 In February 2021, the Apex Bank, that is the central bank of Nigeria's CBN, directed banks to close accounts of persons or entities involved in cryptocurrency transactions with India's systems. In a circular release to Deposit Money Banks, non-bank financial institutions and other financial institutions, the Apex Bank noted that these obedience to the directive would attract severe penalties. So far, 6 banks have been fined 1.31 billion Naira. Also on the show today, the United Nations Food Agency says world food prices jumped nearly 13% in March to a new record high as the war in Ukraine caused turmoil in markets for staple grains and edible oils. Now what's the implication of all of this? Welcome to Business Insight and Plus TV Africa. I am Justin Acadone. Before we get into the discussion proper here, a highlight of what went down in business Nigeria this week. Take a look. The federal government borrowed 2.2 trillion Naira from local investors in the first quarter of the year through federal government bonds, Treasury bills and the federal government savings bonds. This is part of effort to fund a 6.4 trillion Naira deficit spending in 2022 budgets. And this represents an 8.6% decline when compared to 2.4 trillion Naira representing 8.6% year on year decline from 2.43 trillion sold in quarter one 2021. But federal government also paid local investors 827 billion Naira for loans through mature Treasury bills, resulting in net borrowings of 1.93 trillion Naira from local investors in quarter one 2022. 2 million people will start receiving about 20 billion Naira from June this year as basic cash transfers and conditional cash transfers under the National Cash Transfer Program. The federal government would pay the 2 million people 5,000 Naira each. Over time, the number of people receiving cash transfers from the federal government has been increasing. In 2018, a total of 19 states were covered under the National Cash Transfer Program. This increased to 24 states in 2019 and moved up to 36 states and the FCT in 2022, covering 1.6 million people. Under the Cash Transfer Scheme, the federal government supports poor and vulnerable households with cash on a monthly basis. Nigerians have been reminded by the Central Bank of Nigeria CBN to avoid engaging with illegal and unregistered financial operators with who entice and scam members of the public with large profits. This was contained in a circular released on the CBN website. The Apex Bank told the public to check the websites of the CBN, the Securities and Exchange Commission, SEC, and other relevant member agencies of the FSRCC before investing in such companies and schemes. Some telecommunication subscribers were left stranded on Tuesday after telecom companies barred their lines from making calls following a directive from the federal government. On Monday, the federal government had directed telecom companies to enforce compliance with its national identification number subscriber identity model policy by blocking outgoing calls on all unlinked lines after the deadline for the same NIN verification expired on March 31. A former governor of a number of states, Peter Obi, says Nigerians now spend 100% of their salary to feed themselves. He said that Nigeria is in a crisis situation and that the federal government needs to focus on creating wealth. He also revealed his displeasure with the rising rate of insecurity and poverty in Nigeria, citing that the Bawari administration has been too focused on wealth sharing through its various welfare schemes. And those were the stories the mid-headlines said this week. Now, the central bank of Nigeria, CBN, has penalized six banks for 1.314 billion narrow-over alleged non-compliance with a regulation on cryptocurrency accounts. The banks include Stambic-IBTC, First CT Monument Bank, FCNB, AXS Bank, Wemer Bank, United Bank for Africa, and Fidelity Bank. Now, Stambic-IBTC Bank, the domestic unit of Standard Bank Group Ltd, was fined 200 million narrow for failing to comply with the APES Bank's directive according to the Lenders 2021 Consolidated and Separate Financial Statement. Now, CEO of Street Nomics, Economist Gaspul Obelli joins us in this conversation. Good evening to you. Gaspul, thanks for joining us on Business and Science and Plus TV Africa. Hi, Jay. Thank you for having me. Good evening. Yes, it is indeed our pleasure. Gaspul, we're talking about 1.3 billion net. That's a whole lot of money. But the main question right now would be, what could be responsible for these infractions? Is it that it is very difficult for the banks to pin down the transactions or the accounts transacted in cryptocurrency? Yes, so a lot of times you get to wonder is to make the demand side pressure on the financial system, you know, in terms of inflows, moving cash around, transfers, you know, how money moves around a lot of times. Two things I see here is number one. In my own opinion, it will be from a demand side, you know, people making transfers and the description is not quite correct. Or the process of wiring is done in a way that it looks like an intimate transaction in quotes. You know, transactions that are out of the curve, the CBN directs or directs is in the sense. In many other cases as well, there is a lack of proper control mechanism such that you can actually track which transaction is coming from where. Still a business side on Plus TV Africa will take a very quick break and come and talk