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CBN Halts Branch Operations By Bureaux De Change #Emefieleconomics - Business (5) - Nairaland

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Re: CBN Halts Branch Operations By Bureaux De Change #Emefieleconomics by drnelson: 8:46pm On Dec 14, 2015
[size=28pt]Mumufiele[/size]
Re: CBN Halts Branch Operations By Bureaux De Change #Emefieleconomics by miqos02(m): 8:47pm On Dec 14, 2015
AceRoyal:
Hahahahahahahahahahahahahahaha!!!!grin
Re: CBN Halts Branch Operations By Bureaux De Change #Emefieleconomics by kaboninc(m): 8:47pm On Dec 14, 2015
Harwoyeez:
good submission, but I believe d total cancellation of dutch auction will ease d pressure n all transactions will have to go official

Are you current at all?
Re: CBN Halts Branch Operations By Bureaux De Change #Emefieleconomics by Hakagure: 8:52pm On Dec 14, 2015
This is the real right here, the issues are on so many levels.

Nationalized service industries, does anybody have any idea what would have happened if telecoms was a Govt monopoly.

Nationalized refineries, subsidized fuel. Inefficient systems that need to be turned around under NEW MANAGEMENT!

We need to understand that what has not worked in 5 decades will not wake up and start working tomorrow, we need BIG changes, not small ones.

MAURI:


Let's have another thread for this.

Look, we have to start thinking in solutions and not in problem. Are you aware of hom much Nigerians spend on the importation of generators and diesel to power them annually?

I am sure you must have heard / read about the multi billion oil subsidy fraud? Why are finished oil products being subsidized by the Nigerian government? I have explained this in another thread. I am willing to do it again, so you have a complete picture.

Why isn't the government chanelling all these monies into making sure we have operational refineries in Nigeria? It will cost less that all the subsidies put together. For your info.

I will demonstrate the link between lack of operational refineries and it's impact on the Naira / forex (current thread) All the crude we take back and forth abroad to refine and bring back finish products, that whole process is paid for in USD, the scarce forex we otherwise could put to better use. (Transportation, refining, insurance etc. All paid for in hard USD!)

Look bro, our challenges in Nigeria are not as complex as they are made to look, if only the power brokers and the people holding Nigeria to ransom decides to let go of the choke.

1 Like

Re: CBN Halts Branch Operations By Bureaux De Change #Emefieleconomics by owagbeba: 8:56pm On Dec 14, 2015
Importers' conundrum
As an importer, I must say these policies are really hurting. There is no viable official source of foreign currency in this country. The banks' Form M and Form A are utter rubbish. Imagine it takes weeks, even months just to buy foreign currency from CBN via local banks.

Listen, I love Buhari. But I don't think this CBN chap knows what he is doing? He has clamped down on all "unofficial " avenues for us(importers) to buy foreign Exchange, and made NO provision for an official source for Forex.

Why can't the banks sell forex to us directly? I really don't understand why CBN does nothing about these banks round-tripping. Instead of these banks selling directly to businesses, they sell to street corner BDCs at a high rate.

How about the ATM cards? Withdrawal on these cards is down to 300$ a day. What it now means is I'd need about 20cards x 300$ draw on each card x 10days = 60,000$. Well, fair enough, my entry visa is valid for 30days. What about companies with invoices in hundreds of thousands dollars? How many cards will they need? Boy! That's tough!

Will it make sense taking my Naira across the border to Cotonou for CFA? And then change the CFA to Euro?... I don't know. But since there are so many free dealers at the border, I might make a lot of sense. Beside I feel it's better to hold onto CFA than the Naira at this moment. The naira in my account is loosing value when every passing policies by the chap in CBN.

Last resort, I think I'd have to raise prices to cushion the effect of 260:1$ exchange rate. But it's difficulty raising price at this current economic climate. Things are already difficult. If I can't raise price then alternative will be to reduce quality of the product to meet the people purchasing power. But poor product, although affordable, will affect my brand name. What the heck do I do?

Ah!!! Manufacturing! That's a good idea. But wait, I have had NO power supply in my area for the past 3 days, and there's fuel scarcity. How then do I go into manufacturing?

I give up!!!

