Time for central banks to engage social media
It is easy to lose count of the number of times the Reserve Bank of Zimbabwe (RBZ) has been forced to issue statements denying social media rumours over the past year.
The latest came last week, after false social media rumours caused a round of panic buying. A message claiming goods were about to run out in the stores saw many consumers spilling into supermarkets, hoarding commodities. Unsurprisingly, some retailers capitalised on the chaos and increased their prices, thereby adding to the sense of panic.
It was a whole two days after the first round of social media hoaxes had started that the RBZ decided it had to say something.
“The Reserve Bank of Zimbabwe would like to advise the Zimbabwean public to dismiss the social media messages that are circulating and suggesting that there is going to be a shortage of basic commodities. These messages are meant to cause panic and despondency and mayhem to the unsuspecting and peace loving members of the public. All such and other statements should be dismissed with the contempt they deserve,” the central bank said.
It was all rather too late.
It showed us yet again centrals banks, which have long stuck to a tradition of being conservative with information, failing to see the change going on around them. In this day and age, where social media influences even the election of whole governments, central banks can no longer afford to ignore the impact of social media on their core business; managing monetary policy and generally taking care of the economy.
Central banks across Africa are still struggling with the question of what to do with social media. By now, they really should have ample evidence that what they should be debating is not whether to engage social media, but only how they should be doing it.
The numbers are there for any central bank governor to see. According to GSMA, a grouping of mobile phone operators, there will be over 700 million smartphone connections in Africa, over double the forecast number in North America. In Nigeria, a smartphone is sold every 16 minutes.
Already, 20 percent of the continent already has mobile access.
With such numbers, one wonders why central banks appear to think they can still afford not to have a social media presence. If you ask them, they will most likely say they are not on social media simply because they are central banks.
Well, where central banks are in exceptional circumstances such as Zimbabwe’s, one must change. Rumours spread fast, and can bring serious damage to an economy. it will always be the central bank’s job to clean up the mess. Instead of always reacting, they should instead be taking the initiative.
According to the governor of the RBZ, John Mangudya, the biggest task he faces is restoring lost public confidence. He is right. Part of fixing that will be going to where the public is.
He might want to put in a call to the Russian central bank governor, Elvira Nabiullina.
They’re on familiar ground, Russians have similar trust issues with their central bank, having gone through rampant inflation of as high as 2500 percent in the 90s. The public is sceptical of everything they say. “In our situation there are no words that would be sufficient,” the bank is quoted saying in one article.
Yet, the bank has taken to social media to push its message, unfiltered, to the public. Many other central banks are taking this path, as they now realise that the threat of social media to public policy today is very real.
In Kenya last year, the country’s third largest bank, Chase Bank, collapsed partly due to what the Kenya Central Bank called “inaccurate social media reports”. A rumour was allowed to run wild until depositors swarmed the bank and ultimately caused its demise.
This why central banks are changing.
Reserve Bank of India (RBI) used to be conservative, but they too now are seeing the inevitability of social media. Central banks that have traditionally been “cautious and conservative” in communicating with the public, are opening up “gradually and cautiously and increasingly” using social media to connect with the public, RBI says in its 2017 annual report.
A good example of social media use was given by the South African Reserve Bank (SARB) in 2016, when it launched a new series of banknotes. The SARB’s PR team went all out creating content for online platforms. “Together, all these platforms enhanced the effectiveness of the awareness campaign on the new banknotes,” the SARB’s PR department said.
It is time central banks came out of their conservative shell and realised they need more proactive, and not just reactive, approaches to social media. It is tough terrain, but it can no longer be ignored.