Naira Redenomination: Winners and Losers

“Nigeria is in a (sic) haste. We cannot afford gradualism. Some believe that we have to crawl to get there. If you are running a race when you are one million miles behind, you must double your speed to catch up.”-Soludo

In the world of socio-economic theories and/or analysis, two schools of thought constantly struggle for dominance. On one hand are the zero sum theorists; on the other hand are the relativists. The fun part of their struggle is that, political leaning has no role to play in determining which camp of this divide an analyst subscribes to. There are countless liberal zero sum analysts out there, as there are conservative relativists. Any liberal who thinks tax cuts benefits the rich to the detriment of the poor is a zero sum thinker; while any conservative that thinks taxation essentially destroys demand and always drains economic growth is also a zero sum thinker.

Those who see socio-economic theories through black and white are zero-sum thinkers. They classify people as demand side or supply side economists; they see competing interest losing or winning. They believe for every policy decision made, there is always a loser and winner. In their minds, the fulcrum between these competing interests is the government i.e. government allocates and directs resources based on a pronounced camp of winners, versus a narrower camp of losers. The government of zero thinkers justifies its action, because more winners will emerge than losers after implementing any policy; and zero sum critics spurn such actions because “such inherent imbalance is wrong”.

The flip side of zero-sum mentality is the relativists. Doing nothing is not an option for the relativists, whereas it is the unintended consequence of zero sum thinking. Competing interests are perceived as a spectrum of gain and loss rather than discrete camps. The relativists even perceive actors in an economic system as relative. In his or her thinking, blurred lines divide the government, industry, and people- the variable being the individual (the universal atomic actor whose reaction or action cannot be pigeonholed).

This unique thinking mode naturally inoculates the relativists from being wrong: he is always right because a variable is left to the independent uncontrollable lever of human behavior. On the other hand, the zero-sum thinker is hardly right: except in two instances: one being where conditions of abnormality or extremities abound as normal; the other being when he convinces the relativists that zero sum thinking itself is inherently flawed. The paradox of this circumstance is that the relativist by thinking of himself as one, and the zero-sum thinker as another, has inadvertently subscribed to zero sum thinking!

I can hardly be described as a zero-sum thinker, but for the purpose of this piece I have chosen to be one because of reasons already enumerated above. For when we speak of my dear country Nigeria, we speak of absolute abnormalities and/or extremities that exist as normal conditions. For a country so driven by forces of extremities, good and evil is better explained through the zero-sum lens than the relativist’s spectrum. Indeed, disagreeing with me as you might at this point puts you smack at the center of the contradiction that you already agree with me because of the zero sum paradox!

The recent policy of naira redenomination has undertaken a series of public dressing and undressing in the past few weeks. Before the week ran out, the Attorney General blustering with new found powers, allegedly tucked away somewhere in the CBN enabling legislation of 2007, put brakes on the policy directive. However, the story will never be fully understood unless we frame the discussion of the naira denomination policy with the zero-sum mentality concept of winners and losers. No doubt, if the naira gets redenominated and convertible, there will be an equally powerful coalition of winners and losers.

The swelling ranks of losers include the Mallams and quasi bureau de exchange that litter the urban centers of our nation. In every Sabo and near transit centers are men and families who will lose their means of livelihood if Soludo had succeeded in making the naira convertible and strengthened its rate of conversion. On the other side of this loss are the importers. Invariably, the psychological impact of a tightened exchange rate is the increase in the value of export and decrease in the cost of import, which drives import consumption. Hence, my brothers in Aba and Onitsha were the big winners when Soludo came to town with this new policy. Don’t say I didn’t tell you, but to avoid being accused of fanning the embers of discord among brethren, I shall allow you complete this analysis of winners and losers i.e. fly by night Bureau De Exchange vs. Egalitarian Importers.

The fake billionaires that the gon-go reform era spurned were the second group of losers in the still birth era of redenomination. In fact, in one fell swoop, our president would have gone from almost a billion naira man, a man who could stand proud in the exclusive club of billionaires in a country where millions go to the bed hungry, to a man worth merely nine hundred thousand or so new Hectonaira. That was unacceptable! In fact, our own Dangote would have had his net worth reduced hundred fold nominally, and finally “we will hear word”. Those vain boasting of being billionaires or trillionaires in the making will be gone. Governors, who previously donated millions, will now have to shamefully donate their thousands in those owambe parties. Too much to handle I guess.

The line of separation between the winners and losers is even clearer among Nigerians in Diaspora. On one side are those who make the regular trips back to Nigeria; on the other, those daydreaming about it. For the most part, CBN’s policy of convertibility was favorable for the former: now they can go home, and not be hassled before changing their hard earned foreign currency. With a tighter exchange, it was also likely to go farther than it used to- at least so Soludo made them to believe. On the other hand, those abroad-forever Nigerians, whose last tie to home is the regular stream of Dollars, Pounds and Euro sent via Western Union could not fathom the whacking of their egos. A situation where the one thousand hard earned dollars they sent home easily converted to thousands of old naira that turned them to instant heroes, now looked like a done era. Indeed, emotions competing against reality, the policy seem like a fortune killer.

In conclusion, it appears the prospective winners abound across the land, so also are the losers. The stashers who have old naira stored under their pillows can finally sleep in peace. Those who need to spray in parties can now do so brazenly! The politicians can even impress his boys with those worthless old naira notes. But until the fulcrum of the uneven tentacles that hold in place our delicate national enterprise is shifted decisively towards the direction of the atomic actors i.e. the people, the untold story of the winners and losers in the Soludo inspired CBN redenomination debacle will never be put to rest.