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Nigeria's Foreign Reserves: Why Suffer In The Midst Of Plenty? - Politics - Nairaland

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Nigeria's Foreign Reserves: Why Suffer In The Midst Of Plenty? by Larufa(m): 7:45pm On May 18, 2006
We have being hearing Govt. Official telling us that Our foreign reserve is Huge (can not specify the correct amount right now) but there is nothing to show for this:

1. Unemployment is increasing everyday
2. Cost of food increasing everyday
3. NEPA is not improving
4. No security of lifes and properties
5. Naira is not appreciating against other currency
6. Health section is not to write home about.
7. Accident prone road network across the county

Why are we suffering the mist of plenty?
Why I do not know oooooo.
Re: Nigeria's Foreign Reserves: Why Suffer In The Midst Of Plenty? by Seun(m): 8:39pm On May 18, 2006
I disagree completely with this line of thinking. Money should only be spent after serious consideration. governments are more likely to be wasteful than the other way round, so if our government is able to control it's appetite for consumption of foreign exchange we should be praising them. Do you want the money to be poured down the drain as usual, in the name of giving us a better life? Let them just keep the reserves as long as possible. Thanks.
Re: Nigeria's Foreign Reserves: Why Suffer In The Midst Of Plenty? by DaHitler(m): 12:18am On May 19, 2006
Onanugaola, why do you want Nigeria's currency to appreciate (increase?) against other currencies?

A strong Naira at this time, with rampant un-employment, is economic suicide.

I am not going to go to much into detail, but in short, the weaker your currency, the more attractive your goods look to foreigner countries. Sell more goods leads to increased employment.

Also, Cost of food increasing is good for the economy. There reason being, it would encourage more people to return back to farming instead of roaming lagos looking for quick money.

As for the rising unemployment, well thats what happens when everyone takes it upon themselves to reproduce. No babies = lower unemployment in the future.
Re: Nigeria's Foreign Reserves: Why Suffer In The Midst Of Plenty? by Seun(m): 1:45am On May 19, 2006
I love you! Hmmm, I think we have a problem of not having many goods to sell except oil.

Quick note: The exchange rate (per se) doesn't have any effect on exports vs imports if it's not moving - some people reading your post might not appreciate the difference between appreciation and being 'high'. smiley
Re: Nigeria's Foreign Reserves: Why Suffer In The Midst Of Plenty? by DaHitler(m): 1:55am On May 19, 2006
I agree, Nigeria does not have a lot of goods to sell. If only there was a way to provide constant power and eliminate the social unrest in certain parts of the country. If those two things happen, the economy would take off. All the business men here never stop shouting about how cheap chinese labor is, I wonder what they would say about a Nigeria free from power and social issues. cool
Re: Nigeria's Foreign Reserves: Why Suffer In The Midst Of Plenty? by Constantin: 8:42pm On May 19, 2006
Seun, you hit the nail on its head, you said it all nothing more to add!
Re: Nigeria's Foreign Reserves: Why Suffer In The Midst Of Plenty? by Mariory(m): 9:10pm On May 19, 2006
Plus what happens if we spend the money and then the price of Oil crashes? The result will be more borrowing and then back to square one.
Re: Nigeria's Foreign Reserves: Why Suffer In The Midst Of Plenty? by 4Play(m): 9:20pm On May 19, 2006
In past oil booms we spent our money prodigously in the 70s untill the early 80s when oil prices crashed, then we ended running up huge debts.SURELY IT IS COMMON SENSE not to run into the same trap.
Only a few years ago oil was selling for $9 a barrell,what makes u think that it will fall back to that level?
Re: Nigeria's Foreign Reserves: Why Suffer In The Midst Of Plenty? by Mariory(m): 9:42am On May 21, 2006
4 Play:

Only a few years ago oil was selling for $9 a barrell,what makes u think that it will fall back to that level?

It is highly inprobable that it will fall back to those levels because of China and India. But other economies are currently planning/implementing non-fossil initiatives. The price will surely go down in the near future.
Re: Nigeria's Foreign Reserves: Why Suffer In The Midst Of Plenty? by 4Play(m): 1:59pm On May 21, 2006
@Mariory
It can fall down to those levels quicker than u imagine.because pf the high price of oil,there is greater investment in oil exploration than ever b4 to find oil to meet up increasing demand from countries like China and India.This extra investment at some point will lead to over supply of oil surpassing demand from India and China.This will lead to a fall in the price of oil.If u think of it, the price of oil in 1980 adjusted for inflation was about $100 per barrel b4 it crashed subsequently.The subsequent years saw increasing demand for oil but the extra investment spurred by earlier high oil prices led to oversupply.The crash in oil prices meant that investment was stifled leading to today's supply problems .

