Quelle Surprise: NYT Piece on Nigeria’s “Worst Economic Crisis in Decades” Completely Ignores Its Disastrous CBDC Experiment

The world’s largest live central bank digital currency (CBDC) program has so far been a destructive flop. And that is probably the last thing the editors of the New York Times want its readers to know.

Two years ago, Nigeria was Africa’s largest economy and before the COVID-19 pandemic was hotly tipped to become Africa’s first trillion-dollar economy. By the end of this year, it is (according to a recent IMF forecast) expected to have dropped to fourth place in the continental rankings, behind South Africa, Egypt and Algeria. This follows years of slow growth, currency crises, poor governance, fuel shortages (in Africa’s largest oil producing country) and double-digit inflation. In recent months, citizens have resorted to looting food warehouses as almost half the population of Africa’s most populous nation suffer from hunger.

A new piece in the New York Times, titled “Nigeria Faces Its Worst Economic Crisis in Decades”, paints a vivid  picture:

People in Africa’s most populous nation are suffering as the price of food, fuel and medicine has skyrocketed out of reach for many…

The pain is widespread. Unions strike to protest salaries of around $20 a month. People die in stampedes, desperate for free sacks of rice. Hospitals are overrun with women wracked by spasms from calcium deficiencies…

A nation of entrepreneurs, Nigeria’s more than 200 million citizens are skilled at managing in tough circumstances, without the services states usually provide. They generate their own electricity and source their own water. They take up arms and defend their communities when the armed forces cannot. They negotiate with kidnappers when family members are abducted.

But right now, their resourcefulness is being stretched to the limit…

More than 87 million people in Nigeria, Africa’s most populous country, live below the poverty line — the world’s second-largest poor population after India, a country seven times its size. And punishing inflation means poverty rates are expected to rise still further this year and next, according to the World Bank.

So, what are the root causes of Nigeria’s constantly worsening crisis? According to the “Gray Lady”, there are two main drivers, both of which can be blamed on the country’s relatively new President Bola Tinubu: his government’s partial removal of fuel subsidies and the floating of Nigeria’s already weak naira currency, which together have caused major price rises, particularly for basics such as food. From the Times‘ article:

Until recently, the government subsidized [largely imported] petroleum, to the tune of billions of dollars a year.

Many Nigerians said the subsidy was the only useful contribution from a neglectful and predatory government. Successive presidents have pledged to remove the subsidy, which drains a hefty chunk of government revenue — and later backtracked fearing mass unrest.

Bola Tinubu, who was elected Nigeria’s president last year, initially followed through.

“It was a necessary action for my country not to go bankrupt,” Mr. Tinubu said in April, at a meeting of the World Economic Forum in Saudi Arabia.

Instead, many Nigerians are going bankrupt — or working multiple jobs to stay afloat…

The government has twice devalued the naira in the past year, trying to enable it to float more freely and attract foreign investment. The upshot: It’s lost nearly 70 percent of its value against the dollar.

Nigeria cannot produce enough food for its growing population; food imports rise 11 percent annually. The currency devaluation caused those imports — already expensive because of high tariffs — to explode in price.

“A Dead Economy”

On the one hand, this is a pretty accurate depiction of recent developments in Nigeria. But it ignores everything that happened before Tinubu came to office 15 months ago. As a government spokesman said in response to the Times article, Tinubu inherited a “dead economy,” which is also largely true. Inflation was already above 20% and economic growth was stalling. One reason for that is the central bank’s disastrous flirtation with central bank digital currency (CBDC), which culminated in a demonetisation program that upended economic activity for almost the entire first quarter of 2023.

In mid-December 2022, the Central Bank of Nigeria began calling in old 200-, 500- and 1,000-naira notes in a bid to mop up excess cash, rein in inflation, combat rising insecurity, curb vote buying and further “entrench” a cashless economy. But the central bank failed to print nearly enough new high-denomination notes to replace the old ones, leading to an acute shortage of cash in a still heavily cash-based economy. In the space of just two months (Dec 2022–Feb 2023), cash in circulation declined by almost 70%, per official data from the CBN.

