When Nigerian ‘entrepreneur’ and Forbes Africa 30-Under-30 honoree Obinwanne Okeke (Invictus Obi) was sentenced to 10 years in prison for his involvement in computer-based fraud last February, the news “broke the internet”—-to adopt a Nigerian cyber lingo.
Expectedly, conversations shifted toward the dangers “yahoo boys” (internet fraudsters) represent for the average upwardly mobile Nigerian operating within the global space. Across social media platforms, Twitter especially, many Nigerians lamented the plausible effect of Okeke’s conviction on the image of other Nigerians doing legitimate businesses around the world. But I was quite amused that very little or nothing is said of whatever havoc, if any, these internet fraudsters wreck on the micro-economy.
Interestingly, the nation’s statistics bureau released a report the following day showing that Nigeria’s inflation rate shot up to 16.47%. I reckoned then, and even now, that there is perhaps a nexus somewhere.
Anyone who lives in a neighbourhood where ‘Yahoo boys’ and #Benefit Boys (fraudsters diverting Covid-19 relief funds) are quite much would most likely establish this nexus in the inflationary pressures on the prices of “luxury” goods and services within the neighbourhood: a persistent surge in the prices of designer jeans and shirts, colognes, boxer shorts, pizza, grilled fishes, Asun and Shawarma, groceries, and such services like body massage, hair cut, gym services, and related stuff. And because Yahoo boys rarely deal heavily in things like Kuli-Kuli, Fufu, Moni-moni, Iru pete (locust beans), Beske, Okpa, Awara, and related stuff, the (micro) pressures may not spread toward the prices of those goods. In a sense, that does not only explain that the inflationary concerns in such neighbourhood aren’t necessarily the same as the country-wide concerns, it shows that the pressure is heightened largely by the (illicit) purchasing power of those Yahoo Boys in that community.
Inflation simply refers to increase in the prices of goods and services. And whether it is creeping (3% rise in a year or less), walking (between 3-10%), galloping (10% or more), or hyper (more than 50% a month), they all have varying degrees of impact on the economy. Of course, the fundamental goal of managers of the economy is to keep prices stable at rates that would not wreak havoc on the system.
In February, Nigerian inflation hit a new high as food prices jumped more than 20 per cent, heaping financial pressure on households amid slow economic growth. Driven largely by the impact of a coronavirus pandemic that has also induced a drop in the price of oil and weakened the naira, inflation reached 17.33%.
In understanding Nigeria’s inflationary concerns, much is often said about monetary expansion, driven mainly by expansionary fiscal policies, and its impact on the dynamics of growth and inflation. There have also been concerns around devaluation of the naira, an exercise the nation went through twice in 2020, and how it triggers inflation.
In recent months, there have been talks around food insecurity, buoyed by widespread violence in most of Nigeria’s farming communities, occasioned by the tensions among herders and farmers. There was also a recent (food) blockade announced against southern Nigeria, one that made a bad situation worse. Given that food prices, which made up the bulk of the inflation basket, rose 21.79% in February, these are all valid concerns.
But one tiny aspect of the conversation which gets little or no attention is the place of illicit money in the micro-economy, chief among which c0mes from internet crimes.
At the micro-level, Yahoo boys disrupt the neighbourhood markets and influence upward movement of prices with their trademark reckless spending; ultimately making a mess of the average person’s earning power/disposable income. In a nation where workers’ wages do not move with inflationary pressures, where governments at the sub-national level are still debating the possibility of paying N18,000, only those at the lower rung of the ladder bear the brunt.
In contemporary times, there are places the average salary earner can’t afford to rent a modest apartment, especially in Western Nigeria. And that’s not because the infrastructural facilities are superb, nor because the houses are really spectacular; it’s largely because of the “crowding out” effect of “Yahoo-yahoo”. In those places, you’d have to outspend young yahoo boys living large with no legitimate source of income, ever ready and willing to pay huge amounts on properties, and, thus, shooting up the market prices beyond the reach of the everyday Lasisi, Chinaza or Aliyu.
Like any other form of illicit financial flow, internet scam places economic power in the hands of criminals, making a mess of legitimate hustlers’ sweat, with rapacious traders and service providers pushing prices up at dizzying heights, especially at the micro-level. Anyone who has had any interaction with folks in the real estate sector in recent time, especially on the Lagos-Oyo-Ogun corridor, would probably have had to face the “crowding out” effect of the overwhelming presence of ‘Yahoo boys’ in that sector. Landed property that ordinarily should be sold at prices within the reach of the average salary earner has since been overpriced.
The first cohort of Nigerian fraudsters who operated in the 1990s was largely uneducated, and that group was followed by others who were frustrated by the nation’s poor economy. Between the 1990s and now, Nigeria’s economy has gone through a lot, with the nation’s statistic bureau putting the unemployment figures at 33.3% in its last report. Consequently today, internet fraud has become a near-pandemic among Nigerian youths, with almost every skinny boy in sagging trousers sitting in an apartment and diverting huge cash into his bank accounts. And because the market is no respecter of ‘morality’, and price responds largely to demand and buyers’ purchasing power, inflation sets in and the power dynamics swing toward those who wield the Benjamins, leaving the economically powerless (even if law-abiding) in the lurch.
To be sure, measuring the impact of ‘Yahoo boys’ spending culture on the micro-economy, and ultimately inflation, could prove difficult, if not near-impossible. It is very unlikely that such a variable would even have any major impact on Headline inflation. But given the ubiquity of ‘Yahoo boys’ in our neighbourhoods in recent years, it would be interesting to know what the impact is in (micro)economic terms, beyond the oft-trumpeted concern around Nigeria’s diplomatic image.
On the flipside of the ‘Yahoo-yahoo’ spending culture on the micro-economy is the bigger impact of other forms of illicit financial flow on the macro-economy, as captured in the activities of those a pop artist described as “Agba Yahoo” (Older Yahoo boys)–the oil tycoons, politicians, bankers, etc.
In the end, the pressures come from both ends. And it’s a case of double jeopardy for the average salary earner, poor artisan or struggling entrepreneur—both at the micro and macro levels.
Oladeinde writes on the Economy, Investment, Business, and Public Policy. He tweets via @Ola_deinde and can be reached on Olawoyinoladeinde@gmail.com OR +234(70)13363332
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