Also the high oil prices will lead to greater exploration of alternative sources of energy creating even more downward pressure on the price of oil.

Improvement in the political situation in the Middle East will also lead to lower oil prices.

All these add up to one major lesson-Save windfall oil revenues now that oil prices are high because the future won't be so rosy. Any spending if necessary, should be geared towards investment in other sectors of the economy to diversify the economic base and lessen our dependence on oil.
Re: Nigeria's Foreign Reserves: Why Suffer In The Midst Of Plenty? by Larufa(m): 2:45pm On May 21, 2006
@Seun and Afeni,
I am saying the Govt. should just spend the accumulated fund wastefully.
Govt. should rather spend on project that will impact positive on the masses of this country.
Let us have constant electricity, good road networks, well funded Security outfit, provision of water, Adequate fund of Education and Agriculture e.t.c. These will creat jobs and reducing crime rate.


However,What about OBJ newest presidential Jet costing the Nation US$72 million?
Re: Nigeria's Foreign Reserves: Why Suffer In The Midst Of Plenty? by DaHitler(m): 2:54pm On May 21, 2006
Onanugaola, you must also keep in mind that one of the reason why the government is not spending all the available money is because of inflation. The rate of inflation is already at 25% in the country. If the government were to do everything you asked with that money, the rate of inflation would be well over 40%.
Re: Nigeria's Foreign Reserves: Why Suffer In The Midst Of Plenty? by 4Play(m): 2:59pm On May 21, 2006
@Onanugaola
The problem is not an increase in spending.The problemis how the money is spent.Since the past 8 years govt spending has quadripled.
The foreign reserve should be left alone to help us cope with the days when oil prices fall back to normal levels
Re: Nigeria's Foreign Reserves: Why Suffer In The Midst Of Plenty? by miky(m): 4:35pm On May 21, 2006
men somepeople really just dont know or are just pessimist. we have paid the debt, also we have commisioned around 2billion us dollars for the railway( una don hear about am so) also several powerplants have being commisioned billinons of dollars. but yes out reserves peaked at about 37 billion its down to 34 but by year end with its current growth it should peak 50.this administration has tried nigerians are just judging it by the mind of old.
Re: Nigeria's Foreign Reserves: Why Suffer In The Midst Of Plenty? by Blue2(m): 5:45pm On May 21, 2006
My dad told me that back then in the seventies when he was in the UK studying, a British paper came out with this head line, "The fool who won the Pool" in respect to Gowon's infamous statement that "money isn't our problem it is spending it that is the problem" .
I laughed my head off when i heard this grin grin grin! Can u imagine how a foolish fool would behave if he won a jackpot at the pool!! Well that was what i leaders did in the oil boom days of the seventies and just a couple of weeks ago we paid off that expensive debt!

I agree with Seun we should think hard and long before undertaking any major project or borrowing money. We should just throw money at problems that has always been our problem. If we need power stations, the question is what is the most efficient and cost effective source should it be gas, solar, biogas.

Like someone rightfully pointed out a string naira would be detrimental to our export economy, the main reason many Nigerians sort a strong naira is because they want cheap foreign products. The Chinese are giving us just that but their currency is low and their government makes sure it stays low!

What we need is an export driven diversified economy, we have the resources, both human and natural all we need is a visionary leader to galvanise our positive energy in the right direction.

Again I end with something my dad told me, he was part of the generation Soyinka called "the wasted generation", they had so much potential yet they achieved so little. Many of them were trained in the best schools in Europe and America and today we can all see the result. He (my dad) said that in the sixties there was this self belief amongst the Nigerian intelligentsia that the country was destined for greatness. I still believe in this dream with the right leadership Nigeria can be a super power, twenty years ago ho would believe that the Chinese would rule the world’s economy.
Re: Nigeria's Foreign Reserves: Why Suffer In The Midst Of Plenty? by Seun(m): 10:54pm On May 21, 2006
I still believe in this dream with the right leadership Nigeria can be a super power, twenty years ago who would believe that the Chinese would rule the world’s economy.
The ultimate for a nation is not about ruling the world! It's about making your people happy, nothing more.
Re: Nigeria's Foreign Reserves: Why Suffer In The Midst Of Plenty? by Ashiwaju(m): 5:08am On May 22, 2006
I believe we should settle with the local reserve before we Go the foriegn reserve.

