Cryptocurrency, more than a complex term has become a phenomenon present in everything related to progress, and technology. It was started with the sole purpose of peer to peer exchange of money and it grew into something multi dimensional. Bitcoin has been spearheaded by several African countries, and Nigeria was one of them.
At the beginning of the year, the Central Bank of Nigeria disregarded Bitcoin as a legal tender. Consequently, the market for Bitcoin fell.
The following article gives an insight into the potential for digital currency in Nigeria that has been dismissed on grounds of possible fraudulent activity and anonymity of users.
According to the Wall Street Journal, creating a connection between Bitcoin and terrorism is plain exaggeration. All transactions that take place using Bitcoin is recorded in the blockchain, making it easy to trace back any suspicious movement of cash. The unreliability narrative of the Bitcoin is simply pushed by governments.
Bitcoin is just as much as a political tool as an economic tool because it does not have any external source of control and is transparent. Nigerians adopted this new money in hopes of democratising the economy. The unreliability of the Nigerian government led to the rise in use of Bitcoin as an act of insurgence. An act against the political interests of the oligarchs, and corrupt parties.
The Bitcoin surge emerged in Nigeria because of Ponzi schemes, most popularly, the MMM. This Russian Ponzi scheme had over two million participants in Nigeria. Despite the risk of dealing with Bitcoins, residents decided to overlook it owing to weak economic conditions. If the citizens of Nigeria were willing to get involved with a Ponzi scheme to deal with Bitcoins, a more reliable platform could’ve been encouraged amidst them, if it weren’t for the ban. The Central Bank of Nigeria started drawing negative assumptions of Bitcoin, when people lost money owing to Ponzi Schemes, and consequently deemed it an unnecessary, ill-fated monetary tool.
Around 2015, Citibank noticed the popularity of Bitcoin and realised that this technology was there to revolutionise markets rather than disrupt, and thus decided to start their own Cryptocurrency to simplify storing large sums of cash. And with one of their branches located in Nigeria, the bank believed this move to be more than complementary to the then emerging bitcoin market. Being adopted by the banking system highlighted its serious acknowledgment of digital currency.
In February 2017, Bitcoin was observed to be at its peak. It was the most searched term on Google in Nigeria. Trading around that time had spiked on localbitcoins.com topping 400m NGN weekly. The bitcoin exchange rate reached 500,000NGN on some Nigerian exchanges. Nigeria was placed to be the 16th most traded currency for Bitcoin, and now it has fallen to be the 20th. Nigerians found Bitcoin to be a safe alternative asset against the volatile Naira, because of the nation’s oil crisis and consequent economic instability. Nigerian investors with Naira bonds would otherwise be seen hedging against the fluctuating value of Naira in Nafex.
With increased number of Wallets downloads, Nigerians used Bitcoin to send money to family and friends at home. This mode of transferring money had been a cheaper option in comparison to doing so via Western Union, Ria or MoneyGram. Bitcoin doesn’t require any so called ‘fees’, so long as the receiving end has a bitcoin wallet.
Sending money via any of the aforementioned sources is a lot more expensive owing to their vast profit margin. Considering Western Union for example, the fee starts at one dollar (363.5NGN), which is subject to additional charges with respect to the exchange rate. And evidence has emerged of Western Union not being faithful with disclosing their exchange rates.
Bashir Aminu created Cryptogene, a startup, to educate the general public on Cryptocurrency and make them accustomed to a competitive and technologically thriving environment. Similar motives were encouraged by Luno, the continent’s biggest Bitcoin Exchange, by incorporating a learning portal.The building blocks towards a Bitcoin embedded economy were steadily in place with joined efforts by its people.
With various aspects of the economy covered prior to the ban, it is evident that the market for Bitcoin may not have had a solid shape, but it was definitely in the making.
Investing in Zimbabwe – Gamble or Jackpot?
After nearly four decades of rule, Robert Mugabe finally stepped down as president of Zimbabwe late last year. A nation that has been crippled by corruption, plagued by poverty and ostracised from the international community now has an unprecedented opportunity to reform its economy and re-establish itself as a major African power. President Emmerson Mnangagwa has already announced his intention to revive the country’s flagging finances, open up to foreign investors and crack down on corruption.
The first signs are encouraging. On January 15th, South African tycoon Robert Gumede pledged to invest $1.2 billion in the country to develop IT and infrastructure projects. But Mnangagwa and his new government must learn from past mistakes if Zimbabwe is to realise its potential. Otherwise, the country will almost certainly lapse back into the stagnation, inequality and squalor that came to define the Mugabe era.