As in India’s 2016 demonetisation program, businesses went bust. Lives were ruined. But as we noted at the time, the resulting economic pain was seen by the central bank as a necessary evil, a wee psychological nudge to push Nigerians into finally abandoning cash and embracing digital payment options:

Demonetisation may well break some public resistance toward the CNB’s eNaira but it will be at huge social and economic cost. As in India, that cost will be borne disproportionately by the poor and vulnerable. As even the Associated Press reports, analysts worry the initiative will “hurt” daily transactions that people and businesses make, particularly given that Nigeria’s digital payment systems, including the eNaira, are often unreliable:

“The policy is intended to cause discomfort, to move you from cash to cashless because they (the central bank) have said they want to make it uncomfortable and expensive for you to hold cash,” economic analyst Kalu Aja said. “That is a positive for the CBN (because) the more discomforting they are able to achieve, the more people can move.”

The CBN’s prime objective in culling cash was to leave people with little choice but to use digital payment methods — ideally the CBN’s floundering digital currency, the eNaira. Among its list of reasons for pursuing demonetisation, published in October 2022, the CBN said the redesign of the currency will “help deepen our drive to entrench a cashless economy as it will be complemented by increased minting of our eNaira.” Also in October, the central bank’s governor, Godwin Emefiele, said: “The destination, as far as I am concerned, is to achieve a 100% cashless economy in Nigeria”.

That didn’t happen, for a number of reasons: first, tens of millions of Nigerians cannot even use digital payments since they do not own a smart phone or have access to the Internet. Roughly half of the country is unbanked. In other words, many, if not most, Nigerians had no possible means of using digital payment methods even if they had wanted to. They were given an impossible choice from day-one. Many of them took to the streets to protest the restrictions and cash shortages. Banks were vandalised; some were even burnt to the ground.

Those that could switch to digital payments ended up swamping the limited digital payment networks available. Put simply, the infrastructure, including the eNaira itself, was not ready to take up the slack. Many digital payments failed, fuelling even more chaos, frustration and resentment. In February, Nigeria’s Supreme Court ruled the demonetisation program unconstitutional, calling for it to be postponed due to the amount of chaos and hardship it was generating. A month later, the CBN finally obeyed the court order and put back into circulation the old high denomination bills.

But the damage had already been done, both at the micro and macro level.

A Policy Without a “Human Face”

“Nigeria’s economic growth slowed to just 2.3% y/y in Q1 as the damaging effects of a botched demonetisation process more than offset an easing of the drag from the oil sector,” noted the UK-based independent economic research firm Capital Economics in May 2023. “With the rise in oil output likely to have run its course and fuel subsidy cuts as well as a likely devaluation of the naira set to hurt activity elsewhere, the economy will continue to struggle over the coming quarters.”

In other words, while the new Tinubu government’s devaluation and fuel subsidy cuts massively exacerbated economic conditions in Nigeria, the role played by the central bank’s demonetisation program in destabilising the already fragile economy should not be ignored.

As in India, the hardest hit were the country’s poorest communities and smallest businesses. Nigeria’s roughly 39 million micro, small and medium-size enterprises, contributing 46% of national GDP, depend on cash from sales. When 70% of the country’s cash flow suddenly dried up, they struggled to stay afloat. Many had no choice but to allow customers to “Buy Now, Pay Later” to maintain their operations. A leading macro indicator, the Stanbic IBTC Bank PMI for Nigeria, fell to its worst level since the pandemic, signalling a sharp deterioration in country-wide business activity in the first quarter of 2023.

The following words by Yakubu Maikyau, the president of Nigeria’s Bar Association, vividly capture the extent of the damage:

The manner in which the CBN proceeded with the implementation almost without regard for the apparent sufferings of the people as could be seen across the country began to raise questions as to the true motive of the cash redesign policy. Nigerians did not have to die and neither should there be any loss of properties on account of the implementation of a Naira redesign policy if properly undertaken.

