Rising Inflation and Unemployment: The Answers

By Dr. Ahmed Adamu

Indicator of trend fluctuation as
characterized in the inflation trend

The Nigerian inflation rate is now 12.8%, this is higher than what it was (8%) in 2014, this is evident in the prices of common consumer goods. Now, household commodities like tomatoes, rice, egg, milk, spaghetti, maize, matches etc. have all risen, some even doubled their initial prices. This is on top of the scarce and expensive petrol. It is also happening at a time when there are more money in circulation. Currently there are close to N2 trillion in circulation, which means people have more money, but the question is how many of these people possesses the money. Despite the increasing money in circulation, people still struggle to afford the expensive consumer goods.

People now adjust their life styles and downgrade the quality of foods they eat, and this affect the performance of the economy as the aggregate demand keep reducing. In addition, the increase in inflation supposed to have been triggered by increase in employment opportunities in the short run, but that is not the case in Nigeria, as the unemployment rate increased together with inflation.

This indicates that there are more people without jobs, and prices of goods and services have increased. People can easily think there is stagflation in Nigeria, but that is not the case. If the natural rate of unemployment in the country is known, we would have been able to discover if there was trade-off between slight reductions in natural unemployment rate with the increasing inflation rate. However, with very little increase in the unemployment rate, which is a marginal 0.5%, we can assume there is reduction in the rate of natural unemployment.

This is because, the number of people without job due to lack of skills or due to the waiting period have reduced. Even though, there are increasing number of unemployed people due to low growth of the economy at the interim.  This is possible because the speed of the economy has reduced by 0.73% within the period of last quarter of last year and first quarter of this year. So, the marginal increase of unemployment rate was a result of slow growth of the economy, though the natural unemployment can be said to have reduced slightly.

Therefore, we can conclude that increase in inflation in Nigeria was as a result reduction in the natural rate of unemployment within this period. Because, demand for higher wages and external factors like the sudden shock in petrol price, higher import cost and sharp reduction in electricity supply might have triggered the recent increase in inflation. However, if the trend continues, the increase in inflation will cause more unemployment in the future, as producers will find it difficult to acquire factors of production and make their profit low due to the resultant low consumption.

Even through, there is more money in circulation, but yet, there is less money in the hands of average Nigerians, and the effect of reduction of money in circulation will be minimal as it will further reduce the money in the hands of the average citizen. So, the monetary policy shall not affect the money supply, but reduce the interest rate to encourage more investment. Reduction of the interest rate will compel the few that hold so much money to bring out their money from the bank and invest, and if they invest, they will employ labour, and this will address the unemployment. In addition, there have to be measures to checkmate inflation sentiment and undue maximization of revenue by suppliers. The price of petrol has to be strictly regulated to ensure affordable competitive price, so that raw materials can be acquired cheaply.

The recent depreciation of Naira to US dollar has made the cost of import prices higher, so, importation especially of refined petroleum products should be totally eliminated in midterm. This will drastically reduce the inflation rate, and provide more employment. Since there is no effect of wage increase on the current inflation rise, the regulated wages shall be maintained for now until when inflation rate is cut down to about 5%.

With the current China/Nigeria currency deal, we will expect cheaper cost of production and reduction in inflation, as cheaper raw materials can be imported from China at the short term. However, if this is also prolonged, there will be resurgence of inflation as cost of importation will be higher with continues overdependence on China raw materials.

Finally, on a related note, to address part of the food inflation, the government should lift the ban on land importation of rice. If rice is still imported through the sea, then it should be allowed to be imported through the land. What the government should do is to take measures to track and organise the land rice importation, so as to generate revenue from import taxes. However, there should be provisions and incentives for rice farming locally. The price of domestic rice should be subsidised so as to discourage buying foreign rice. The local farmers shall be provided with capital and suitable farming locations for rice, so as to encourage local rice production and discourage its importation. The current ban on land importation of rice has led to the scarcity of rice, unemployment and rise in rice price. It is discriminating to ban small-scale importation through the land if large sea importers are still allowed to import. Therefore, government should lift the ban on land rice importation in the short term before the effects of new measures and investment in local rice farming start to manifest.