Is Zimbabwe a bull market?
If history is any guide, foreign investors would be wise to play it safe. This is not the first time a hopeful figure ousts an ageing African dictator after decades of misrule, promising reform only to prove themselves equally unfit for the task. The most notable example is perhaps the Democratic Republic of Congo (DRC), which spent three decades under the thumb of its own Mugabe-like figure: Mobutu Sese Soko. Mobutu, a textbook totalitarian, embezzled substantial amounts of state aid, played minority groups against each other and ruled with an iron fist.
After his ouster in 1997, hopes were high that the DRC’s new leader – Laurent Kabila – would steer the country in a more judicial direction. Instead, Kabila maintained the same power structure as his predecessor and ramped up the violence. His forces slaughtered thousands of Rwandan refugees within months of taking the presidency. Assassinated by one of his own bodyguards just four years into his regime, Kabila was replaced by his son, Joseph, who is still clinging to power today.
Though Joseph Kabila has proven to be slightly less bloodthirsty than the father, he appears to be every bit as addicted to his position. Despite agreeing to step down in December 2016, Kabila has repeatedly delayed elections, citing logistical obstacles and financial deficiencies. Protests at his continued reign have become increasingly violent – seven were killed at the turn of the year – while his most popular political opponent, Moïse Katumbi, has been hounded out of the country on entirely politically motivated fraud charges.
Recent polls suggest Katumbi would replace Kabila with ease, though the former provincial governor and current opposition leader is reluctant to return to his homeland as he fears for his life. Katumbi is asking for international protection and is leveraging his time abroad to maintain global pressure on Kabila’s regime.
Unsurprisingly, foreign investment in the DRC has cratered. Most outside commercial interests in the country are concentrated in the mining sector – itself embroiled in international scandals involving Dan Gertler, an Israeli tycoon added to the U.S. sanctions list for his ties to the murderous leadership in Kinshasa. Economic development has stagnated and the country’s GDP per capita stands at around half of its 1970s levels.
There are eerie parallels – not to mention unsavoury connections – between the Congolese and Zimbabwean political ordeals. When Robert Mugabe came to power as the first prime minister of the newly liberated Zimbabwe in 1980, his appointment was greeted with rapturous optimism by the world. Mugabe was even nominated for the Nobel Peace Prize the following year. Unfortunately, the ‘freedom fighter’ rapidly showed his true colours, using intimidation, bribery and, at times, outright slaughter to maintain his grip on power. The Matabeleland Massacres alone which claimed between 10,000 and 20,000 civilian victims between 1983 and 1987.
Mugabe prioritised military endeavours and total control over society, famously proclaiming in 1998 that “countries don’t go bankrupt!” when sending troops to the Congo in support of the elder Kabila. At the same time, he oversaw the decimation of his own country’s economy. Mugabe’s continued threats to nationalize the nation’s best performing industries has discouraged foreign direct investment (FDI). In 1992, the Land Acquisition Act decreed that the government could lawfully strip white landowners of their property and redistribute it among the indigenous population.
This bill was forcibly enacted in 2000 when 4,000 white farmers were forced into giving up their land. Mugabe then gifted the assets to friends, relatives and assorted cronies instead of promoting the interests of impoverished Zimbabweans. Agricultural output plummeted immediately. The resulting food shortages prompted the need for increased imports, financed by an unsustainably zealous attitude towards money-printing.
Predictably, inflation spiralled out of control. At its peak in 2008, monthly inflation reached 7,900,000,000% and prices doubled overnight. Gross national income (GNI) per capita fell from $890 USD in 1990 to just $300 in 2008; only in recent years has it returned to the previous levels. Even now, inflation remains at 348%. The industrial sector is operating at below 30% capacity and unemployment remains above 90%. Clearly, reform is needed – and fast.
Can Mnangagwa do it?
Fortunately for him, Zimbabwe’s economic opportunities are still there for the taking. The country was formerly known as the “breadbasket” of Africa, but a glance at its natural resources makes such a description seem positively miserly. With the world’s third-largest reserves of platinum, the fifth-biggest lithium production output and plentiful mines of coal, copper, diamonds, gold and iron ore, the country is a veritable cornucopia of resources. Mnangagwa hopes to harness that potential with a raft of measures designed to boost the economy by 4.5% in 2018.