more with Gaspul in a moment. Alright, welcome back. It's still business and science and Plus TV Africa. We have Gaspul, an economist and we are talking about the crackdown on cryptocurrency. Gaspul, just before the break, you were telling us about internal mechanisms of banks. Alright, great. So I'm saying that some from the central bank flowing down to the commercial banks, there are conversations on how you regulate and how you internally control policies that have probably been held back or policies that the central bank has rolled out in time past. How do you ensure that there's a level of compliance from the angle of commercial banks? That's one. Secondly, within the context of commercial banks now, there are further down internal control gaps because a lot of commercial banks don't even have data or don't know how to use the data they have to track correctly where transaction is coming from. Plus, with the fact that demand side crypto markets has intelligently moved ahead in leaving descriptions or reworking descriptions around transactions. So the transaction may come in and doesn't look like a crypto transaction. Alright, so a lot of times these so-called spots or errors or seemingly going part of the track of directives given by the central bank, by commercial banks is a function of internal controls and poor internal tracking systems to a very large extent. But however, we cannot not also leave out the fact that commercial banks can be very, very naive in the context or probably seeking to also gain the system in themselves. That's my initial thought. Alright, with all of this happening, Six Banks have been fined at 1.3 billion. It goes to tell that the CBN is actually very serious about this issue of cryptocurrency, actually dashing hopes of our future integration. I did a bit of clarity right now, Gospel, because from what we understand, a few months ago the Securities and Exchange Commission opened some sort of a crypto department giving Nigerians some sort of hope that over time there will be some sort of inclusion and the integration of cryptocurrency, the blockchain into our financial services. So what does this really tell? Yes, so one fundamental thing and body language we've seen from the central bank is a lack of a collaborative strategy slash willingness to adopt the global blockchain disruption and how that's going to impact on financial institutions and monetary systems development to a large extent. More international nations are seeking to find more intelligent ways to collaborate as well as protect the integrity of the traditional systems whilst welcoming innovation. We've not been able to see that clearly from the central bank and it's also tilt forward to some sort of misalignment in communication, in real and in efforts by the central bank and the Securities Exchange Commission. So that's to tell you that regulating why we have a very long journey ahead of us in terms of integration and leading in blockchain technology globally as well as some financial systems integration as well. So it speaks heavily around the misalignment in the system and the lack of willingness to embrace change and that's the cause for worry going forward into the future. But Gospel, one would wonder if we're actually maybe walking in circles or just trying to be a bit stagnated because the entire world as it were are embracing, is embracing rather this blockchain technology and it's actually doing most banks globally doing them very well in terms of returns and all of that. Why are we not really looking in that direction? Yes, number one, first of which is important for us to note that the world is moving in that order but clearly almost 85% of countries right now are seeking to understand better how to deploy cryptocurrency. In some context you're thinking of them as assets, in some context you're thinking of them as commodities, in some other context there's perceived medium of exchange. You know, crypto is already seen as a medium of exchange but it hasn't been made legal as a medium of exchange. So yes, the acceptance you see globally has been efforts towards accepting the disruption but yes, define what that disruption is within your context. However, in the Nigerian context we've seen an outright trying to take against crypto by number one policy ban and number two an immature early roll out of e-currency or GD2 currency or e-nirre. We have not just shown a body language or a decentralized to accept crypto but we've also sought to counter crypto and even for that punish or penalize institutions that are seeking to manage the excessiveness of the disruption in the context. So I think Nigeria has a very long way to go and even the way we've been handling the crypto drive and the crypto disruption has largely been on intelligence and showed that we've lacked a show of understanding or proof of concept of what crypto currencies of the blockchain technology as a whole can offer in terms of enabling financial institutions development. And that's going to in the long term bring about the level of perceived lack of financial readiness to embrace innovation. I don't think it's a very good position for the Nigerian economy in the long term and we're also proving to be very, very unintelligent around leading technologies in the frontier of development in the 10th century. Alright, just before we move to world food prices, just on the beat of an advisory note, what would you advise