2 Likes

Re: CBN Halts Branch Operations By Bureaux De Change #Emefieleconomics by Nobody: 9:01pm On Dec 14, 2015
It is rather sad that the CBN Governor who is suppose to know better is taking strange decisions that are based on the PMB's body language in order to retain his job. PMB is interested in practicing a form of social economy system that may favour the common people on the short run. But the fact is that on the long run the economy will collapsed and everybody will become poor and PMB will become unpopular. Emir Sanusi stated more than a month ago that PMB needs help on . I will just enumerate few:

1.Falling oil price and 2016 budget

The reality is that our earning from oil will decline through next year. I found it strange that this fact was not taken care of in 2016 budget. As at today oil price has fallen below our budgeted projections for 2016 and there is possibility that it will fall further. It would have been realistic to put the oil price budget bench mark at 20usd per barrel. Considering our dwindling revenue, N6trillion budget is not feasible. I know some people will say recovered money from looters will augment the shortfall. This is laughable as we will be shocked that a larger per cent of the looted funds are not recoverable.

2. Oil Subsidy Payments

PMB has been advised by renowned economists like Soludo, Sanusi and Rewanne to remove oil subsidy but he is not favourable dispose to oil subsidy removal. The result, over N500Billion was recently paid to oil marketers. We still have fuel queues and Government is still owing oil marketers! Why is Nigeria still paying subsidies on oil? Imagine what N500Billion will do to building long lasting infrastructures that will provide more jobs and benefit the common people on the long run? The reality on ground is that Government cannot even sustain subsidy payments.

3. Devaluation of Naira
The CBN Governor knows better. He is only playing to the gallery. Despite his hype interventions, the dollar is exchanging for N260 as at today. Investors are shying away from Nigeria. Millions of jobs will be lost in coming months. Our foreign reserves is being depleted and inflation is increasing. Obviously CBN interventions are not working!

4. N5000 Stipends to the unemployed
I will only quote this proverb: Give a man fish,he will eat fish for a day. Teach him how to fish he will eat fish forever.
Finally I have a feeling that like GEJ, PMB is gradually being caged by selfish individuals who are bent on misleading him for their selfish interests. It is important that we realised that PMB is mortal. He needs our prayers and constructive criticism. We don't have to shout Sai Buhari even when things are going wrong....

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Re: CBN Halts Branch Operations By Bureaux De Change #Emefieleconomics by miqos02(m): 9:02pm On Dec 14, 2015
magicminister:
This is beautiful.
This is what they should have done a long time ago.
This would actually help in stabilizing the freefall of the naira.
Now they are serious,
u sure?
Re: CBN Halts Branch Operations By Bureaux De Change #Emefieleconomics by 1freshdude: 9:02pm On Dec 14, 2015
Hakagure:
I dont think we can afford to fix the dollar. We dont have forex to fight at keeping the naira at any level. Demand and supply will determine the price of essential goods, why should we treat them any difference, the country will consume what it can afford! The issue is quite severe and the more we delay the worse the crash will be and we will lose the confidence of the capital markets (this has already happened!)

Lol, calm down It is the duty of the monetary authority of every country to defend the currency of its country against external shocks. Nigeria is currently experiencing a shock because the price of the crude oil has suddenly crashed internationally. Now the crude oil is the most important resources that Nigeria exports, and it accounts for over 90% of our foreign exchange. The implication of this meteoric crash in the price of our main stay crude oil is that, Nigeria would have less revenue generally (and that is why states are having problems financing budgets and Governors threatening to cut wage). In the foreign scene, Nigeria gets less Forex from the sale of crude and can not keep making available the same quantity/units of Forex to the economy before the crude oil price crash.
They guys at CBN are not stupid, they can not allow the exchange rate float as we practically manufacture nothing in Nigeria (we import almost everything that we consume). Even the basic commodities like clothes and food are imported, so tell me what you think will happen to the naira if you let it float after say, 1year. I tell you this, if you let the naira float after a year, lots of people will not be willing to take naira in exchange for there goods/services (naira would be almost worthless). You can only allow your currency to float when you have domestic alternative to imported goods.
You may not agree with the method which the CBN is using to hedge the naira, but you must agree that there is need to hedge the naira. Allowing the Naira to float is suicidal!
Re: CBN Halts Branch Operations By Bureaux De Change #Emefieleconomics by lawydewy(m): 9:03pm On Dec 14, 2015
sosanova:
BUHARI IS AN ECONOMIC ASSASSIN....1984 IS HAPPENING ALL OVER AGAIN.
Mr man! do u read the post at all?
this regulations have been there since 2002, but because of our lawlessness country no implementation.
B
Do know base record, we make good laws more than the Americans.... we lack implementation/enforcement
Re: CBN Halts Branch Operations By Bureaux De Change #Emefieleconomics by Harwoyeez(m): 9:06pm On Dec 14, 2015
Hakagure:
You are aware that you cannot just "get dollar at the official rate".. Everything is capped. so if I want to study at a 100K a year university(heck 20 a year sef), CBN wont give me all the money.