Among other incentives, Mnangagwa has pledged to repeal the indigenisation law (so crucial to Mugabe’s regime and so damaging to the economy) from all industries except platinum and diamonds. He has also indicated that local businesses will be granted a tax amnesty on interest and fees, allowing them to clear debts and concentrate on the future. Additionally, he will also need to introduce a stable domestic currency in order to combat cash shortages that currently result in Zimbabweans queuing outside banks for days on end. Only then will the target of 4.5% become feasible.
Democracy just as important as the dollar
Even if Mnangagwa is successful in enacting his proposed measures (in itself a tall order), all that will mean nothing if he can’t get his own house in order. Corrupt political institutions will not encourage FDI or catapult the country out of its current pariah state, and if Zimbabwe is to flourish, it will need the help of the international community.
The signs thus far do not seem encouraging. New Justice Minister Ziyambi Ziyambi has dismissed calls for electoral reform, claiming they are not needed. Mnangagwa’s opponents say that the new president – and longtime Mugabe lieutenant – will turn out to be a carbon copy of his predecessor. Unless Mnangagwa can banish such anxieties and demonstrate a real desire to reform, Zimbabweans could come to face the same Sisyphean fate as their Congolese counterparts.
The Zimbabwean Economy: Can It Recover?
Before Mugabe resigned, before the military coup, before the 93-year-old man gained independence yet slowly disintegrated the Zimbabwean economy, and before the British colonization, Zimbabwe had an economic structure with massive potential.
Within the country lies the “Great Zimbabwe,” a remarkable ruin built around the 11th century. The size and structures within it could only be achieved with innovation and progressive technology, symbolizing a developed region at the time. This development was enhanced by the depth of architecture within the city, which included the Control Tower, the Reserve Bank and the Lodge in Masvingo, and many more structures.
Furthermore, the country had an abundance of gold, a leading commodity of trade, hence international exports triggered economic activity and consequently economic growth. As well as this, iron, cotton and cloth were also mined locally, further expanding their economy domestically, yet the Mutapa empire held a monopoly on all of this. Even though the state had more control than the free market, Zimbabwe seemed to have a successful economy.
An interesting factor to consider is education at this time, compared to the post-colonial period. While post-colonial education in Zimbabwe was considered “improved”, the pre-colonial system generated a labour force that consisted of engineers, architects, artisans with creative minds and entrepreneurial instinct. The post-colonial labour force had ambitions of being labourers and workers, rather than being employers or managers.
With an appetite for power and wealth, Cecil John Rhodes decided to take his South African Company to Zimbabwe, in 1890, to search for the gold. The land was even renamed to “Southern Rhodesia.” The Ndebele Kingdom was effectively seized, resulting in severe racial segregation between the colonists and the indigenous population. The new settlers occupied the upper class, living with comfort and affluence, while the natives were stripped to obliterating conditions. The Land Apportionment Act, 1930, banned the natives access from any urban areas, as those were solely designated to the whites.
With law enforced, the natives were forced to exploit resources in forests just to survive. Undoubtedly, the result was land and resource degradation. This became increasingly worrying when population growth started to surpass resource availability. Inequality grew exponentially to a point where the colonists (4% of the population) guarded 90% of the economy, with only 10% being held by the locals. Perhaps the empire robbing away Zimbabwe’s natural wealth has been the root cause of the country remaining an underdeveloped LEDC and struggling to find effective leaders to help revive its economy.
Robert Gabriel Mugabe. In April 1980, this man, the head of the Zimbabwe African National Union (ZANU), ended almost 100 years of racial segregation. He won the majority and became the prime minister, finally securing independence for this country.
But was Zimbabwe really ready for him to be ruling for 37 years? Mugabe clutched on to a Marxist ideology, which influenced most of his decisions for the country. Being a highly educated individual, he thrived for power and success. This power that he had is justifiable, considering he was later elected as president in 1987. Whether or not his policies were benefitting Zimbabwe in any way, there seemed to be no other leader as influential.
Nevertheless, it is evident that this man made countless decisions that seem to not have been in the best interests of the country itself. Many are becoming more aware that Mugabe really destroyed the country and the economy which many referred to as “the breadbasket of Africa.”
What did Mugabe really do to Zimbabwe?
Once the World Health Organization revoked their decision of appointing Mugabe as the Goodwill Ambassador, the world slowly began to discover who this man truly was. The accusations he had of destroying Zimbabwe’s healthcare system largely contradicted what Mugabe was publicizing on global health issues.