Unfortunately, and sadly so, that was our experience. Nigerians died. Properties were destroyed and lost. There is hunger in many homes as people are unable to use their hard-earned funds which they deposited in the banks because of the apparent high handedness of the policy. The rural economy was stifled. Economic activities have dwindled, many farmers engaged in dry season farming have not been able to cultivate their farmlands – only about one out of every ten hectares of rice fields have been cultivated in most parts of North-western States. Food security has come under threat as the cash crunch has affected the ability of rural farmers to engage in farming activities. Simply put, the implementation of the policy appears not to have a human face.

Another legacy of the Nigerian central bank’s demonetisation program is increased distrust in both the banking system and the central bank itself. Which is ironic given that lack of trust was one of the biggest obstacles to take-up of the eNaira in the first place. Indeed, in early January this year — nine full months after the demonetisation program was suspended — Bloomberg reported that Nigerians were once again hoarding cash “amid memories of the failed official campaign around this time last year to demonetize high-value naira notes.”

Another largely ignored legacy of this saga was the sacking, arrest and imprisonment of the man behind both the eNaira and the demonetisation program, the CBN’s governor, Godwin Emefiele. Although he was eventually released on bail after spending roughly half a year in a real-life Nigerian jail, Emefiele faces a host of charges including misuse of authority, receiving bribes, accepting gifts via intermediaries, engaging in corrupt practices, obtaining property fraudulently, and providing improper benefits to his associate.

Not a single shred of this story gets a mention in the New York Times article. Neither the acronym “CBDC” nor the word “demonetisation” make an appearance. It is almost as if all of the problems now affecting Nigeria’s economy began the moment the new government took over. While Tinubu’s reckless energy and currency reforms are probably the two main catalysts for Nigeria’s latest economic woes, there are other factors that certainly deserve a mention — and none more so than the central bank’s adoption of the eNaira and its decision just over a year later to remove 70% of the cash from the economy.

Imagine an alternative article title:

“First Large Country to Fully Adopt a CBDC Is Now Suffering Its Worst Economic Crisis in Decades.”

That is not a headline you are likely to see in the New York Times, The Economist or The Financial Times, or any other major Western media. But it is true. Nigeria was the first large country to fully adopt a CBDC at the national level. And its economy is now suffering its worst crisis in decades. The spectacular rise and fall of the eNaira and the damage inflicted by the CBN’s demonetisation program have been studiously ignored by the mainstream press in the West, while other central banks are presumably watching and learning.

As in India, the broad economic results of demonetisation were disastrous — though in both cases use of digital payments did surge afterwards, albeit much more so in India. And that was probably the main underlying goal behind both programs anyway. Witness the Reserve Bank of India’s casual advice to the more than a billion people caught up in the chaos after it had nullified 86% of the country’s currency from one day to the next (emphasis my own):

While these efforts are afoot, [the] public are encouraged to switch over to alternative modes of payment, such as pre-paid cards, Rupay/Credit/Debit cards, mobile banking, internet banking. All those for whom banking accounts under Jan Dhan Yojana are opened and cards are issued are urged to put them to use. Such usage will alleviate the pressure on the physical currency and also enhance the experience of living in the digital world.

This prompted a seething rebuke from Indian economist Jayati Ghosh:

Statements like this make one wonder whether the RBI is living only in the digital world. Surely the worthies in that institution have some idea of the conditions under which banking and money exchange occur for most Indians?…  The facile assumption that moving to e-banking is just a matter of personal choice, which appears to underlie some of these arguments, is completely mistaken.