these banks so they can forestall these infractions happening again in the future? Well, in my own opinion, to be very honest, I think in my own opinion, I think that both the central and commercial banks can only try hard to manage the situation but they cannot contain the situation. The reason why you cannot contain the situation is because you don't understand it in the first place. You can only correctly regulate what you understand or you can only correctly regulate what you've been a part of. Alright, so the body language from the central bank really now to the commercial bank has been a rejection, a rejection and a gross disinterest in seeking to understand. Now, because you've done that, because you've done that and you cannot also contain the demand drive for crypto transactions, alright? It's mixed technicality. You cannot truly, in the real sense of things, regulate it to a full extent. What you can only do is to probably manage and probably use some top sanctions and processes to punish offenders in court. So in my own opinion, I think at best you will only be able to manage but in the long term, I see this whole competition spiraling out of control because you cannot contain the global blockchain drive. Whether you're ready or not, it should definitely hamper heavily on your monetary system and taking the counter approach is not intelligent in my opinion in this case. Alright, before we go, Gospel, let's talk about the world food prices. It has jumped nearly 13% in March to a new record high. It's all in the wake of Russian invasion on Ukraine. What do we have in our hands? Let's bring it closer home here to Nigeria. The Nigerian context is quite a very hurting situation. It's painful, it's hurting and it could have been avoided. The conversation of rising surprises is no longer a conversation of just... It has now grown to become much of a demand pool but of largely cost-push. Cost-push because the critical structural dynamics that impact on the cost centers of the Nigerian economy are seriously crippled. And they are further crippling due to the actions and inactions of critical stakeholders on that value chain. How can you in one month have forced capacity as a result of dirty work or polluted work and you also have the national grid failure? Alright, that is a complete recipe for disaster. That's a complete recipe for hike in food prices. And let's not get it twisted because the MBS can come and say inflation has dropped by 1%. No, inflation hasn't dropped. Inflation talks about the rising food prices. Inflation rates talks about the pace at which those prices increase. So even if inflation drops from 13% to 12% or from 15% to 14%, it simply tells us that the rate of increase in food prices has slowed down. It doesn't tell you that the price of tomatoes has dropped. No, it means that the rate at which the price of tomatoes is going up has reduced. That's the English here that a lot of Nigerians don't grasp. And it comes up as a political correctness too from the central bank and the MBS and the fiscal policy guys. The conversation here is that structural issues must be dealt with so that cost pressure centers are relaxed and that with food prices can be contained and slowed down. That's the fact that we cannot even feed our population in a sense. Alright, Gospel, on the final notes. I want us to talk specifically about the global price of wheat. It seems as though the issues in Ukraine is actually doing the world a whole lot of bad. But specifically right now, wheat now in Nigeria, the cost of bread and other confectioners have actually gone up in Nigeria. How can we vet this? What do we begin to do locally? Alright, first of all, it's very important to note that the level at which global shocks will hit your economy. The effect of global shocks on your economy is a function of where you are on the developmental ladder. The lower you are on that ladder, meaning that you don't have a lot of structural impact or strength internally as an economy to take in shocks, the more the effects on your economy. But for Nigeria, we expect more. Because the Russia-Ukraine conversation is out of control. And when you're looking at leadership and trying to make decisions to protect your own, you need to be able to identify what is really a circle of influence and what is really a circle of control. So in this context, both the Russian and Ukraine story is out of a circle of influence and out of a circle of control. At best, Nigeria will only begin to receive the repercussions of these changing narratives. So it means that what we need to begin to do something is different because this is not the first time it happened during the Gulf War. It means that we did simply learn from the past. So we need to do more around fixing our structures and ensuring that we are a strongly self-dependent nation that with or without geopolitics or globalization, we can do more for ourselves as a people as a nation. Other than that, we'll keep being at the mercy of any change or structural issue that happens globally, being a pandemic or being geopolitics. Alright, thank you so much, Gospel or belly for your time. We are completely out of time. We do appreciate all of your inputs that you have shared with us today. Thank you for having me. It is indeed our pleasure. And that's the size of the show for today. My name is Justin Kadunee, Business Insights. We'll return to you again next time. Bye for now.