The recent report by
Bloomberg that Nigerians accumulating cryptocurrencies to shield assets against a weakening naira have contributed to a slump in the fiat currency to a record low in the unauthorized market got my attention. The news reminded me of the blame game of the government of my country. My government is always quick to blame cryptocurrencies for the fall of our currency. But they fail to understand that people prefer Bitcoin because they have lost confidence in the stability of our currency. Converting our currency to Bitcoin is the effect of the fall in the value of our currency and not the cause of it. There are many factors that have led to the fall of our currency and cryptocurrency is not at the top of the list.
In February 23, 2021, my country’s
Central Bank Chief appeared before the parliament to defend the bank’s directive to all commercial banks which forbids them to use, hold, trade or transact in Bitcoin and other cryptocurrencies. The apex bank claimed that these currencies are used for many illegal activities including fraud/ money laundering, ransom collection by kidnappers, terrorism financing and purchase of small arms and light weapons, and tax evasion. He also went further to state that dealings using cryptocurrencies threaten the soundness of our countries’ financial institutions which might lead to the depreciation in value of our national currency. From the above, the Central Bank Chief informed the Parliament that banning Bitcoin and other crypto currencies would lead to the decrease of
1. Fraud and money laundering
2. terrorism financing/ ransom collection by kidnappers
3. tax evasion and
4. depreciation of national currency value.
I might not be able to defend or talk much about the third point because he might be correct but the other three challenges he outlined that the restrictions of Bitcoin operations would reduce are far from the truth.
Fraud and money laundering: Immediately after the ban, it was reported that four deposit money banks in my country lost a total of N1.77bn to fraudulent activities involving the banks’
employees and consumers in 2021. The bank incurred due to fraudulent activities rose by N337.5m from N174.40m recorded in 2020. And none of these fraud cases was crypto related; all of them were carried out through physical or online fiat transactions. In fact the main master-minders of fraud and money laundering in my country are government officials. Several cases of fraud or money laundering activities of government officials have been widely reported. But on Monday, May 16, 2022, the country’s anti-corruption agency arrested the serving
Accountant General of the Federation (who was meant to be the main anti-fraud crusader), in connection with diversion of funds and money laundering activities to the tune of $136,752,137. The AGF had raked off the funds through bogus consultancies and other illegal activities using proxies, family members and close associates. And the funds were laundered through real estate investments in different parts of the country. Yet the government would want to blame young Bitcoiners for the increase of fraud and money laundering.
Terrorism financing and ransom payments: Just recently the government of my country criminalized payment of ransom to kidnappers and bandits. Anyone that is convicted of ransom payment would be sentenced to 15years imprisonment. But the
government has been accused of hypocrisy; people argue that top government officials secretly paid ransom to secure the release of their loved ones while other victims from poor families were left at the mercy of their abductors. An example is the recent kidnapping of over 61 train passengers and $170,000 was paid secretly for the CEO of the Bank of Agriculture. A
report stated that based on what could be verified, between July 2021 (after the ban on Bitcoin transactions) and June 2022, no fewer than 3,420 people were abducted across my country, an increase of more than 100%. In the ensuing period, $9,806,306.31 was demanded in exchange for the release of captives while a fraction of that sum ($1,126,126.13) was paid as ransom. And most of these funds are paid in cash. An
example is the testimony of one of the notorious bandits’ leaders who carried out the abduction of nearly 300 schoolgirls at the Government Girls Secondary School in Jangebe town in Zamfara State in February 2021 who revealed that the Nigerian government coughed up approximately $102,561 cash before they (the bandits) freed the girls.
The bandits’ leader in an interview with BBC Africa Eye, when asked what they did with the money, simply stated that they used the money to acquire more rifles and other deadly weapons for subsequent operations (
Purchase of small arms and light weapons).
Depreciation of national currency value: One of the cardinal reasons for the current drastic
depreciation of our national currency is because of the primaries of the two leading political parties, the All Progressives Congress (APC) and Peoples Democratic Party (PDP). Aspirants mopped up dollars across the country that would be used to buy votes from delegates and other critical stakeholders instead of carrying big bags. The
Vanguard gathered that a number of delegates smiled home with amounts ranging from $10,000 to $40,000 each and total of 7,800 delegates will participate in the primary of the APC and 3,700 will determine the flag bearer of the PDP. Even when several professional bodies warned that this dollar mop-up would cripple the value of our currency the country’s apex bank was still making the dollars available to their “political allies. But recently the government blamed Bitcoin for the fall of our currency and never mentioned that our currency has been depreciating since April because of the huge pressure on the naira because politicians share dollars, especially to delegates. According to available records, Nigerians spend between $1.2 billion and $1.6 billion on
medical and $2.9 billion annually on
education, a development described by experts as a huge drain on the country’s foreign reserves. A government that cannot fixed the health and educational system so as to limit the pressure on the country's currency is always blaming Bitcoin.
It might be true that Bitcoin can be misused or abused by some individuals or organization which might affect the economy, but portraying Bitcoin as one of the major cause of the country’s economic woes is untrue.
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