Central bankers may not inhabit an exclusively digital world just yet, but it does seem to be the general direction of travel they have us moving in. CDBCs are being developed and piloted in dozens of countries around the world with the help and support of global banks, the IMF, the Bank for International Settlements, payment card companies, BlackRock and even the SWIFT payment system. As we have noted a number of times and as a new op-ed in Forbes by the Cato Institute’s Norbert Michel echoes, CBDCs are ultimately intended as instruments of centralised control:

As my colleague Nick Anthony points out, 10 countries and the Eastern Caribbean Currency Union have already launched their own CBDC. Hong Kong and 39 other countries have official CBDC pilot programs, and at least 65 other countries are now researching CBDCs.

CBDCs are very real, and very dangerous.

No think tank has done more than the Cato Institute to explain the risks and supposed benefits of CBDCs, and nobody at Cato has done more than Nick. In fact, he just returned from the Oslo Freedom Forum, where he demonstrated the new Human Rights Foundation CBDC tracker.

Nick also has a new CBDC book that will be released this Tuesday, titled Digital Currency or Digital Control? Decoding CBDC and the Future of Money.

CBDC advocates love to talk about putting money directly into people’s wallets, but few like to talk about the flip side, where central bankers stop people from spending money. If you don’t believe me, here’s a clip of an assistant governor of the Malaysian central bank trying like crazy to avoid answering whether the central bank would “frustrate” individuals’ payments. (For the record, some government officials boast about having this power.)

In Nigeria, the eNaira, now in its third year of existence, is still floundering. “Slow” is the word the IMF — which helped roll out the eNaira — recently used to describe the CBDC’s adoption rate to date. “Since the eNaira’s launch, the volume of executed transactions has reached 854,512 transactions, mostly from consumers to merchants, with a total value of N29.3 billion,” the Washington-based fund said in its 2024 country report for Nigeria. That works out as a paltry $61 million.

In May 2023, the IMF disclosed that 98.5% of the 13 million eNaira so far downloaded wallets are inactive and the average value of transactions was 923 million naira per week. That’s around $622,000. The world’s largest live CBDC program (to date) has so far been a complete dud despite the harmful efforts of the central bank and former Buhari government to impose it on the populace. Even after all that has happened, most Nigerians still either cannot or do not want to use the eNaira. And that is probably the last thing the editors (and board) of the New York Times want its readers to know.


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  1. Yaiyen

    Could someone explain to me why third world country’s find it so hard to grow their own food. The weather is perfect in these country’s for agriculture. Is this all on the west or local governments is so corrupt that they don’t care one bit what happen to their nation people, in away you get say they even enjoy seeing their nation people suffering. Its like they cant enjoy the food if poor people can also buy same food. Sound weird i know but if you think upper class attitude is bad against the poor in west, in third world country’s its on another level . At least that is my experience with my Jamaica family. In Jamaica too they are pushing digital currency when most people cant even afford internet or have bank account

    1. jsn

      Lately, (post WW2) IMF WTO policy has been to require “open agricultural markets” for participation in their financial offerings.

      This is the current non military method by which the Anglo US Empire subordinates vassals around the world: an under-developed agricultural sector introduced to “open agricultural markets” will collapse, moving populations to rapidly developing cities where an IMF WTO imposition of whatever they decide at the moment is an appropriate “division of labor” for the subject population absorbs western investment capital and forces downward wage pressure on whatever unlucky place was already doing whatever this is as it must now compete with a new, low labor cost producer.

      The Irish “potato famine” was a famine afflicting the surplus labor generated by English cash cropping for export markets in Ireland for profits much greater than the English could get by feeding the Irish who’s land they’d just appropriated. English embarrassment at external responses to the famine led them in future to invest in productive, exploitative labor for such displaced populations: its not so obviously cruel and if done right adds to profits. Maximum profit is the goal always and forever. People and their lives don’t factor into it except to the extent they force themselves violently into the equation, much as happened on October 7th next to Gaza. It is the essence of Settler Colonialism re-branded as Western Values.

      1. JBird4049

        Only the potato crop failed for several years. All the other crops being grown by the tenant farmers and used to pay their rent did not. It was die homeless or just die from starvation because they could not earn enough money from labor to buy food due to the then very high cost of the food.