Dr. Ahmed Adamu,

Petroleum Economist and Development Expert,

Pioneer Global Chairperson of Commonwealth  Youth Council,

University Lecturer (Economics), Umaru Musa Yar’adua University Katsina.

Speech delivered by Dr. Ahmed Adamu on the importance of literature during the launching of a book titled Tears of Agony on 17/4/16 in Katsina.

Speech delivered by Dr. Ahmed Adamu on the importance of literature during the launching of a book titled Tears of Agony on 17/4/16 in Katsina.

Dr. Ahmed Adamu presenting his speech during the book launch
(more photos below)

Writing books is very important, and is a culture that we promote and encourage among youth. It enhances one’s creativity and enhances mental stimulation, and this builds the brain’s capacity and imagination. When someone writes a book, he is transferring knowledge, experiences and in many times good characters/lessons. By writing, one is making good use of his time, and which will earn him economic benefits and recognition.

There is a myth that says, if you want to hide something from Africans, put it in a book. This remain a myth, but to some extent it is true, because, some of our young people lack the culture of reading. You will see young people wasting time sitting on the streets or under the trees arguing, gossiping and playing games. This is huge waste of time. They should have engaged in reading  to improve their knowledge. There are so many benefits of reading and some of these benefits include:

1.       Mental Stimulation: Just like any other muscle in your body, your brain needs to be exercised, and reading makes your brain to engage in imagination of what you are reading, which enhances its strength and speed of comprehension.

2.       Stress reduction: Some young people play games when they are stressed, not knowing that reading can give them the free entertainment, as they read stories and information that may please their minds.

3.       Knowledge: the more you read, the more you learn. Always, there are things you never know about, and you can know about them when you read. So, your basket of knowledge increases once you read. And if you have knowledge, you will be elevated in society, people will respect you and you will attain higher positions.

4.       Vocabulary Expansion: Especially books written in foreign languages, e.g. English Language, the more you read English books, the more you come across new words, and you will learn how to use them and how to spell them. This will help you to develop effective communication skills. It will also help you develop better writing skills as you will get use to how words are spelled and sentences constructed. This is very important for students as well.

5.       Stronger Analytical Thinking and Skills: Stories in books are logically presented and linked, and some books are about mysteries, which the reader will have to solve by him/her self, this trains you to develop analytical thinking, which you can apply in real world.

6.       Focus and Attention: reading makes one concentrate, and this concentration eventually becomes one's natural habits. Concentration is extremely needed in every aspect of life, without it there will not be understanding and progress. Multi-tasking add more to stress, but when you concentrate all your attentions to a single thing (the book you read), you become attentive and tranquil. If you develop this tranquility over time, your behavior will change as you will become more calm and attentive, and you will begin to discover world more than you can imagine.

7.       New Skills and Inspiration: When you read books, you will read stories of successful people and how people apply different skills to achieve their objectives, and you will become inspired by them, and you will then try to emulate and apply their skills and traits in your real life.

8.       Speed in Reading: Those that developed the culture of reading tend to be fast in reading, there are people who can read an average sized book in eight hours. Assuming these are students in Universities, it means they can read the entire text books in just a day or two. They read and understand faster, and they become more intelligent and knowledgeable than their colleagues. That is why you see the intelligent students always read.

All the developed countries in the world fall within the 30 top ranked countries in terms of reading culture, and this explains why they are developed. Most of poor countries do not have culture of reading.

There is need to identify the interest of the audience so as to give them the right book. Frank Serafini once said that “There is no such thing as a child who hates to read; there are only children who have not found the right book”.  So, we need to encourage our young writers to write about things that connect and relevant to the immediate lives of our people.

This why I commend the author of the Tears of Agony (Comr Lukman Kankia) for writing about the insurgency in the North-Eastern part of this country, narrating the horror and agony the victims of the insurgency undergo. The book also explained how and why the insurgency occur, and it is important as it tells stories of those who could not tell their stories. It will also help in giving another look at the causes and likely solutions to the insurgency.

We need to have our own authors, we should not subject our readers to what other people of different cultures write. We need to write to document our cultures, norms and values, and this is necessary to tackle indiscipline and insurgency. If we don’t write, then we will then have to read about the cultures of others.