If I want to buy a component for my combine harvester, it may not be on the approved list .. hence .. down time. Energy companies will try and use futures and puts and arbitrages and they will lose money on the exchange rate. Who wrote approved list? If I need beets is it on the approved list!

And fyi.. its not only in Nigeria o, every country in the world that I have been to has a BDC, actually you can trade forex FREELY if you want in the US and in Western Europe. In any currency!

U didn't get my point. Cancellation of dutch auction will limit forex trade to BDC and bank only so there's no more street trading of forex. In all d countries u have visited are there 2 diff rates for forex like we have in Nigeria?
Re: CBN Halts Branch Operations By Bureaux De Change #Emefieleconomics by Harwoyeez(m): 9:09pm On Dec 14, 2015
kaboninc:


Are you current at all?
u didn't get my point, street trading of forex creates more pressure because we have an official rate and parallel market rate which shouldn't be, all forex transactns will av to go tru bdc's and bank. Op u understand
Re: CBN Halts Branch Operations By Bureaux De Change #Emefieleconomics by Harwoyeez(m): 9:11pm On Dec 14, 2015
kaboninc:


Funny economist.

If you "cancel" dollar sales, how will the banks and BDCs get funds to sell to anyone?
u didn't get my point, street trading of
forex creates more pressure because
we have an official rate and parallel
market rate which shouldn't be, all
forex transactns will av to go tru bdc's
and bank using only d official rate. Op u understand?
Re: CBN Halts Branch Operations By Bureaux De Change #Emefieleconomics by MCRUEMUS: 9:15pm On Dec 14, 2015
adioolayi:
Great economists of Nairaland ..I don't want to judge this directive as a novice...Please explain the Fundamental implications of this. What school of economics does this suits Is there any where in the world this has been put to test what was the outcome After these answers...We will be able to judge holistically grin
NICE ONE
Re: CBN Halts Branch Operations By Bureaux De Change #Emefieleconomics by miqos02(m): 9:16pm On Dec 14, 2015
MAURI:

One of the few ways that the government and CBN can dissuade Nigerians from patronising foreign goods and services and reduce demand for forex is to make these goods and services expensive by making it expensive to acquire forex. Let the Naira float.
the manufacturers of these local substitutes also depend on imported raw materials sometimes
Re: CBN Halts Branch Operations By Bureaux De Change #Emefieleconomics by 1freshdude: 9:19pm On Dec 14, 2015
MAURI:


Let's have another thread for this.

Look, we have to start thinking in solutions and not in problem. Are you aware of hom much Nigerians spend on the importation of generators and diesel to power them annually?

I am sure you must have heard / read about the multi billion oil subsidy fraud? Why are finished oil products being subsidized by the Nigerian government? I have explained this in another thread. I am willing to do it again, so you have a complete picture.

Why isn't the government chanelling all these monies into making sure we have operational refineries in Nigeria? It will cost less that all the subsidies put together. For your info.

I will demonstrate the link between lack of operational refineries and it's impact on the Naira / forex (current thread) All the crude we take back and forth abroad to refine and bring back finish products, that whole process is paid for in USD, the scarce forex we otherwise could put to better use. (Transportation, refining, insurance etc. All paid for in hard USD!)

Look bro, our challenges in Nigeria are not as complex as they are made to look, if only the power brokers and the people holding Nigeria to ransom decides to let go of the choke.