    2. MG

      In the case of Nigeria, these are some (by no means all…) contributing reasons:

      – Inadequate liming. Tropical soils tend to be acidic. Acidic soils tend to have lower crop yields.
      – Inadequate fertilizer usage. For average small farmers, these are expensive cost inputs.
      – Inadequate storage facilities. Even if small farms could produce 2-3 crops a year (and most don’t), a significant portion of produce is left to rot in fields as there is insufficient storage.
      – Inadequate irrigation. Outside a few states blessed by river/tributary flow, irrigation is non-existent. Irrigation could help farms move to regular, year-round crop production.
      – fragile economy means it is hard to attract labour. Most small farmers need 2-3 jobs just to make ends meet.

      Etc etc etc

      Academic websites are full of papers on the problems facing small Nigerian farmers.


    3. Ezra Teter

      It is also important to know that World Bank and IMF lending programs discourage self-sufficiency in agricultural production in favor of growing commodity crops on the global markets and purchasing grain surpluses from the heavily subsidized American and European markets.

  2. NotTimothyGeithner

    It’s the usual problems.

    -monoculture farming as directed by the powers that be

    -cash crops (the US has a complex system of subsidies. No, we don’t need to grow all thar corn) that eat up soil

    -farms operating on insufficient scales. Often reform is share cropping where the farms ultimately fail. Farming is hard.

    -the loan cycle

    -water access.

    1. c_heale

      Not sure about insufficient scale. I thought small farms are more productive than large ones.

  3. Roquentin

    There was one other massive, glaring omission from that article. The fact that currency woes have caused several major multinational corporations to exist Nigeria in recent months. It’s highly probable that the needs of these corporations to exchange their naira for domestic currency is what motivated the decision to abandon the peg and allow the naira to float. This is to say nothing of the obvious arbitrage opportunities created by their “dual currency’ system.


  4. The Rev Kev

    ‘Two years ago, Nigeria was Africa’s largest economy and before the COVID-19 pandemic was hotly tipped to become Africa’s first trillion-dollar economy. By the end of this year, it is (according to a recent IMF forecast) expected to have dropped to fourth place in the continental rankings, behind South Africa, Egypt and Algeria.’

    Just after reading that my spidey-senses began to wonder if that was the whole point of the CBDC program. To deliberately sabotage Nigeria’s economy using local corrupt politicians and officials. It may be the US or the EU but regardless, neither would have any interest in having strong African countries with solid economies pushing their own interests. If this does not sound likely at all, then read up on the effect of the destruction of the NS2 pipeline and get back to me.

    1. JBird4049

      Good point.

      The United States also has a large unbanked and poor population, which people don’t seem to notice. Then add the poor state of the electric grid as well as the increasing ineffectiveness of FEMA (Federal Emergency Management Agency).

      It used to be that the agency would be funded and restaffed whenever there was a Democratic Administration, but seeing the joke that was the federal response to any recent disaster, I am particularly thinking of the flooding in Appalachia, the general rot has finally reached it. I should not be surprised after the failures of the CDC, NIH, FDA, and USDA.

      However, what that means is that any widespread disaster, like a major earthquake or hurricane, that kicks a few tens of millions of people off the grid will likely stay off for weeks, perhaps more than a month. Then what? Tell half of California to just be patient?

      A reason why the American Colonies were already restless before the unrest over taxes was because there was a permanent shortage of currency. People had farms and businesses, but they could not get enough physical cash. Rum became a substitute. They would use jugs of it. Of course, the molasses had to be smuggled in from the French colonies in the Caribbean as it was both better quality and affordable.

      The reasonable efforts of the British government to get the taxes needed to pay for the governing and defense of the colonies was also a threat to the colonies economy. Also, the colonists couldn’t profitably sell their rum both because of efforts to buy their molasses from the more expensive British sources and because of the tariffs protecting British rum makers from the American rum makers.

      All this prevented the Americans from making as much money as before and it prevented them from having a medium of exchange. I am sure that some other kind of money would have been found but booze is such an understandable one.