Finally, there are some solutions I proposed that will help revive the culture of reading and writing in our society; Some young people have the passion for reading but they cannot afford to buy the books, so there should be provision of free books. This could be provided by government, organisations or private individuals. I use to buy books and share among young people and then rotate the books around, but unfortunately no body finished reading any of those books yet.

Competition can be set up for both readers and writers with attractive prizes, this will encourage engagement of young people in literature. Similarly, there should be annual literary award dinner to recognize young writers and readers. There should be provision of grants to young authors, because, some young authors lack the resources to type and print their work, and as a result, they subject themselves to asking for assistance. Now with this literary grant, young authors do not have to suffer, and new authors will be inspired.  We should also encourage establishment of literary clubs and reading centers to provide training opportunity and conducive atmosphere for readers and writers respectively.

Thank you

Dr. Ahmed Adamu

Petroleum Economist and Development Expert 

Pioneer Global Chairperson of Commonwealth Youth Council

University Lecturer (Economics) at Umaru Musa Yar'adua University, Katsina

Dr. Ahmed Adamu with the Speaker, Katsina State House of Assembly,
Rt. Hon. Aliyu Muduru

Dr. Ahmed Adamu with the Speaker, Katsina State House of Assembly, 
Rt. Hon. Aliyu Muduru

Cross section of other members on the high table

Re: Nigeria-China Currency Deal

President Buhari in handshake with the President

of China, Xi Jinping

By Dr. Ahmed Adamu

The Nigeria-China currency deal is a welcome development but only in the short term. With the new currency deal, both countries will hold each other’s currency in their foreign exchange reserves, which makes it easy for their citizens to directly access both country’s currencies without the need for intermediary currency, largely Dollar. This will mean loss of demand for Dollar. Demand for Dollar will now come for direct importation from the USA. This will crush the dollar compare to Naira in the money market.

However, the Chinese Currency-Yuan, will now be exposed to direct demand from Nigerians, and this means the heavy importation from China will further increase the demand for Yuan. This will make China to hold more of Naira in its reserves, and Nigeria hold less of Yuan in its reserves due to the resultant stimulation of latent demand for the Yuan.

A single Yuan is now exchanged for N30, and with easy purchase of Yuan and continues importation from China, the demand for Yuan will increase, and its value will appreciate. And this will continue, everything being equal.

We will then see a fall in demand of Dollar for Yuan, which will further depreciate Dollar compare to Yuan, and with continues American importations from China, the Dollar may further lose its competitiveness. This will extend to further restore the value of Naira to Dollar.

However, with Yuan being cheap to get and easy to import from China, the Chinese tend to benefit more, as this will serve as incentives for Nigerians to import more from China, ceteris paribus. This will then lead to increased supply of the Naira for Yuan, and which will lead to appreciation of Yuan over Naira. And if this trend continues, Yuan will no longer be any different from Dollar in near future without structural change. The Dollar used to be exchanged for N30 seventeen years ago, and now it is around N200. This is due to continues importation from America especially of Petroleum Products and Cars and other consumables, and for it being intermediary for importations from China. The Nigeria’s largest import origin is China, which worth $11.6 billion as at last year, which is 44% higher than imports from America. Because the demand for Yuan was largely shielded by the Dollar intermediary, the demand for Yuan will be visible and direct, making it possible to appreciate more compare to Naira.

This currency deal is very good as a short term measure, but if no structural change, we will see Yuan appreciating higher and likely reaching N200 in few years. The Chinese people may not need much from Nigeria currently, so even if China hold much of Naira in its foreign reserves, it might not see the demand for it. So efforts has to be in place to stimulate Chinese demand for Naira. Therefore, to consolidate this development, there must be radical measures to stimulate economic independence, by diversifying the economy and improving the industrial, manufacturing and agricultural sector. This will offset any balance of payment deficit and enhance the exports from Nigeria, so that Nigeria will hold more of the China’s currency in its reserve. So, there should be more productions in Nigeria and reduction of importation. Nigeria can have a statistics of major importing goods and services and then invest heavily to enable production of these goods and services within the country.

