peak.
Should the rate at which a naira exchanges for a dollar interest someone living in Oyo or Nasarawa? A slow, uncertain recovery from the recession is enough reason. Experts advise that local businesses and investors to make conservative business plans; have sufficient cash in reserve; to avoid currency mismatches i.e. dollar-denominated loans paid from naira earnings and to diversify risks by investing elsewhere than Nigeria.
If cash reigns supreme among the list of liquid assets, then the dollar is king; for now. And since the often disjointed economic policies of Nigeria tend to shoot without missing, Nigerians have learned to fly to the dollar for safety, a habit developed during the hard knock life of the 1980s.
The economic crisis in mid to late 1980s resulted in a recession in 1991. Oil prices had plunged, the dollar was insufficient to meet our disproportionate appetite for imports, and the CBN, jettisoning market forces to determine the exchange rate, resorted to fixed rates and restrictions. Many turned to the black market. Shortly after its coup in April 1984, the Buhari-led military government passed a decree to combat black marketeering (a very Nigerian expression) and currency trafficking.
This period gave birth to multiple exchange rates: official, parallel or black market; practices such as round-tripping and arbitrage i.e. taking advantage of differences between the official and black market rates. Similarly, an alphabet soup of acronyms emerged: DAS, BDC, SFEM, AFEM, IFEM, and UFEM. Some of these acronyms died while others evolved.
Take UFEM. It stands for Underground Foreign Exchange Market, and was dominated by mallams. In a study of the black market during the devaluation in the 1990s, Charles Adesina, a professor of history, notes that, “The operators of UFEM moved into the spaces opened up by the incoherent policies, formal sector corruption and the sheer absence of needed financial services to provide a whole portfolio of financial services – at a price – to the public.”
Contrary to popular stereotype the mallams were connected, savvy, organised and had a rich tradition of foreign exchange transactions that dates back to pre-colonial trade routes in West Africa.
Because they sold at market rates the premium between what they offered and the official rate was an irresistible source of corruption for government officials and financial institutions. To correct this anomaly licences were given to bureau de change (BDC) operators. Yet the black market prevailed and morphed into BDCs.
Technology, however, is disrupting the efficient, convenient, safe and expeditious service they once provided. A service the mysterious AbokiFX has disrupted, democratising information that was once their advantage.
This month makes it a year since the Association of Bureaux De Change Operators of Nigeria (ABCON) launched naijabdcs, their website. It’s their response to the foreign, “inauthentic” and unrealistic AbokiFX.