      I guess all this is just me working out just how disastrous this digital money could be and how unwise our elites are. The value of money is based on its trustworthiness, which depends on its reliability and that depends on its availability. It is hard to have an economy without it.

  5. Jokerstein

    Another largely ignored legacy of this saga was the sacking, arrest and imprisonment of the man behind both the eNaira and the demonetisation program, the CBN’s governor, Godwin Emefiele. Although he was eventually released on bail after spending roughly half a year in a real-life Nigerian jail, Emefiele faces a host of charges including misuse of authority, receiving bribes, accepting gifts via intermediaries, engaging in corrupt practices, obtaining property fraudulently, and providing improper benefits to his associate.

    Heavens to Betsy! The US doesn’t even measure up to a third-world country like Nigeria for governance, tackling corruption, and adherence to legal standards.

    So very sad.

    /me wanders of shaking head and shedding bitter tears…

    1. ChrisPacific

      Corruption is endemic in many African countries, largely because colonial powers wanted it that way as it served their interests. Selective enforcement of anti-corruption regulations is a common political power play.

      So maybe not as different from the US as all that (see: Trump trial).

  6. ChrisPacific

    A nation of entrepreneurs, Nigeria’s more than 200 million citizens are skilled at managing in tough circumstances, without the services states usually provide. They generate their own electricity and source their own water. They take up arms and defend their communities when the armed forces cannot. They negotiate with kidnappers when family members are abducted.

    What a remarkably chipper framing. Those plucky, self-starting entrepreneurs, living the libertarian dream!

    Somehow I don’t think that having to devote almost all your time and energy to securing the basic necessities of life (water, electricity, security) that are normally taken for granted in a civilized society is what those of us in the West would consider entrepreneurship. But doubtless the high level of deprivation and the lack of any kind of effective state control has created plenty of opportunities for entrepreneurs in other fields, like the human trafficking alluded to in the article.

    1. Philip

      What a remarkable misrepresentation! Not only of the overall thrust of Nick’s piece, but of the specific paragraph this comment has plucked from its context.

      1. ChrisPacific

        I wasn’t trying to represent anything – I just thought that was a particularly repellent framing of the issue. If there’s a context in which it isn’t repellent, I’d love to hear it.

        But since you mention it, I read Nick’s article as saying that the NYT article was acknowledging the problem but downplaying the severity and airbrushing out the causes. I think the quoted passage supports that point.

    2. Jay

      That’s to indicate the people have some level of worth. If they are “entrepreneurs” and “skilled” they have value – if they are simply poor, destitute people they aren’t so important. If it were the US he was talking about it would be “hard working” and “pay their taxes.”

      The thing is it’s hard to tell when this stuff is intentional or when it is just rote, unthinking, repetition – you know, what ChatGPT is good at producing. (Which isn’t to imply this article was written by ChatGPT, although the NYT has been using “AI assisted” writing since at least 2017, but more a comment on why ChatGPT writes the way it does and why so many people actually think it is good writing).

  7. MFB

    Interestingly, I see that South Africa is now deemed the top continental dog in that list. It may be true, but my country has been economically stagnant since the installation of Anglo American crony Cyril Ramaphosa as President (thanks to an $18 million slush-fund supplied by big business which got him his party presidency and an unknown amount of money laundered through foreign interests, a little of which was stolen from his farm at Phala Phala and caused the media and the judiciary lots of trouble to cover up).

    Ramaphosa is now President again despite his party losing the last election disastrously, thanks to cooperation with white supremacist and Zulu tribalist (but white-controlled) parties. The white supremacist parties are dedicated to privatisation, social spending cuts, tax cuts and pulling out of BRICS. And now the New York Times says we are the best bet for Africa. Need more be said?

    1. Roger

      So the “white supremacists” are really the “rich white supremacists” using the usual racism dog and pony show to maintain the hold over the mass of poor whites. The strategy that just keeps on giving …

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