Someone said inflation has raised, Abeg how did you get your %25 Inflation from and anada said we have paid the debt as if we owe just one debt. Good, he met 3Billion and raised it to 38 billion but dont forget that he met the price per barel at $9 then and now its about 72 per barel. See no magic just the market!
Re: Nigeria's Foreign Reserves: Why Suffer In The Midst Of Plenty? by DaHitler(m): 5:22am On May 22, 2006
What do you mean by local reserve?

Sorry, my rate of inflation was a bit off. The current rate of inflation is 18.9 percent in Nigeria now. The 25 percent inflation was in the mid 1990s.

Link showing the rate of inflation at 18.9 percent.

http://www.economist.com/countries/Nigeria/profile.cfm?folder=Profile-Economic%20Structure
Re: Nigeria's Foreign Reserves: Why Suffer In The Midst Of Plenty? by Love44(f): 6:50am On May 22, 2006
Afeni, that is 2001 and we are in 2006.
Re: Nigeria's Foreign Reserves: Why Suffer In The Midst Of Plenty? by raldsfield(m): 7:04am On May 22, 2006
I think, Governments are not in power to make money. Reserve put away in foreign bank for other countries to use our money to develop there countries. Where did you think China got all the money to move there country forward.

Do we need to save money, I think no. And if our Leaders think they need time to discover our numerous problems that needs attention then they don't need to be in power, they should resign.

The national infrastructure is weak, the money should be used now that it has value to add value to the economy. New damps should be built, old roads repaired and New roads constructed, New refineries, Water plants, General hospitals equipped, University, secondary libraries stocked up etc.

The government should send the money to make Nigeria work, time is not on our side and the sooner the realize it the better for us. We are centuries behind, we have to find a way of catching up with countries like Ghana. Not waiting and musing over nothing. angry
Re: Nigeria's Foreign Reserves: Why Suffer In The Midst Of Plenty? by Seun(m): 7:10am On May 22, 2006
It's ironic that you're using of the example of China to justify the squandering of Nigeria's foreign exchange reserves. China's foreign exchange reserves stand at almost 900 billion dollars! www.chinability.com/Reserves.htm

Since we have made this mistake of spendng excess reserves in the past and got into debt as a result. It would only be stupid to repeat the mistake again. In this regard, I must applaud the current administration.
Re: Nigeria's Foreign Reserves: Why Suffer In The Midst Of Plenty? by raldsfield(m): 7:19am On May 22, 2006
Before china's foreign reserve got to $900 billion how did they get the money todevelop their infrastructure.
And we are not in competition with China.
Nigeria is like a poor house hold, you don't stock away money and allow your house roof to lick, walls colaps

no light in the house, no water, no food More your households have got no job, no social security.

Infact where do we get the money to fix Nigeria, If you decide to save the money. Or build a reserve that will sooner or later get missing.
Re: Nigeria's Foreign Reserves: Why Suffer In The Midst Of Plenty? by Seun(m): 7:25am On May 22, 2006
China has problems that are arguably worse than the problems we have in Nigeria. They have less freedom. in china, a forum like this one where we criticize the goverment cannot exist. The operators will be arrested and jailed. They also have areas of the country that are very deep in poverty, and a larger population to support.

Infact where do we get the money to fix Nigeria, If you decide to save the money. Or build a reserve that will sooner or later get missing.
Don't you ever save money for rainy days? What if the investments required in the country aren't immediate?
Re: Nigeria's Foreign Reserves: Why Suffer In The Midst Of Plenty? by Ashiwaju(m): 11:25am On May 22, 2006
Seun:

save money for rainy days? What if the investments required in the country aren't immediate?

And must one die b4 the rainy days? I still repeat we need to know how much we have inside and how it can be well implemented, foriegn Reserves or not, Nigeria is still indebted to many financial insitution, its just like taking a loan from bank "A" to pay Bank "b", Gbese na still gbese. And dont forget that when all these neccesary infrastures are met, Nigeria would save times 100 of what we save now.If the refineries work, God knows how much we would earn from it, If the roads,Water and Light would work God knows how much they would make from Tax payers money, no matter how much it is, Its just like keeping your money in a savings account for little or no interest when you can aswell withdraw the same money invest in some kinda buz to make more.