I understand you bro, but I must caution you, its not as easy as you think. I admit that corruption is a problem in Nigeria, but the major issue is the structure of the budget. Do you know how much is ear marked annually for capital expenditures? that is where your answer lies! Is it possible to grow sustainably without accumulating capital? How do you postpone current consumption in Nigeria today where over 60% live from hand to mouth, for future growth? The recurrent expenditure is killing the country. Building a refinery (if you have the money) takes time, will the people be patient? where every politician is cautious of elections and would rather do things that people would rate them with immediately and governments often do not continue their predecessors projects, It is not as easy as you think.
Nigeria is not irredeemable, but redeeming Nigeria is NO walk in the park!

2 Likes

Re: CBN Halts Branch Operations By Bureaux De Change #Emefieleconomics by mart2k(m): 9:20pm On Dec 14, 2015
MKO4ever:
A caution deposit of N35billion at near zero interest rate is too punitive for the operators. But I believe the objective of the FG here is to reduce the number of the BDC operators in the market.
It is 35million and not 35 billion o
Re: CBN Halts Branch Operations By Bureaux De Change #Emefieleconomics by mart2k(m): 9:21pm On Dec 14, 2015
Good policy
Re: CBN Halts Branch Operations By Bureaux De Change #Emefieleconomics by mployer(m): 9:23pm On Dec 14, 2015
1freshdude:


What about essential goods? What alternatives will people seek? what is the alternative to electricity generating sets? what is the alternative to household appliances? what will the country consume? explain please.

The alternative to electric generating set is that you stay without it. I mean you light your candle and save us some forex grin

The alternative to appliances like tv set is that you buy a tokunbo 14 inches tv and forget about plasma grin Alternative plenty bro.

The essential materials ought to be industrial raw materials, medical equipment and drugs and some food items.
Re: CBN Halts Branch Operations By Bureaux De Change #Emefieleconomics by Slickchuma1: 9:24pm On Dec 14, 2015
lastpage:


First, l agree that there is no need to "Hawk" forex at street corners but l do understand that those Mallams are just like "marketers" who are staffers of a particular registered BDC Company.

What needs to be done is to ask that the actual transactions take place in a registered office. That is, when the "marketer" gets a customer off the streets, he should lead that customer to their registered office and the transaction takes place in such office. Finito!

You are right about the transaction taking place in a registered office but totally wrong by saying the marketer should lead the customer to their office. Personally I would not trust the marketer to follow them to their offices. Since all offices would have been registered I would rather Google the office location and go there on my own.

Again, asking BDC's to close all branches is like asking all Banks to close down all their branches and operate ONLY from their Head office!
What can be more stewpid than that?

On this I do not think it is 'stewpid' but rather allows for each BDC to be held accountable and their activities monitored. CBN didn't say several BDC's can't be opened.

Is Emefiele telling us that if a BDC has its HQ at Abuja, l need to travel to Abuja, to exchange a paltry $300, for example?
Why cant l change it at their branch office nearest to me? What is that directive supposed to achieve?

On this you could always google the nearest BDC closest to you and go to the offices directly. Even the black marketers are not located at every street corners, eg in lagos there are limited place where you would see abokis.

Let me use the UK as a reference point cos I lived there a while, post offices and a handful of currency shop deal with forex, it is not ideal to allow every body and anybody access to forex.

You dont cut-off your nose, simply to spite your face! It is senseless and counter-productive!!
[b]

I think we should be asking ourselves what are the advantages of this policy, we lost both the advantages and disadvantages and see which would be better, what every body on this thread have been doing is mostly to spell out the disadvantages, trust the average naija not to be objective in analysis.

What we need is more "intelligence-led" monitoring, not some rash of archaic policies that lead now-where.[/b]



Lastpage!
Re: CBN Halts Branch Operations By Bureaux De Change #Emefieleconomics by 1freshdude: 9:24pm On Dec 14, 2015
Harwoyeez:
good submission, but I believe d total cancellation of dutch auction will ease d pressure n all transactions will have to go official

Do you understand the aim of the Dutch auction system? and why do you think it is the problem?
Re: CBN Halts Branch Operations By Bureaux De Change #Emefieleconomics by Harwoyeez(m): 9:30pm On Dec 14, 2015
1freshdude:


Do you understand the aim of the Dutch auction system? and why do you think it is the problem?
it creates unnecessary pressure by having d official and non official rate. There shd only be one rate. Imagine we have cbn rate, bank rate, bdc's rate and street trading rate which are not d same just for a currency, isn't that gonna create pressure?
Re: CBN Halts Branch Operations By Bureaux De Change #Emefieleconomics by MAURI: 9:30pm On Dec 14, 2015
@1freshdude

Nigeria is not irredeemable, but redeeming Nigeria is NO walk in the park!

