Kai, Nigerians we are funny o. Whenever we hear that the value of the Naira has fallen more deeper, we will start panicking. "Ah jonathan see what you have done to us...." Some are even saying Buhari will make $1=N30. (Mind you I'm a buhari supporter).

A lot of people don't know how economic works. Have you ever wondered why countries like China and Japan are artificially devaluing their currencies?

Pls take a look at this article about currency war: www.en.m.wikipedia.org/wiki/Currency_war

Advantages of a Weak Currency:

* Imports become more expensive:

It's an advantage, believe you me. If our currency becomes weaker, importing goods and services from abroad will become expensive, and this in turn will cause demand for local goods and services (which will be relatively cheaper). Some will say local goods (and services) are inferior, but over time, it will develop.
Some critics will also be against a weak currency because now the iPhone 6 they are supposed to buy for N150,000 now cost over N200,000. Yeah that's good. Spend the money on nigerian made products, and perhaps with local patronage, they will also be able to develop an iPhone-quality product.

* Traveling outside the country will also become expensive:

This is also good. All those people (depleting our foreign reserve) sending their kids abroad to study, perhaps its time to come home.

All those dubai crazed shoppers, perhaps it's time to visit Tinapa in Calabar.
The list goes on and on...

If you should look at it with an unbiased mind, u will realize its the rich that has more to gain with a strong naira.

Now is time to develop our own local industry and economy. So join me to pray that 1 barrel of oil falls to $5.

Now is the time to get off the oil driven economy

Ure thinking outside the box...nice one

Yea well said. especially in terms of agriculture like that foreign rice of a thingy, i am of the opinion that they should place embargo on foreign rice and let's see what we can get from our farmers

Evidence of an enlightened mind.

KevinBrown:

Kai, Nigerians we are funny o. Whenever we hear that the value of the Naira has fallen more deeper, we will start panicking. "Ah jonathan see what you have done to us...." Some are even saying Buhari will make $1=N30. (Mind you I'm a buhari supporter).

A lot of people don't know how economic works. Have you ever wondered why countries like China and Japan are artificially devaluing their currencies?




Advantages of a Weak Currency:

* Imports become more expensive:

It's an advantage, believe you me. If our currency becomes weaker, importing goods and services from abroad will become expensive, and this in turn will cause demand for local goods and services (which will be relatively cheaper). Some will say local goods (and services) are inferior, but over time, it will develop.
Some critics will also be against a weak currency because now the iPhone 6 they are supposed to buy for N150,000 now cost over N200,000. Yeah that's good. Spend the money on nigerian made products, and perhaps with local patronage, they will also be able to develop an iPhone-quality product.

* Traveling outside the country will also become expensive:

This is also good. All those people (depleting our foreign reserve) sending their kids abroad to study, perhaps its time to come home.

All those dubai crazed shoppers, perhaps it's time to visit Tinapa in Calabar.
The list goes on and on...

If you should look at it with an unbiased mind, u will realize its the rich that has more to gain with a strong naira.

Now is time to develop our own local industry and economy. So join me to pray that 1 barrel of oil falls to $5.

Now is the time to get off the oil driven economy

you are trying to rationalize failure and economic incompetence. Planned depreciation would help an economy in a cohesive strategy as it could be used as an instrument but the Nigerian one is unplanned and will bring enormous inflation.

Babalegba:
you are trying to rationalize failure and economic incompetence. Planned depreciation would help an economy in a cohesive strategy as it could be used as an instrument but the Nigerian one is unplanned and will bring enormous inflation.

Well said Babalegba.

Nah Pikin wey no sabi him Papa bottle of aphrodisiac think say nah fruit juice.

OP, the question you should ask yourself is that ' is our production capacity as high as the chinese' do we have local products which can serve as substitutes? We don't produce electronics, ceramic tiles, phones, our food production can't meet our demand, even our crude is imported bck in it's refined form because we hv no functioning refineries. so how is the exchange rate a blessing since we hv to pay expensive dollars for all this trades.

Disagree! Rich will always travel even if naira is 500 to 1$. Its d masses who collect loan to send their children abroad that will suffer it. If no foreign competition, our local product won't step up and we have no price regulation in d country.... We increase price with the higher in demand. Our fuel depratment will suffer it since we don't refine here. So how is this a blessing sir?.