Petroleum refining is the sector that requires serious and immediate investment, because, over the years refined petroleum contributed so much to the pressure on Naira. In last year, it contributed the largest proportion of the imports to Nigeria (17.9%). If we can stop importing refined products (which we must), then our economy will be much stronger, as the demand for our crude oil is still inelastic.

With the Chinese offer to give $11.1 billion loan to Nigeria, this will weaken the Nigerian competitiveness, as Nigeria will have to use the Yuan in its reserve to pay for the loan and the interest, making the supply of currency from Nigeria higher. The loan shall then be strictly invested to the manufacturing and industrial sectors that have stronger multiplier effects so as to offset the deficit.

Even if the Chinese decided to invest in oil refining and mining, their investment will be in Yuan, and they will be paid in Yuan, which will further deplete the Nigerians Foreign Exchange Reserves. The Chinese cannot invest in currency they have no control and confidence on. So, it is a ticklish situation. Despite our relatively small financial capacity to invest in the manufacturing sectors, we have to optimised and encourage local investments.

One good move, is that of additional $15 million injection on the Nigerian Agricultural Sector by the Chinese government, which if managed well, will invigorate the exports sector and reduce the trade deficit. This is a big support from Chinese government in addition to its willingness to offer more Nigerians scholarship positions and technical training slots. So, I will say this is one of the most impactful trip by Mr President.

You can listen or download my interview on this matter with Voice of America Hausa via the link below. The interview starts from 16th minutes, from the Afternoon programme for today.

http://www.voahausa.com/archive/shirin-rana/latest/2862/3144.html

For more on my previous and future write-ups, you can visit my blog: http://ahmedadamu.blogspot.com.ng/

Dr. Ahmed Adamu

Petroleum Economist and Development Expert

Pioneer Global Chairperson of Commonwealth Youth Council

University Lecturer (Economics), Umaru Musa Yar'adua University, Katsina.

Draft Bill to ease ATM users’ hardship

By Dr. Ahmed Adamu

Yesterday, six primary school teachers died on their way to Katsina to withdraw money from Automated Teller Machine (ATM). They received their salary alert, and because there is no ATM or Bank branch in their town (Danmusa), they boarded a commercial vehicle to go to Katsina (114 kilometres away from their town) to withdraw their little salary, not knowing that they were drawing closer to their end. The six primary school teachers died on their way to withdraw their salary.  They had a ghastly motor accident, and will never access the money.

In my recent articles titled ATM Wahala: The Way Forward, I emphasized on the need to take immediate actions and policy review to address difficulties associated to access to finance. The above sad story is just one out of many unfortunate incidents relating to the inadequate infrastructure in financial sector. In my article, I gave some suggestions on the way forward, and as such, I drafted a bill regarding this issue to the National Assembly as a matter of national importance, and I will forward it to a senator in the National Assembly for review and presentation before the National Assembly.  This is the letter I plan to send to the Senator, you can give your inputs before I send the bill to the senate:

Dear Senator,

As you may be aware that yesterday in Katsina state, six primary school teachers died on their way from their hometown (Danmusa) to Katsina, which is around 114 kilometres distance, in order to withdraw their salary from Automated Teller Machine (ATM). If ATM machines and other means of accessing finance are available in their locality, these people do not need to travel to anywhere else to access finance. People suffer so much just to access their own money. For example, in Katsina Senatorial zone, only three towns have Automated Teller Machines (ATMs), and these are Katsina, Jibiya and Dutsinma, and all the remaining eight local governments and their towns do not have ATMs, and people from these localities have to travel to the three major cities to access finance. This leads to serious hardship and congestions in financial access points. Some people have to spent money and hours to come to the major cities, and they have to wait under scorching heat for hours, many without eating. In many instances, these poor people do not achieve their objective of getting the money. The ATMs many times fail due to technical or money unavailability issues, and it takes time to fix these issues in many access points.

As a result of congestion in the cities, people who are residents in the major cities then find it difficult to access finance, especially when salaries are paid, because, that is the period when there is acute overcrowding on monetary access points as those living in other towns have to come to the city to access the little salaries they receive. In societies like ours, people have to wait for their salaries, and when they receive the salary alert, they will not spend a minute before they go to the ATMs. This is why the ATMs are congested in this period.

