It’s no longer news that the recent CBN reminder restricting Nigerian financial institutions from Bitcoin and other Crypto assets have started to spur negative effect in the crypto industry when considering the cost of buying the world’s most popular cryptocurrency at Africa’s largest crypto market.

A recent study by Nairametrics revealed the flagship crypto asset, Bitcoin traded as high as 46% premium on some P2P exchanges and untraditional channels when compared to the use of Nigerian bank debit cards before the Crypto ban took effect, meaning the price of a bitcoin on such platforms was much expensive than its average price on other Crypto exchanges of around $49,000 at the time.

Crypto experts are of the bias that although the Central Bank’s recent directive does not criminalize ownership of Bitcoin, the circular will however make it difficult for them to process debit, credit card, and bank transfer transactions.

READ: Bitcoin joins the trillion-dollar club with Apple, Saudi Aramco and Google

This is already increasing the complexity of a significant number of Nigerians that often use their local currencies in buying crypto assets. Many Crypto exchanges interviewed by Nairametrics spoke on the challenges many of its Nigerian users face buying Bitcoin at a fair value on the account that Nigerian leading financial payment providers such as Paystack, Flutterwave have arbitrarily cut ties with Crypto exchanges.

Adding more woes to young Nigerians adamant about buying the flagship crypto asset is the prevailing dollar scarcity in Africa’s leading economy which had often led many to buy the dollar at the black market rate of as high as N500, knowing fully well that all Crypto assets value are denominated in U.S dollar.

Adding credence to this, Rume Ophi a.k.a. Cryptopreacher, and Nigerian Crypto Educationist said;

“Nigeria’s bitcoin price isn’t consistent because it is pegged to the dollar (Usdt), which is a bit different from the parallel market, the one we call the black market or abokifx.”

READ: Nigeria’s cryptocurrency ban: A legal analysis

He added weight to the exchange rate disparity on some Crypto exchanges and other channels Nigerians have been left with

“At the time of writing, Paxful an online peer 2 peer platform pegged 1 USDT to 475. This means you need 475 naira to get 0.0000004sat (the smallest unit of bitcoin is called sat). Whereas a black market vendor is also known as OTC will sell for 480/$,” Ophi said.

The effect of the CBN crypto ban is already breeding bad actors that are currently taking advantage of the high thirst for Bitcoin as Luno a leading African-based Crypto exchange in an email sent to Nairametrics sheds more light on the cost bitcoin buyers in Nigeria must bear;

“Pushing people underground also makes it easier for scammers to exploit Nigerians, and we are already seeing Bitcoin trade at huge premiums in the country as a result of the ban.

“Other companies have made the choice to find workarounds that are less visible for regulators – for example, Peer-2-Peer (P2P) trading. Our view is that P2P trading would go against the spirit of the CBN’s directive.

“We believe that the focus should instead be on demonstrating to the CBN that exchanges such as Luno have the necessary controls in place to address the concerns it has in relation to cryptocurrencies.”

READ: Most powerful financial leader takes side with CBN, says Bitcoin is untrustworthy

What you should know

• Recall, the Central Bank of Nigeria had recently notified Deposit Money Banks, Non-Financial Institutions, other financial institutions against doing business in Crypto and other digital assets.
• In a circular dated 5th February 2021 and distributed to regulated financial firms, the apex bank of Africa’s largest economy warned and reminded local financial institutions against having any transactions in crypto or facilitating payments for crypto exchanges.
• Nigerian Apex bank further warned Nigerian financial stakeholders that any breach of this directive will attract serious regulatory sanctions.

READ: Why Crypto black market is thriving in Nigeria

Luno also spoke on the effect the CBN crypto ban will have on Nigerians in the long term, stating,

“Any attempt to restrict access to cryptocurrency does not protect Nigerians. It holds them back and leaves them vulnerable. It prevents honest Nigerians from taking advantage of all that cryptocurrency has to offer them.”

Bottom line: The rate of purchasing the most widely used Crypto asset in Nigeria is currently trading at a premium amid the Central Bank’s directive, suggesting it is getting much harder for Africa’s most important crypto market in getting Bitcoin at a fair value.