.

giantstrides:
OP, the question you should ask yourself is that ' is our production capacity as high as the chinese' do we have local products which can serve as substitutes? We don't produce electronics, ceramic tiles, phones, our food production can't meet our demand, even our crude is imported bck in it's refined form because we hv no functioning refineries. so how is the exchange rate a blessing since we hv to pay expensive dollars for all this trades.

You are right about our low level of production. But one thing you are failing to realize is that the low level of production is not due to lack of capacity or technical know how. It's just plain economics. It's because it's cheaper (on the short run) to import such goods than produce it locally. But what happens when those imported goods become very, very expensive due to a weak currency?
Then we will have to start looking for local substitutes. And you will start seeing industries sprouting up, which will in turn create more jobs.
See pictures of Nigerian made vehicles... They need local patronage to survive

ibedun:

Inflation will generally slowly creep in......like a tsunami it is already on the way.
[size=4pt]GEJ till kwashiorkor and poverty kills everyone in SE/SS, the region that produces zero food.[/size]

So much for the region you come from @ the bold-faced. It seems pupils and students were (are) not taught concord in English.

I earn in USD , so ko kan aye

Babalegba:
you are trying to rationalize failure and economic incompetence. Planned depreciation would help an economy in a cohesive strategy as it could be used as an instrument but the Nigerian one is unplanned and will bring enormous inflation.

from Ur analysis. what's keeping the inflation.. How come the inflation is yet to be enormous

Babalegba:
you are trying to rationalize failure and economic incompetence. Planned depreciation would help an economy in a cohesive strategy as it could be used as an instrument but the Nigerian one is unplanned and will bring enormous inflation.

He's a Tanoid.
He's just doing his job.

Good thinking, good product!!!


I am begining to wonder how come upon the shouting by politicians how devilish the devaluation is the following products prices remain unchanged :
1. Garri
2. Rice
3. Okrika wakeup
4. Plantain
5. Beans
6. Palm oil
etc.

I know that I am clueless about basic economics, but an average Nigeria needed, food, shelter and clothing.

I begin to wonder again, to whose benefit do these politicians campaign on devaluation? It can only be to themselves. They gain more when N1 = $1. I never knew this until now, thanks OP.

Another angle again, a weak naira will encourage foreign investment. The reason is that labour becomes very cheap. Our sisters and brothers in UK, USA, CHINA, JAPAN, can come back home to invest and have a good return for their money.

CONCLUSSION : Nigeria is a great nation let us salvage it together. We will make it!!!

You are wrong on this. Nigeria is still too underdeveloped for this. No country on earth, none, likes a falling currency. But for some countries that have substantial local production, its beneficial as a short term measure to help boost or protect market, jobs or in the case of the Americans protecting their banks by boosting their reserve. But its always a short term measure.

Nice try but the mistake you made is that Japan and Nigeria are way too different. You are comparing oranges and apples. You have to analyze this topic in a larger context of the country involved. That's why its called macro economics. A better comparable country isRussia and on a lesser degree south Africa or Brazil. In Nigeria, exporters like Nollywood might still benefit but because Nigeria exports so little and imports so much, its going to be a net loss for usa

KevinBrown:

Kai, Nigerians we are funny o. Whenever we hear that the value of the Naira has fallen more deeper, we will start panicking. "Ah jonathan see what you have done to us...." Some are even saying Buhari will make $1=N30. (Mind you I'm a buhari supporter).
A lot of people don't know how economic works. Have you ever wondered why countries like China and Japan are artificially devaluing their currencies?
Advantages of a Weak Currency:
* Imports become more expensive:
It's an advantage, believe you me. If our currency becomes weaker, importing goods and services from abroad will become expensive, and this in turn will cause demand for local goods and services (which will be relatively cheaper). Some will say local goods (and services) are inferior, but over time, it will develop.
Some critics will also be against a weak currency because now the iPhone 6 they are supposed to buy for N150,000 now cost over N200,000. Yeah that's good. Spend the money on nigerian made products, and perhaps with local patronage, they will also be able to develop an iPhone-quality product.
* Traveling outside the country will also become expensive:
This is also good. All those people (depleting our foreign reserve) sending their kids abroad to study, perhaps its time to come home.
All those dubai crazed shoppers, perhaps it's time to visit Tinapa in Calabar.
The list goes on and on...
If you should look at it with an unbiased mind, u will realize its the rich that has more to gain with a strong naira.
Now is time to develop our own local industry and economy. So join me to pray that 1 barrel of oil falls to $5.
Now is the time to get off the oil driven economy

KevinBrown:

Advantages of a Weak Currency:

* Imports become more expensive:

It's an advantage, believe you me. If our currency becomes weaker, importing goods and services from abroad will become expensive, and this in turn will cause demand for local goods and services (which will be relatively cheaper). Some will say local goods (and services) are inferior, but over time, it will develop.
* Traveling outside the country will also become expensive:
Now is time to develop our own local industry and economy. So join me to pray that 1 barrel of oil falls to $5.