The fear of this crowding and difficulty in accessing money make people to keep cash at homes and in their wallet, and this reduces the government’s ability to control the economy, and increases risks in the financial sector.

There are many institutional implications and untold hardships relating to the inadequacy of financial infrastructures. I am worried about the physical hardship and loss of lives that these inadequacies cause.  You can look at the photos below to have a glimpse of these hardships. Many of the victims cannot voice out their concerns, and that is why I am writing this letter so that we can speak out on behalf of these people and to ensure that the relevant laws are reviewed and actions taken to ease the hardship people undergo.

In my state (Katsina), almost all public servants receive their salaries through their bank accounts, and they all have to come to the ATM machines at the same time (end of the month after government salary) to withdraw money. And because most of the withdrawal are not above N50, 000, they must withdraw it from the ATM mouth, according the new decongestion policy by Central Bank Nigeria (CBN). This means majority have to line up before the ATM machines to get money. However, joining the long ATM lines is not the only point of sympathy, the frustrating thing is to wait on the line, under scorching heat, and only to come to their turn and the ATM will tell them “Unable to dispense cash” or “temporary out of cash” or “issuer inoperative”, and before the machine can come back to work, it might take long time or the next day depending on the bank and its location. Another serious difficulty scenario is when customer tries to withdraw the little money in his/her account, and the machine refused to give the cash and his/her account is already debited, in this situation, the customer is left stranded.

Similarly, the reason why most Banks cannot maintain constant availability of money is because of the poor quality of the money they receive. Some of the paper money CBN gives to the commercial banks are below the ATM standard, and as such, they cannot be placed on the ATMs. This is why despite money availability in Banks, they cannot fund the ATM machines. And if they place any paper currency that did not meet the ATM standard, the machine will get jammed and stop working. 

Another reason why ATMs fail is because of technical error on the server of the Banks, thereby making it impossible to execute any automated transactions. Many times, one wonders what is the role of the so called ATM Monitoring Team (AMT) and their supervisors, who are instantly alerted of any failure or cash unavailability on the ATMs? Sometimes, there is serious reluctance on the side of the AMT, and since they receive special allowances, then they shall be able to promptly respond and address all ATM issues even on the weekends.

Another limitation of ATMs is that, no ATM can be uploaded with over N1m after 6pm to minimise risks of theft and security breaches. As a result any 10 big customers can exhaust ATM in a night, and then subsequent customers cannot access cash from the same machine. Even if all ATM issues are to be addressed, the number of customers have far outnumbered the ATMs.

Solutions and Prayers:

Because of increasing dependence on ATMs in financial payments, which account to up to 93.3% of transactions on e-payment channels in recent years, the following prayers/solutions are proposed to address inefficiencies and difficulties relating to access to finance in Nigeria.

1.       1.       Cashless Economy: Now, whether we like it or not, no matter how our society resist change, there are changes that must be embraced. We have to change our payment systems in all payment points or at least provide options for automated payments via Point of Sale (POS), and this shall be provided in all shops, filling stations, restaurants, commercial offices and business, public institutions, educational institutions, etc. There is need for more incentives to encourage automatic payment systems in local markets and businesses. Therefore, the Banks and other Financial Institutions Act 2004 (BOFIA 2004) shall be reviewed to mandate commercial banks to provide free POS devices to business customers, and reward such customers for using the POS device for certain amount of transactions. We should not ascribe to reverting back to cash down salary system, because, without money in Banks, government will lose its power in controlling the economy. If all payments are done automatic, then there is no need for this long lines on ATMs, because we don’t need cash to live, you only need card to live.

