Last month the U.S. Office of the Comptroller of the Currency (OCC) issued a new set of guidelines that underlined the fundamental difference between a prosperity-focused economy and whatever Nigeria is currently doing. The new rules state that American banks can no longer deny their services to businesses because of “category-based risk evaluations” which place legitimate businesses alongside illegitimate ones.
The most obvious target of the new regulations was to effectively criminalise discrimination against cryptocurrency or blockchain-based businesses in the United States. Prior to the decision, certain banks had refused to offer services to crypto companies because they crudely categorised all crypto-related activity under the same heading as “untraceable dark web money used to fund illegal transactions.” Now the OCC said, they are obligated to provide fair financial services access to all individuals and businesses in line with the provisions of the Dodd-Frank Act.
Imagine that. Here is a government regulator staffed by career bureaucrats, overseeing an industry witnessing rapid disruption and change – and what a response to that change. Instead of trying to throttle or slow it down, a government regulator rather saw it as its job to keep up with the pace of change so as to understand it and help steer it in such a way as to become a net public good. How different this is from the African experience!
Africa’s cannibal states compromise the future
I did not want to write yet another article about CBN’s recent decision to restrict banks from offering their services to cryptocurrency exchanges. At this point, yet another article on the topic would be redundant. Most people already get the gist of the matter – the Nigerian government does not “get” cryptocurrency and it has made yet another reactionary decision following the prominent role that crypto played in the #EndSARS protests. None of this is headline news anymore.
Read Also: Explainer: Why Nigerians are turning to peer-to-peer crypto trading
The issue that this article highlights are the more general fact that Nigerian regulatory institutions as a matter of historical fact always defer to the status quo. Nigerian regulators instinctively aim to restrict any kind of disruption or rapid large-scale change. While U.S. regulators like the OCC see their job as that of regulating the private sector so that it always acts for the public good, their Nigerian and African counterparts see their job as protecting the state from the people.
You can draw these comparisons everywhere across the political landscape of both jurisdictions. At the height of ex-US President Donald Trump’s post-election meltdown in November 2020, when he tried to insinuate that the U.S. military somehow owed its primary loyalty to him, General Mark Milley publicly stated: “We do not take an oath to a king or queen or a tyrant or a dictator. We do not take an oath to an individual. We do not take an oath to a country, tribe or religion. We take an oath to the constitution.”
Compare and contrast this to ex-COAS Tukur Buratai’s comments in the same month: “Therefore, I wish to pledge the commitment and unalloyed loyalty of officers and soldiers of the NA to the President and the defence of our democracy.” Notice anything? You cannot, of course, fail to notice that while General Milley spoke of defending an idea, which is what the U.S. constitution represents, General Buratai merely pledged the allegiance of Nigeria’s armed forces to an individual. You can apply the same comparison to the OCC’s January 2020 instruction mentioned at the outset and the CBN’s crypto banking ban.
While crypto exchanges in the U.S. are now being granted banking licenses and are being regulated to offer a full suite of new and legacy financial services in such a way as to benefit the American economy, Nigeria’s and Kenya’s only regulatory response to the growth of crypto finance has been to impose a lazy, ill-considered and unenforceable ban in a vain attempt to defend the status quo. While U.S. regulators like the Internal Revenue Service (IRS) are even working with companies like Chainalysis to remove the blockchain’s layer of anonymity for tax purposes, Africa’s regulators refuse to think that far. It is so much easier to just kill or restrict regulation after all.
Fixing the problem of reactive regulation
The post-colonial African state’s time-honoured and hard-earned reputation for being a lazy and reactionary entity is not unfixable. In fact, the question is not if it will change, but how. The very existence of the internet alone has forever changed the reality of the African state as a power-broker, whether it understands that or not. Crypto finance is just one example of many ways that the African state’s suffocating control over economies and individuals is being completely degraded.
Since the CBN’s daft decision, unregulated peer-to-peer exchange volumes have shot through the roof and in fact, crypto exchange platforms are probably now recording more traffic from Nigeria than at any other time. The same disruption will happen to education, broadcast media, computer-based service industries and every other activity that can be carried out over an internet connection. Short of unplugging Africa from the internet altogether, the world of 1988 where an African state could dictate if, where, when and how Africans could conduct business, consume media or interact with each other is never coming back.
In fact, the Hail-Mary last card option of switching off the internet altogether, which the reactionary regimes in countries like Togo and Uganda have already used, will soon cease to be an option altogether as things like Elon Musk’s Starlink satellite internet access solution come online. Soon the reactionary regulators in Abuja, Kampala, Lome, Dodoma and Kigali will be powerless to stop their citizens from accessing the unfiltered world wide web, carrying out transactions and handling money outside of the state’s reach, and engaging with innovation that the regulators consider being threats to the status quo.
If the modern African state does not want to find itself thus effectively innovated and disrupted out of existence, the only option it has is to accept that change is inevitable, to restructure itself to become accustomed to change, to start viewing Africans as sovereign citizens rather than imperial subjects, and to start viewing itself as merely a facilitator for whatever comes next, as against the end of history. They can either do this the easy way, or they can do this the hard way.
Somehow, I think we already know which option they will pick.
Join BusinessDay whatsapp Channel, to stay up to date
Open In Whatsapp