Now is the time to get off the oil driven economy

Nice economic postulation.......................

But can this work for a country that is 80% import dependent

What have we done in the past years for infrastructural development to enable local production of goods and services?

Organization producing here in Nigeria import their raw materials for production.......do u know what effect this will have on the price of commodity?

Is it until we start buying tin of peak milk for N250? cos it will still get there if care is not taken with the way we are going......................

Do u know DSTV just increased their subscription fee? Why?.............................They pay for licence in $ and collect Naira from us, this means that they are paying more now cos of our devalued naira.

The same thing will happen to multinational companies that buy raw materials abroad with dollars as means of exchange, cost of production will be high and this will affect price of goods and services.


Systematic depreciation of currency is good cos it will improve patronage of locally produced goods and services but not in a situation we find ourselves now which was due to lack of foresightness by our leaders.................

They thought the raining days will be forever, no adequate planning...........................................


Cant just stop thinking about what will happen if things continue like this.....................................................It will be disastrous

Nigeria is not Japan. So?
Can't we use the inconvenience the weak naira is causing us to advance technologically?

saintopus:
Good thinking, good product!!!


I am begining to wonder how come upon the shouting by politicians how devilish the devaluation is the following products prices remain unchanged :
1. Garri
2. Rice
3. Okrika wakeup
4. Plantain
5. Beans
6. Palm oil
etc.

I know that I am clueless about basic economics, but an average Nigeria needed, food, shelter and clothing.

I begin to wonder again, to whose benefit do these politicians campaign on devaluation? It can only be to themselves. They gain more when N1 = $1. I never knew this until now, thanks OP.

Another angle again, a weak naira will encourage foreign investment. The reason is that labour becomes very cheap. Our sisters and brothers in UK, USA, CHINA, JAPAN, can come back home to invest and have a good return for their money.

CONCLUSSION : Nigeria is a great nation let us salvage it together. We will make it!!!

Its going to cause inflation on a lower scale on those products because 2 of the basic raw materials of those products which are petrol and fertilizer are heavily subsidized. And we don't export those items.
A better place to look is electronics and appliances, imported clothes and cosmetics, cars.

patmaine:

from Ur analysis. what's keeping the inflation.. How come the inflation is yet to be enormous

Inflation will generally slowly creep in......like a tsunami it is already on the way.

[size=4pt]GEJ till kwashiorkor and poverty kills everyone in SE/SS, the region that produces zero food.[/size]

KevinBrown:


You are right about our low level of production. But one thing you are failing to realize is that the low level of production is not due to lack of capacity or technical know how. It's just plain economics. It's because it's cheaper (on the short run) to import such goods than produce it locally. But what happens when those imported goods become very, very expensive due to a weak currency?
Then we will have to start looking for local substitutes. And you will start seeing industries sprouting up, which will in turn create more jobs.
See pictures of Nigerian made vehicles... They need local patronage to survive

Don't be silly. The entire Nigerian economy is import dependent. At the current rate, local production will never rise to meet demand not even in 100 years. Those vehicles you showed in the picture still rely on foreign partners for their production, the raw materials are internationally sourced. Countries that artificially devalue their currency do so because they have a massive manufacturing base and access to a huge international market.
China needs a weak currency to make it easier for America and other countries to buy their products. The only way a devalued naira can be good for Nigeria is if we have very strong exports which we don't. No country is patronizing made in Nigeria goods at any level that can sustain this current devaluation. Even our oil no longer has a stable international market and sustainable demand. If this trend continues, especially with the treasury being emptied and our foreign reserves being depleted, the result will be massive inflation and economic hardship. Just wait and see.

The problem with your China comparison, is that China has the electricity and educated workforce and resources to propel itself forward as the new manufacturing hub of the world. Like Dubai, they also have an intelligent and focused leadership that has developed a plan for success and worked to make the plan a reality. With tens of millions of jobs tied to the export of manufactured goods they are careful to keep the value of their currency stable against the dollar.
Those conditions do not exist in Nigeria unfortunately. People sneer at the apc plan to make enugu coal a major employment opportunity, and we have embraced a culture of worshipping foreign goods, and retailing them. In time things will change but there must be clear policy that is communicated to potential manufacturers and the government must give proper effect to the policy. The communications companies were promised a massive improvement in power supply and that did not happen.