2.       2. Reinforcement of Penalties for Banks’ negligence and inadequacy:  The penalties identified under Sanctions on Erring Banks/e-Payment service Providers for Infractions of Payments System Rules and Regulations should be reinforced. Some of these penalties resulting from any avoidable technical error and money unavailability on ATMs are not strictly reinforced. This is why banks care less about efficiencies of their payment systems and access points. For example, if any ATM is down for 72 hours without cogent reason, the bank will pay penalty of N100, 000, and if they refuse to respond to an ATM customer’s complain within 24 hours, they will pay N100, 000 per day.  Considering the frequency of the use of the ATMs, the chances of their breakdown might increase, and this underpins the need for close monitoring. The BOFIA 2004 shall be reviewed to increase this penalty to N200, 000 and the penalty shall commence 24 hours after ATM breakdown to discourage negligence and encourage efficiency. The sharing ratio of these penalties as specified in the BOFIA 2004 shall be reviewed to include the victimised customers to serve as compensation. So that the victimised customers will get 10 percent of the share of revenue from the penalties. Victimised Customers are those that 72 hours (or 24 hours if reviewed) after ATM breakdown attempted to withdraw from one of their bank branches and were not successful due to technical or money unavailability issue or those whose complains were not responded to within 24 hours.

3.       3. ATM Users Associations: Most of Bank customers are not aware of their rights and the laws, and they are subjected to unnecessary hardships, and the trauma such ATMs and Bank inadequacies caused them are not compensated. Therefore, the BOFIA 2004 shall be reviewed to establish and recognise Association of ATM Users (AAU), which will serve as the voice of all ATM users, so that the AAU will be monitoring performance of ATMs, and they should have mobile numbers of the AMT officials and to report to them any failure or issue on ATMs that they may not know about it, and they should follow up to ensure all issues are rectified immediately. The AAU shall be responsible to hearing grievances and complains from all ATM users and ensure that all complains are addressed within 24 hours. The AAU branches shall be provided in all towns and villages. They should also help the CBN in checkmating the inefficiencies of the commercial banks.

4.       4. Local Access to Finance: The BOFIA 2004 shall be reviewed to permit AAU and qualified individuals to use private cash to meet local cash demand using POS, and upon submitting their transaction reports to the respective banks, they receive their money back with some incentives from the banks as compensation for providing the financial services.  Under this reviewed act, any customer that want to withdraw money, he/she can go to the AAU branch or certified individuals in his/her town or village, and his bank account will be debited with exact amount he entered on the POS, and he will receive the same cash amount from the AAU officials or the certified individuals. AAU and other certified individuals shall be supported by the Act to source and hold enough cash to settle local demands. This will reduce the hurdle of travelling to Major Towns to withdraw money. Alternatively, the mobile money platforms can be included in the Act, where e-float can be exchanged for cash, and vice versa. Under this platform, people can hold e-float as token for cash, and they use it for saving and withdrawing cash and other payment services.

5.       5. Private ATMs: The BOFIA 2004 shall be reviewed to permits private individuals to operate independent ATM, so as to provide for much ATMs and provide business opportunities. Private ATM business is a highly paid business, where individuals can buy their own ATM, and charge customers per transactions, and later get their money back from Banks. For example, if you charge N200 per transaction, and your ATM is placed in strategic locations, you can get up to a thousand transaction in a month, which means you will have a net revenue of N200, 000 per month. So, allowing this kind of private business will decongest major cities and ATMs, and will make lives easy, and will create business opportunities.

6.       6. Review of CBN Banking hall decongestion policy: The CBN’s N50, 000 restrictions for inside banking hall transactions shall be reviewed for the meantime, so that even a transaction of N1000 can be executed inside the banking hall, so as to decongest the ATM points.

7.       7. Improve Quality of Currencies in Circulation: The CBN should improve the quality of currency in circulations, especially those held by the commercial banks, so that ATM errors caused by poor currency quality will be avoided. Any currency that do not meet the required standard is supposed to be replaced. There should be a nationwide advocacy on proper handling of currency. The good handling of currency can be reinforced by reviewing the BOFIA to include section that mandate commercial banks to not accept dilapidated or unfit notes, and any customer holding dilapidated cash has to submit such for reissue through the commercial banks after paying a penalty. This will discourage misuse of the currency and reduce the cost of currency reproduction.

8.       8. More ATMs: Finally, the Banks shall be encouraged to install more ATMs in all towns and villages, and they shall be efficient and responsive to all technical issues and cash unavailability problems promptly.  The BOFIA 2004 shall introduce the ratio of ATM per customers, so that 500 customers can have one ATM.

