Whilst growing up, I used to and I’m sure almost every Nigerian has thought of how feasible it would be for the government to share money to every Nigerian after news break about the recovery of billions of dollars from corrupt government officials.
According to Investopedia, helicopter money (or helicopter drop) was first mentioned by popular economist, Milton Friedman in the 1960s while it gained popularity after former US Federal Reserve governor, Ben Bernanke made a passing reference to it in a November 2002 speech.
By definition, helicopter money is an unconventional tool of monetary policy that involves printing large sums of money and distributing it to the public in order to stimulate the economy. It is a metaphor to describe the sharing of money as if the money is being dropped or scattered from a helicopter.
Because other monetary policies like quantitative easing and management of interest rates may not reach the real economy and produce the desired effects of stimulating an ailing economy in deflationary periods, central banks can adopt policies like helicopter money when every other policy does not work.
Other features of helicopter money
- It can lead to a currency devaluation in the international foreign exchange markets due to the creation of more money.
- Other forms of helicopter money may come in the form of tax relief measures for local businesses such as deferred tax payments and partial waivers of provisional taxes.
The latest country to embrace helicopter money policy is Hong Kong as the government plans to give every citizen HK$10,000 in a desperate move to ease the burden of the economic collapse the region is battling.
Recent news reports stated that Hong Kong’s financial secretary, Paul Chan Mo-Po is set to roll out a HK120 billion relief deal which includes helicopter money – giving every permanent resident over the age of 18 a cash handout of HK10,000 ($1,280).
I wonder if Nigeria’s central bank authorities or the government gives a thought to applying the helicopter money in Nigeria and how feasible it will be in stimulating the economy.
Although it is very likely not to work out because Nigeria can not sort out the basics like having a proper database of its citizens not to talk of rolling out huge amounts of money to citizens.