One of the many challenges facing Nigeria’s electric power sector is the issue of metering. From being a pre-privatisation problem, lack of metering has evolved to be a more sophisticated post-privatisation feature skirting the corridors of the Nigerian power sector for the last few years.

Statistics show that the number of unmetered customers across Nigeria has continued to rise. In 2016, a metering status report from the Nigerian Electricity Regulatory Commission (NERC) showed that about 3 million of the registered accounts of customers were unmetered. In 2017, this number grew as NERC reported that over 4 million unmetered customers. In 2019, a NERC report showed that over 5 million Nigerians were unmetered and this number has continued to rise.

In a bid to address the metering gap, in 2013 at the onset of the privatised electricity sector, the Credit Advance Programme for Metering Implementation (CAPMI) scheme was launched. The purpose of the scheme was to relieve the Distribution Companies (Discos) of the burden of financing the cost of the meters. As such it enabled the customer to pay for the meter upfront while the Disco amortised the cost through electricity supplied to the customer over a period of time.

READ: Nigerian firm set to raise $1.2 billion to purchase electricity meters

The CAPMI removed the initial capital outlay for financing meters from the Discos and Discos were to provide the customer with a meter within 45 days of payment. However, the scheme failed to deliver on its objective. As noted by the then Minister of Power, Works and Housing, Babatunde Fashola in 2016, “Discos that collected money from their customers to procure and install meters at their homes have mostly failed to do so”. The CAPMI was eventually discontinued in 2016, leaving the sector with at least a 50% metering gap.

In April 2018, the Meter Asset Provider (MAP) scheme was introduced by NERC in a bid to address the same problem. Under this scheme, there were to be third party meter suppliers engaged by the Discos, effectively removing the burden of providing meters from the Discos. The Discos were mandated to engage MAPs within 120 days.

READ: Consumer Complaints: DisCos received 203,116 complaints in Q2 2020 – NERC

The scheme, unlike the CAPMI, ensures that the customer received a meter from the MAP without making any upfront payment, while the payment was sculpted into the customer’s monthly electricity tariff as an energy charge until it was fully amortized. The scheme also gave customers the opportunity to choose to pay upfront and get their meters installed within 10 days in return for energy credits. It turned out that more customers were taking the alternative approach rather than the original approach as the rollout was not very favourable to those who chose to go the energy charge amortization route.

The MAP scheme has not been as successful as was hoped, with Discos missing deadlines to engage MAPs and MAPs facing the challenge of increased import tariffs and lack of local manufacturing capacity. In October last year, the Central Bank of Nigeria (CBN) launched its National Mass Metering Programme (NMMP) with a view to funding the local production, and in some, cases importation of meters by meter providers and Discos. Perhaps this was a case of putting the cart before the horse, since the facility came after the Federal Government had revised electricity tariffs upward of a 100%, not considering the fact that a teeming number of customers who had subscribed under either the CAPMI or the MAP scheme were yet to receive meters.

READ: FG to inject over N198 billion on capital projects in power sector in 2021

With the addition of the NMMP facility to CBN’s existing N213billion Nigerian Electricity Market Stabilisation Facility (NEMSF) advanced to the Discos in 2014, significant progress is yet to be seen from this facility gathering. While it is hoped that the NMMP will help close the metering gap, the brunt of the lack of metering since the privatisation of the sector has always been borne by the consumers, many of whom have had to pay exorbitant prices for meters under previous schemes, with nothing to show for it.

Interestingly, while consumers remain unmetered due to the inefficiencies of the Discos, the Discos continue to charge estimated bills even after the February 2020 NERC Order that capped estimated billing. While the Order may have merely reduced incidences of outrageous bills, Discos continue to bill customers outrageous amounts.

READ: NNPC to boost power generation with additional 5,000 megawatts to national grid

It is unfortunate that almost a decade after the privatisation of the Nigerian electricity sector, the Discos are unable to tackle one aspect of Aggregate Technical, Commercial and Collection (ATC&C) losses and continue to put the burden of metering or estimated billing on the customer, added to the increased electricity tariffs the customer has to pay in spite of epileptic power supply. NERC must really sit up in mandating compliance by the Discos in seeing that the NMMP combined with the MAP meet the December 2021 deadline of closing the metering gap.