Dr. Ahmed Adamu

Petroleum Economist and Development Expert

Pioneer Global Chairperson, Commonwealth Youth Council

University Lecturer (Economics), Umaru Musa Yar’adua University

Re: N10 Billion Bank of Industry Loan

By Dr. Ahmed Adamu

One of the recent demonstration of commitment by this administration toward youth empowerment is the launch of the N10 Billion loan to youths by the Bank of Industry (BOI), which will help create 36, 000 jobs. If implemented, this will add count to the targeted 3.5 million jobs that the government set to create in three years. In order to make these loans more effective, there are some issues to consider, which might affect the overall objective of the programme.

First, the N10 billion loan is only accessible to the graduates who finished at least a National Diploma, this means that only a small fraction of population of the young people can access this loan. Most of the Nigerian empowerment programmes capitalized on the tertiary institutions graduate, leaving out the non-schooled or non-graduate youth. The non-schooled and non-graduate youth have higher propensity of being unemployed and they pose more risk to the society as many of them tend to be uninformed and hopeless, as such these kinds of opportunities should be open to them. Priorities have to be given to these categories of the youth. Even though, the graduates equally need jobs as 8 million graduates enter labour market annually, and only 23% of new jobs are perceivably suitable for them. So, there should not be marginalisation of any section of youths for this programme.

In previous year, around 1.1 million all kind jobs were created and 72% of these jobs came from informal sector, individual businesses with little or no structure and capacity. And this sector employ more of the non-schooled and non-graduate youth. So, there is need for professionalization and investment in small skilled businesses so that it can provide more decent and organised job opportunities like in the organised private sector.

The second issue with the BOI loan is it being a loan. While some argue that, it will allow for only the serious minded young people to access the loan, because if it is free, anyone can apply. That is correct, but the BOI or the government may consider giving a targeted grant, because payment of interest and loans cripple small or infant businesses. The BOI belonging to the government may not all the time maximise profit. Alternatively, the bank might consider scrapping the interest payment, even though it is little, but there are some social and economic issues relating to the interest payment. First, the payment of interest add to the cost of capital, and some faith persuasions distaste anything to do with interest, and that may discourage or deny others access to the loans. This is in addition to other requirements like the need for two external grantors, which makes the access to the loan very difficult, as some people may be reluctant to stand as grantors.

The third issue is that the application is online, and this means that rural poor youth, who are not familiar with computer operation, who cannot write good English and who cannot access internet cannot be able to access the loan or compete. So, the programme shall be opened to the rural poor and there shall be special support for them in the application process.

The fourth issue has to do with the distribution of the loans. Empowerment programmes must be targeted, there is need for a prior indices or surveys that states the context of the unemployed youth in terms of their real economic conditions, their chosen business, and capital scale. The funds shall then be distributed based on this independent survey. But, since this is a loan, and not everyone will want to take a loan, then, during the survey the participants may be asked about their willingness to take the loan.

Lack of this targeted approach brings about the possibility of misplacement. Since the application is online and it is based on how competitive each entry is, there is tendency that those that may not necessary need the loan will eventually benefit from it, and those that seriously need it, may not compete favourably. Therefore, the targeting approach should be employed so that the weak and poor can be directly identified and can then access the loan according their productive need and poverty status.  

One of the strengths of this programme is the offline business training sessions for the youth applicants, which is very important, and it should be maintained. More targeted empowerment grants should be created.

For those that want to apply for the Youth Entrepreneurship Support Programme shall read the flier below:

ATM Wahala: The way forward

ATM line in Katsina town. More photos below

By Dr. Ahmed Adamu

It disheartened me to share these photos of hardship in our society, these pictures were captured in Katsina, and it may not be different in other parts of the country. It is the pictures of Automated Teller Machines (ATM) points, showing large crowd of people lining up and suffering trying to withdraw money from the ATM. Some of them travel from long distance places to come to the ATM points, and they may eventually not get the money. This ATM Wahala has lingered for a while, and it keep exacerbating. First, we need to understand the situation and then talk about the solution.

