Most Nigerians are cynical about their country. So, I can hear most people asking if the country’s economy has not been destroyed already. Well, my message has always been that our nation is what we make of her. All those nice countries that we wish to migrate to are only better than Nigeria to the extent of their people’s sacrifices, vision, hard work, pragmatism, and perseverance, over a sustained period of time.
Nigerian youths must look away from the disappointing past, seize hold of their country in many ways and create the future that they deserve. Some of the tendencies we are seeing from the youths so far – get-rich-quick syndrome, practice of fetishism for money, easy crimes, predilection for wanton display of money, and excessive frolicking – does not portray any indication that they are willing to form into a critical mass large enough to shape their own future positively.
One may explain it away as product of frustration. But high unemployment and poverty is one thing, while playing football with money or dancing on it in drunken sprees to show ‘you have now made it’ is another and is only practiced in Nigeria. We must look inwards.
I write about the youths, partly because we live in the digital age, the crypto age. Everywhere I turn, the youths of Nigeria are being gaslighted with crypto. The rhetoric of the merchants of crypto taps not only into the need to be smart and modern, but also the need to be detached from the traditional economy… and by extension your country. The new age of finance says that you could live your life on the cloud, store your money in the clouds, or at best join a virtual group of bohemians who have created – or are creating – their own financial and economic rules. By extension, this also presupposes that the youth of today have less and less use for their country, and more and more resentment for that country in our own instance. The Naira means less and less to today’s youth, and so also does Nigeria, or Ghana, or Mali, or Cameroon and their currencies. It seems pretty natural to simply obey the latest trends and innovations but is there anyone who could help us all think deeper about these issues?
Whereas cryptocurrencies have their own uses and values, especially that these days, many youths use stable coins to hedge against fluctuation in the naira by keeping whatever liquidity they have in coins like USDT (United States Dollars Tether), and they can also much more easily transfer funds from wallet to wallet without having to go through a bank, there are grave implications for the macroeconomy some of which are:
- The promises of cryptocurrency are usually overhyped. As at today, the market is in a slump compared to some months back. This means that the youths are subjecting their liquidity to unnecessary volatility. From hedging against Naira fall with USDT, most youths get more adventurous. It’s like being lured into gambling. Many have lost a lot but are usually silent when this happens. The few hype-men also voice out only when there is a market uptick.
- As we grow older and the economy naturally shifts into the hands of today’s young people, economic management will be harder as too much local currency gets converted to crypto even as local economic managers struggle to keep the sovereignty of the traditional currencies
- Whereas 2 above may be regarded as a fait accompli (a lost battle) as sovereigns scramble to create electronic versions of their own currencies in order to compete, the real challenge will be that domestic savings and investments will be negatively impacted. Every economy will feel the impact as more money flows into space but struggling, growing economies like ours may simply buckle if more and more people see no reason to keep savings in local banks or even invest in anything here.
- In spite of the popularity of cryptocurrencies among the youths, they have failed some of the basic qualities of a good currency, such as being a proper means of exchange, store of value, and stability.
I was discussing the Nigeria stock market with some top gentlemen the other day and wondering why we have had very few new listings (new companies getting on the exchange), since the 2009 crash. MTN was one recent significant addition. It became apparent that ‘investment’ in notional or pseudo-assets like cryptocurrencies by today’s savvy Nigerian is a direct erosion of, and in direct competition with, funds that could go into the stock market. What this means is that most new listings or initial public offerings (where companies actually raise money for expansion or such like), have to struggle more for success. And we are saying that companies are not even willing to list. I then wondered how do we grow this economy? How do we find financing for struggling or growing companies who are producing real goods and services that people actually need? For there are not many companies around the world that have been built from the revolution of cryptocurrencies. But if the domestic economy continues to experience slumps, will that not be even more impetus for people to convert their liquidity into cryptocurrencies and thereby we have a chicken and egg scenario, not knowing what caused what – whether investments in cryptocurrencies are setting off disinvestment everywhere else in the traditional economy, or the traditional economy’s meltdown is causing people to flee into crypto? The bottom line is that the traditional economy – and by extension societies, economies and nations – will sink into chaos. It is clearly a race to the bottom for everyone. Is this something our young people envisage and is this their desire? Are we booking an entry into a dystopian world already?
Is cryptocurrency going to bring a global economic meltdown of never-before-seen proportions? Something worse than the Great Recession of 2009-2011? Some economists and traditional financiers think so. Will cryptocurrencies finally liquidate economies like Nigeria’s? Just as we have now seen that the push for 100% green energy could spell our albatross and foreclose our economic development and we have raised that issue with the UN and other bodies, who does anyone talk to about cryptocurrency; currencies that simply float in the air with nobody’s backing? From a purely economist’s perspective, I think we need more analysis to understand the risks fully.