Professor Steve H. Hanke, an applied economics scholar at The Johns Hopkins University, suggested in a conversation with the Federal Newswire that Nigeria's economic crisis could be mitigated by controlling the growth of the nation's money supply. This advice comes as the Nigerian government attributes the devaluation of its currency, the naira, to the burgeoning cryptocurrency industry.
"To control the naira's exchange rate and Nigeria's inflation, the most effective way would be to control the money supply growth rate," said Hanke. "To hit its inflation target of around 7.5% per year, Nigeria should keep the money supply growth constant at Hanke's Golden Growth Rate of around 12.75% per year."
Hanke is also known for his role as founder and co-director of The Johns Hopkins University's Institute for Applied Economics, Global Health, and the Study of Business Enterprise, as stated on the university's website. He holds senior fellow positions at both the Cato Institute and Independent Institute. Hanke's past roles include serving as a senior economist on President Reagan’s Council of Economic Advisers and a senior adviser to the Joint Economic Committee of U.S. Congress.
According to The Conversation, Nigeria has experienced a sharp rise in inflation from 28.92% in December to 29.90% in January - a peak not seen in two decades. The naira depreciated by 69% between June 2023 and mid-February 2024. With escalating costs for basic necessities, Nigerians are grappling with these economic challenges while their country's fiscal situation shows little sign of improvement without disciplined governance.
The Financial Times reported that as the naira plummeted to unprecedented lows, Nigeria's Communications Commission (NCC) instructed telecoms companies on February 21 to limit public access to prominent crypto exchanges such as Coinbase, Binance, and Kraken. Digital assets have gained traction among Nigerians who have lost confidence in their national currency due to its rapid devaluation. The Nigerian government has been compelled to devalue its currency twice in recent months.
The Crypto Council for Innovation disclosed that Nigeria houses the world's second-largest population of crypto users who resort to digital assets as a safeguard against inflation and an investment vehicle. "Nigerians are keen to protect the value of their money," stated the report. Additionally, Nigeria relies heavily on remittances which, when processed through traditional financial systems, attract substantial fees and lengthy transaction times - issues that are significantly mitigated by cryptocurrency transactions.