I will use Katsina as a sample in trying to describe the situations. In the state, almost all public servants receive their salaries through their bank accounts, and they all have to come to the ATM machines at the same time (end of the month after government salary) to withdraw money. And because most of the withdrawal are not above N50, 000, they must withdraw it from the ATM mouth, according the new decongestion policy by Central Bank Nigeria (CBN). This means majority have to line up before the ATM machines to get money. However, joining the long ATM lines is not the only point of sympathy, the frustrating thing is to wait on the line, under scorching heat, and only to come to your turn and the ATM will tell you “Unable to dispense cash” or “temporary out of cash” or “issuer inoperative”, and before the machine can come back to work, it might take long time or the next day depending on the bank and its location.

The reason why most Banks cannot maintain constant availability of money is because of the poor quality of the money they receive. Most of the paper money CBN gives to the commercial banks are below the ATM standard, and as such, they cannot be placed on the ATMs. This is why despite money availability in Banks, they cannot fund the ATM machines. And if they place any paper currency that did not meet the ATM standard, the machine will get jammed and stop working. 

Another reason why ATMs fail is because of technical error on the server of the Banks, thereby making it impossible to execute any automated transactions. Many times, one wonders what is the role of the so called ATM Monitoring Team (AMT) and their supervisors, who are instantly alerted of any failure or cash unavailability on the ATMs? Sometimes, there is serious reluctance on the side of the AMT, and since they receive special allowances, then they shall be able to promptly respond and address all ATM issues even on the weekends.

Another limitation of ATMs is that, no ATM can be uploaded with over N1m after 6pm to minimise risks of theft and security breaches. As a result any 10 big customers can exhaust ATM in a night, and then subsequent customers cannot access cash from the same machine. Even if all ATM issues are to be addressed, the number of customers have far outnumbered the ATMs. For example, in Katsina Senatorial District, only Katsina, Jibiya and Dutsinma towns have ATMs, and in most cases customers have to come to Katsina to withdraw little of the salary they receive. These photos illustrate the serious hardship the ATM users undergo. If at all they are lucky to have the money eventually, they will then have to join another long line to take fuel from filling stations.

Solutions:

Now, whether we like it or not, no matter how our society resist change, there are changes that must be embraced. We have to change our payment systems in all payment points or at least provide options for automated payments via Point of Sale (POS), and this shall be provided in all shops, filling stations, restaurants, commercial offices and business, public institutions, educational institutions, etc. I can never ascribe to reverting back to cash down salary system, because, without money in Banks, government will lose its power in controlling the economy. If all payments are done automatic, then there is no need for this long lines on ATMs, because you don’t need cash to live, you only need card to live.

Because, most of Bank customers are not aware of their rights, they are subjected to unnecessary hardships, and the trauma such ATMs and Bank inadequacies caused them are not compensated. Therefore, there is need to set up Association of ATM Users (AAU), which will serve as the voice of all ATM users, so that the AAU will be monitoring performance of ATMs, and they should have numbers of the AMT and to report to them any failure or issue on ATMs, and they should follow up to ensure all issues are rectified immediately. The AAU shall be responsible to hearing grievances and complains from all ATM users. The AAU branches shall be provided in all towns and villages. The AAU shall be empowered by the Banks to hold cash and be provided with POS, and then any customer that want to withdraw money, he/she can go to the AAU branch in his/her town or village, and his bank account will be debited with exact amount he entered on the POS, and he will receive cash from the AAU officials. AAU shall be able to maintain security balance in their accounts to avoid default. This will reduce the hurdle of travelling to Major Towns to withdraw money.

There shall be laws that permits private individuals to operate independent ATM. This is a highly paid business, where you can buy your own ATM, and charge customers per transactions, and later get your money back from Banks. For example, if you charge N200 per transaction, and your ATM is placed in strategic location, you can get up to a thousand transaction in a month, which means you will have a net revenue of N200, 000 per month. So, allowing this kind of private business will decongest major cities and ATMs, and will make lives easy, and will create business opportunities.

Finally, the Banks shall install more machines in all towns and villages, and they shall be efficient and responsive to all technical issues and cash unavailability problems. They should consider the suffering of the customers and sympathise by providing adequate service to ease lives.

Dr. Ahmed Adamu

Petroleum Economist and Development Expert

Pioneer Global Chairperson, Commonwealth Youth Council

University Lecturer (Economics), Umaru Musa Yar’adua University