CBN must address technology fundamentals to reduce impact of naira redesign – Bolaji Ojo

Bolaji Ojo Managing Editor & Publisher The Ojo-Yoshida Report

Managing editor and publisher of The Ojo-Yoshida Report, Bolaji Ojo, has advised the Central Bank of Nigeria (CBN) to implement adequate national technology backbone and other fundamental measures to alleviate the adverse impact of the Naira redesign policy and expedite the transition towards a cashless society.

Mr Ojo gave the advice while speaking on Tuesday at the Technology Times Digital Transformation Thought Leadership Series.

The former managing director of EMEA and global editor-in-chief of AspenCore said Nigeria needs to invest in its infrastructure to power the digital economy by ensuring stable, reliable, and affordable electricity; while telecommunication network must also be strengthened to foster digitalisation that is essential to achieving a cash-free system.

“In fact,” Mr Ojo said, “what I would say is that Nigeria is pioneering certain actions that other economies are going to be forced to take. So aside from the impact, so far, the negative impact on people in general, Nigeria is actually taking a leap forward ahead of some developed economies that are still primarily cash-based. And I can list quite a few of them. In terms of developing economies globally, Nigeria is also advancing things that others are going to have to take steps towards. The cash-based economy is an anomaly today. It’s going to go away whether we like it or not.”

According to him, Nigeria can learn from other economies that have already achieved a cash-free system and should take advantage of the experiences of countries such as the UK and Switzerland, that have made significant progress towards a cash-free system without promulgating a decree or a force of law.

According to him, “a key question is how do you implement it in such a gradual way that it doesn’t negatively impact people the way this one has been done. And you’re right. There are technology tools that can be used. But first, let’s start with the most basic things. You go to some economies, and you find that those economies have already achieved what Nigeria has achieved. So we asked the question what made it possible for them to do this without necessarily promulgating a decree or a force of law to say, ‘this is where we are headed.”

Ojo added that infrastructure is essential to a successful transition to a cash-free economy. Digitalization of the global economy, he says, is accelerating, and semiconductors are in everything nowadays. A reliable telecommunication network and stable electricity are fundamental to everything, including the financial technology industry.

“However, in order for that to happen, you need to have power. If I’m returning to an old topic for Nigerians, it is because that is something that is fundamental to anything that we want to do in the economy. We need to have stable, reliable and I would say affordable electricity. That is fundamental. That has to be a priority to the Nigerian system. It doesn’t matter whether we are talking about financial technology or the rest of the economy, industry or whatever it is that we are talking about. That underpins everything. In order for you to have a cash-free or reduced cash system, you need to be able to have the infrastructure in place,” he said.

He explained further that, “you need to also have the telecommunications network in place to foster that. In most developed economies where they have moved towards these goals, those are the underpinnings, the fundamentals that they had in place that allowed them to do that. When you have spotty coverage, when you spend 10, 20, 30 minutes just trying to send messages across, or to access the app for your banking, you are not going to be able to have what we are desirous of if we don’t solve that problem.”

To find sustainable solutions, he advocated that public-private partnership is essential to the transition to a cash-free economy that will involve all levels of government working together to achieve the goal.

“In essence,” Bolaji Ojo said, “this goes beyond the Central Bank. It cuts across the economy. It involves the Federal Government; it involves State Government; it involves Local Governments. We tend to load most of these on one arm of the Government. The Federal Government should provide electricity. They should do this, they should do that. It has to be a public-private partnership. Local Government, if empowered, can also be involved. There are Local Governments elsewhere in the world that actually offer wireless, Wi-Fi services to their citizens in precisely defined areas. When you have that, when you have the backbone in place, you can do what we are talking about. The infrastructure has to be in place, that is key.”

He advised the CBN to review its position on Nigeria’s unbanked population noting that, “when we are talking with regard to the unbanked, there are no unbanked people in Nigeria. There are only people that do not fit into our traditional view of what banking is supposed to be. There are no unbanked people. They bank the way they want, and the best service is for you to service people the way they want to be serviced, not the way you think you should service them.”

He explained that “Nigerians want a cashless society. This is the thing that maybe the CBN doesn’t get. You don’t need to sell it. We already want it because it solves so much problems for us. I can take my phone and slap it against your phone, and the money that I need is immediately transferred.”

For the apex bank, CBN, Ojo advised that “it is not about focusing on the political objectives. Let’s also focus on the longer-term objectives that Nigerians are ready for. You asked okay, what are the financial tools that will help? They are already in place. They are being used by Nigerians. It is the way the CBN carried these out that got people hurt. People really got hurt bad. However, if we really want this cashless society, let’s go back to the fundamentals, let’s strengthen the institutions and the systems that can help us achieve those goals. The societies that did, didn’t come up and say we wanted a cashless society.”