With Nigerians being cut off from their own money amid a banknote redesign, Bitcoin is the best chance to reinvent the system.
This is an opinion editorial by Ray Youssef, founder and CEO of Paxful and founder of the Built With Bitcoin foundation.
Imagine standing in endless lines, fighting to get your own money. Read it again and try to make sense of it. This is life for millions of Nigerians right nowwho are facing a redesign of their bills, the naira, which means old naira notes will be worthless after February 10. This is a problem because while Nigeria hopes to move closer to a digital cash economy, the country is still highly dependent on cash. Politics is causing a rush of people at bank offices and ATMs, desperate to trade their old bills for the new design.
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 (about $1,087) and 5,000,000 Naira (about $10,087) for organizations. While these weekly limits already sound crazy, the actual amount Nigerians can withdraw depends on what is available in each location.
What is unfolding on the ground in Nigeria
My team in Nigeria is seeing queues all day, with many people leaving empty handed. Some bank offices and ATMs do not even have cash to dispense. Nigerians are bringing mattresses to ATMs and others arrive at ATMs at 4:00 a.m. to be 115th in line for when they open at 8:00 a.m. Shortages are an even bigger problem in some rural areas and people have not been able to access any new bills. I heard that after they return the old bills to the banks through their children or agents because most of them don’t have bank accounts, they can’t get new bills. This puts an end to their day-to-day transactions and livelihood. And for people who can get naira, Point of Sale (PoS) transaction charges shot up by 400% in most cities of the country. This is causing a lot of fear as inflation already exceeds 20% and Nigerians struggle to keep up with the cost of living.
Source: Paxful
This is all coming to a head during a hugely important event. general elections on February 25. The monetary and political collision is causing its own chaos, as are the political parties in Nigeria. threatening an election boycott if the February 10 deadline is pushed back again. They believe that less cash in circulation will reduce voter fraud and vote buying. Beyond the election, advocates of the redesign also believe that Nigerians are hoarding cash, and by having a better idea of the money circulating in the economy, they can better control inflation.
Bitcoin can solve this
Nigeria has shown the world that Bitcoin can be the solution. Mass adoption won’t happen overnight, but it will put an end to these terrible bottlenecks. Money is a human right and people should not be waiting in long lines for their own money. The beauty of Bitcoin is that while it is not tied to a central authority, can strengthen a national economy. Bitcoin has been shown to do this by reducing 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 wealth and international employment — By connecting to global value chains, Nigerians can get paid for their services virtually instantly and for free.
Breaking the global monopoly of wealth
For too long, people in countries like Nigeria have had a gun pointed at their heads. If the Nigerian government tried to advance its economy 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 it needs to buy Western currencies at a premium to fuel its economic boom. Otherwise, the IMF could use its price discovery control to ruin the local currency.
This is not unique to Nigeria, it is happening across the Global South. It is the reason why the region remains poor while being filtered with natural resources and a strong and growing young 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 on Bitcoin and allow its economy to flourish. Through Bitcoin, you can open the Nigerian economy to more international jobs, protect Nigerians from economic volatility, and lessen their reliance on international centralized power. Prosperity for all, 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.