#change
#GMB
#APC

For those who know what to do. The ignorant ones will suffer

Well said

KevinBrown:


You are right about our low level of production. But one thing you are failing to realize is that the low level of production is not due to lack of capacity or technical know how. It's just plain economics. It's because it's cheaper (on the short run) to import such goods than produce it locally. But what happens when those imported goods become very, very expensive due to a weak currency?
Then we will have to start looking for local substitutes. And you will start seeing industries sprouting up, which will in turn create more jobs.
See pictures of Nigerian made vehicles... They need local patronage to survive

Do you realise tht most of the local vehicle companies only assemble the parts together? , they have to import those assembled parts by paying with dollars and whether we like it or not the increase will still be passed to the final consumer, let's move away from the effects of weak naira on the manufacturing sector, The overall effect of a weak naira on the economy is worse, simply because right now tk a look at the oil price, it dropped due to over supply of oil into the market , that is bad for Nigeria because we receive far less than we used to, now what is worse is that the refineries don't care abt the over supply of oil. They still sell refined oil at an high price ( there are more suppliers of oil but fewer refineries ) so we hv to pay higher to buy back our oil from the refineries and guess wht we pay in dollars again. A weak currency shouldn't be a prerequisite for local manufacturing growth because its a double edged sword.

You fail to realise there is no electricity in Nigeria
And you fail to realise generator is often more expensive than the production machine in Nigeria
You fail to realise we are not so intelligent like those white people (i'm being sincere)
pls quote me if i dont make sense

patmaine:


from Ur analysis. what's keeping the inflation.. How come the inflation is yet to be enormous

My people have a proverb that says ' the person they are bringing a bride to should not be craning his neck to catch a glimpse of the bride on her way in.' The inflation is already on the way and no amount of abracadabra statistics will be able to disguise it. The local butcher even told me last week that a lot of our beef comes from Chad and they have to be paid for in dollars.

OP, I like your train of thought. Most people crying about the Naira exchange rate, cannot explain, how it affects their personal life. If segments of our manufacturing & services sectors are negatively affected by the exchange rates, government have tools to ease their problems.

Don't compare us to China or Japan, China has to keep it's currency down so tht everyone can keep importing from them, that is why the quality of their products are not as high as their western counterparts, if their currency starts appreciating people will wonder why they re paying much for goods of lower quality. Meanwhile Japan has to keep its currency lower to the dollar because their electronics and automobiles are not on the same level with European or American vehicles, they only come cheaper because of the lower cost of production. Every technology japan has, US has it too, the only problem is USA can't compete with the japanese because they spend higher in production, if japan currency goes up and those cars become more epensive , they will lose their customers due to high price. Now what does Nigeria have in common with this two? what do we produce besides oil , wht do we produce and export tht makes the cost of production cheap.

atlwireles:
OP, I like your train of thought. Most people crying about the Naira exchange rate, cannot explain, how it affects their personal life. If segments of our manufacturing & services sectors are negatively affected by the exchange rates, government have tools to ease their problems.

Which tools do they have?

can you please educate me more on that?

atlwireles:
OP, I like your train of thought. Most people crying about the Naira exchange rate, cannot explain, how it affects their personal life. If segments of our manufacturing & services sectors are negatively affected by the exchange rates, government have tools to ease their problems.

I disagree with the fist part of your post. Imported foodstuffs has gone up in price and I was at computer village just last week to buy a soundcard and was told that prices are going up because it cost them more to stock the goods now. My menswear supplier also told me to be prepared to pay more for my next batch because he will be buying them abroad at the new rates. You guys are making the mistake of thinking that economic negativities kicks in immediately, it doesn't. Being a social science the realitities only become apparent over time.

Babalegba:
I disagree with the fist part of your post. Imported foodstuffs has gone up in price and I was at computer village just last week to buy a soundcard and was told that prices are going up because it cost them more to stock the goods now. My menswear supplier also told me to be prepared to pay more for my next batch because he will be buying them abroad at the new rates. You guys are making the mistake of thinking that economic negativities kicks in immediately, it doesn't. Being a social science the realitities only become apparent over time.

Imported food and imported underwear are not problems for millions of Nigerians. Neither is a sound card a problem. Buy made in Nigeria, it will reduce your stress.