We need to see things work in this country and if you say china still ave worse problem, that is pretty obvious. The most populated Country in the whole world and the problem of china is not fund but population. Nairaland no dey criticize Govt. it only promotes one of the dividends of Democracy "Freedom of Speech"!
Re: Nigeria's Foreign Reserves: Why Suffer In The Midst Of Plenty? by seeker(m): 3:32pm On May 22, 2006
we need those reserves to be as healthy as possible. As someone said, what would happen if the price of crude crashes. I'm not an economist, but does anyone else appreciate the irony that now we're debt free, and have much healthier reserves, we can more easily go and borrow money?
Re: Nigeria's Foreign Reserves: Why Suffer In The Midst Of Plenty? by Ashiwaju(m): 4:34pm On May 22, 2006
seeker:

we need those reserves to be as healthy as possible. As someone said, what would happen if the price of crude crashes. I'm not an economist, but does anyone else appreciate the irony that now we're debt free, and have much healthier reserves, we can more easily go and borrow money?


and Who said we are debt free, if the price of crude crashes, does the production and exportation of crude crash aswell?
Re: Nigeria's Foreign Reserves: Why Suffer In The Midst Of Plenty? by seeker(m): 5:01pm On May 22, 2006
Ashiwaju:


and Who said we are debt free, if the price of crude crashes, does the production and exportation of crude crash aswell?

Debt free, relative to say last year.

No production and exportation will not fall. We haven't built up the foreign reserves because of the quantity of crude produced. it's the current high price that has been of benefit. It's quite simple really.
Re: Nigeria's Foreign Reserves: Why Suffer In The Midst Of Plenty? by Ashiwaju(m): 5:06pm On May 22, 2006
and thats why i said in my previous post that, its no magic, just the market!
Re: Nigeria's Foreign Reserves: Why Suffer In The Midst Of Plenty? by seeker(m): 5:08pm On May 22, 2006
You obviously got me wrong then. I was not implying that someone did magic, only that it's a good thing whichever way we arrived at it.
Re: Nigeria's Foreign Reserves: Why Suffer In The Midst Of Plenty? by Larufa(m): 5:54pm On May 22, 2006
@Asiwaju,
Thanks for all your postings. we seem to think alike.
While have huge foreign reserves while Basic infrastructure needed and necessary for industrial development are lacking. The best value that can be given to any fund is to invest it in assets/programs that will be useful now and in the future, adding value to the fund. This is what can be refer to as Leadership Vision. Not just putting it in Foreign Bank Vaults.
Pa Awolowo did same in the 60's -- Industrial and Housing Estates, Television Station, Best Road Network, Free and qualitative Education, Functional Farm settlements, all these are still with us till date.

Why is OBJ Govt. keeping huge foreign reserves in foreign banks, where the home countries are using the same fund to give us loans/grant and developing their economy. we have to put the fund into useful and meaningful use.

It is a statement of fact that Oil price will fall, in fact our crude will finish one day, so why not invest the ready fund in provision of the infrastructure neccessary catalsyst for our industrial development, which will serves as shock absorber during these period, making us to depend less on income from crude oil.
Japan does not produce crude oil but their income from manufactured goods in far higher than that of Nigeria. Why ?? They invest heavily in Education, provision of the enabling environment for industry growth.


(Not wasting it on buying Presidential Jet, Bribing Legislators, hosting Commonwealth Head of States, Building new accomodation for the Queen, New Banquet Halls, Galivating all over the world e.t.c.)
Re: Nigeria's Foreign Reserves: Why Suffer In The Midst Of Plenty? by seeker(m): 9:16am On May 23, 2006
It's not money that is just left around doing nothing. It's usually actively managed. It can also be used to stabilise the local currency from speculation and other shocks. Wether the level of reserves that we have is optimal is another debate entirely.
Re: Nigeria's Foreign Reserves: Why Suffer In The Midst Of Plenty? by miky(m): 2:35am On May 24, 2006
inflation was dolwn to 11% firts quarter but is back to 15%. foreign reserves attract foreign investors it ensures an environment of stable currency not pressumely high or low. moreover nigeria is at a clinical period if we start digging into the reserves very soon no accountability of it would be known.

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