The lack of government expenditure in state-run hospitals led to them running out of essential and basic medications like antibiotics and painkillers. The way Mugabe also ruined agriculture led to a deprivation of nutrition and water for the majority of the population. Consequently, a result has been an outburst of diseases such as the cholera epidemic.
As for the economy, Mugabe really managed to crush it. Crush it to a point where almost 72% Zimbabweans live in absolute poverty. A significant decision he had made was reallocating white-owned farms to black farmers. These farmers were solely chosen due to their relationship with Mugabe and lacked any valuable experience in modern agriculture practice. Consequently, we can observe that the agriculture that had once been the foundation of Zimbabwe’s economic growth has now shattered to an irreversible state. Additionally, a notable era for the country was its hyperinflation, due to the fiscal complication.
Mugabe seemed to direct government spending to other sectors such as Congo’s civil war, higher salaries for the army and government officials as well as for personal use. The central bank had to support the government’s large debt by rapidly printing more money. The supply of Zimbabwean dollars increased exponentially, leading to the inflation rate rising from 7% in 1980 to 231, 000, 000% in 2008. Only once the entire currency was rejected did they adopt American dollar instead.
How could one man make such powerful, yet devastating, decisions for a country and still guard his role and influence for so many years?
End of Zimbabwe?
The end of Mugabe’s era was bound to happen someday with the way Zimbabwe’s population suffered. The president finally resigned after a military coup had taken place on the 14th of November 2017. An event like this would leave any country in a pool of uncertainty, and the population still remains unsure of what to expect next. With change lies opportunity, and perhaps this event will enable Zimbabwe to rekindle the successful spark they once had.
On one hand, the new president Emmerson Mnangagwa seems to be controversial due to his previous actions in the country. On the other hand, there may be strategies to unlock Zimbabwe’s potential. Effective government policies to combat and reduce inequality via an improved tax system could be the first step.
Moreover, rebuilding the agricultural sector to boost exports, as well as cracking Zimbabwe’s investment potential. Instead of Zimbabwe being stuck in the natural resources trap, successful governance could ensure Zimbabwe’s resources are used for investment rather than exploitation. This success is not guaranteed, as, after all, Zimbabwe remains a developing LEDC, which evidently means it will not be easy for sudden growth. However, maybe a drastic change is all the country needs to drive them back to success.
Oscar Pistorius’ Sentence Extended to 15 Years
The former South African athlete’s sentence has been increased to 15 years for the murder of girlfriend Reeva Steenkamp on Valentine’s Day 2013. The athlete has served a year and 7 months and has 13 years and 5 months remaining.
The South African appeals court ruled that High Court Judge Thokozile Masipa’s decision to reduced the sentence to 6 years, based on the athlete’s state of mind, was wrong. Two of Judge Masipa’s rulings during the trials of Oscar Pistorius has been overturned by the appeals court. While gaining fame during the trials, she has been the subject of significant criticism on this topic.
Other famous sports figures charged with murdering their partners include former NFL player O.J. Simpson and boxer Rubin “Hurricane” Carter.
More on Cryptocurrencies
Two New Blockchain ETFs, So What?
With the recent failure to get cryptocurrency Exchange-Traded Funds (ETFs) up and trading, the Nasdaq has listed ETFs this week...
South Korean Minister Wants to Ban Cryptocurrency Exchanges
South Korea’s Justice Minister, Park Sang-Ki, has announced plans to ban domestic cryptocurrency exchanges. Park said: “There are great concerns...
Messaging App Line Joins the Cryptocurrency Hype
Japanese messaging app Line is expected to announce plans of its own blockchain and cryptocurrency. Line already offers a mobile online payment...
Cryptocurrencies5 days ago
Ripple and MoneyGram: A Proof of Concept for the Use of XRP?
Cryptocurrencies4 days ago
XRP, NEO, Monero, IOTA: Can One of the New Kids on the Block Dislodge Bitcoin?
Cryptocurrencies4 days ago
ICOs: The New Gold Rush
Europe3 days ago
Silvio Berlusconi: Why Italy and Europe May Need Him
Cryptocurrencies4 days ago
Bitcoin Bubble: Cryptocurrency Values are Plunging
Cryptocurrencies5 days ago
Blockchain: Could It Improve the Quality of Financial Reporting?
America3 days ago
UN Drug Treaties Need to Rethink Cannabis
Global Affairs5 days ago
The Migrant Crisis in Europe: What Will 2018 Bring?