I agree with you completely bro. That is no reason not to start the walk towards improvement and betterness though.
Re: CBN Halts Branch Operations By Bureaux De Change #Emefieleconomics by 1freshdude: 9:32pm On Dec 14, 2015
Harwoyeez:
U didn't get my point. Cancellation of dutch auction will limit forex trade to BDC and bank only so there's no more street trading of forex. In all d countries u have visited are there 2 diff rates for forex like we have in Nigeria?

Lol...It depends on which countries you visited, rationing always gives room for black market. And BDC's are not Black market! Take note please.
Re: CBN Halts Branch Operations By Bureaux De Change #Emefieleconomics by Harwoyeez(m): 9:35pm On Dec 14, 2015
1freshdude:


Lol...It depends on which countries you visited, rationing always gives room for black market. And BDC's are not Black market! Take note please.
I never said BDC is a black market from what I wrote
Re: CBN Halts Branch Operations By Bureaux De Change #Emefieleconomics by MAURI: 9:38pm On Dec 14, 2015
it creates unnecessary pressure by having d official and non official rate. There shd only be one rate. Imagine we have cbn rate, bank rate, bdc's rate and street trading rate which are not d same just for a currency, isn't that gonna create pressure?

The reason there are different rates is due to arbitrage. That word is missing in your submission.

There is arbitrage because the Naira is overvalued and all sort of parties take advantage of the gaps created by this situation.

Should the banks start buying USD tomorrow at 270 the BDC / Black markets will cease / have serious challenges surviving.
Re: CBN Halts Branch Operations By Bureaux De Change #Emefieleconomics by 1freshdude: 9:38pm On Dec 14, 2015
Harwoyeez:
it creates unnecessary pressure by having d official and non official rate. There shd only be one rate. Imagine we have cbn rate, bank rate, bdc's rate and street trading rate which are not d same just for a currency, isn't that gonna create pressure?

What would you have CBN do? Because the CBN has a limited amount of Forex to sell at the official rate and a lot of items have been excluded from their list (They do not sell Forex to some certain sectors like telecom equip importers, generator importers e.t.c) What happens to the excess demand for Forex? how would you suggest they manage it?
Re: CBN Halts Branch Operations By Bureaux De Change #Emefieleconomics by 1freshdude: 9:39pm On Dec 14, 2015
Harwoyeez:
I never said BDC is a black market from what I wrote

Ok bro, that was to buttress my point that whenever you ration like this another market is created for people who want more. So you will definitely find this double price in other import dependent countries who ration foreign exchange. cheers!
Re: CBN Halts Branch Operations By Bureaux De Change #Emefieleconomics by kaboninc(m): 9:43pm On Dec 14, 2015
Harwoyeez:
u didn't get my point, street trading of
forex creates more pressure because
we have an official rate and parallel
market rate which shouldn't be, all
forex transactns will av to go tru bdc's
and bank using only d official rate. Op u understand?

Firstly street trading for now has no significant effect because these street traders obtain their fx from BDCs.

Secondly there would always be a parallel black market. The government has to make sure it is never lucrative.
Re: CBN Halts Branch Operations By Bureaux De Change #Emefieleconomics by 1freshdude: 9:43pm On Dec 14, 2015
MAURI:


The reason there are different rates is due to arbitrage. That word is missing in your submittion.

There is arbitrage because the Naira is overvalued and all sort of parties take advantage of the gaps created by this situation.

Should the banks start buying USD tomorrow at 270 the BDC / Black markets will cease / have serious challenges surviving.

Serious bro. I do not see the selling of Forex by banks solving this problem. The problem is the insatiable demand for Forex/import, the CBNs effort needs to be complemented by the Fiscal policy only then can pressure ease on the Naira.
Re: CBN Halts Branch Operations By Bureaux De Change #Emefieleconomics by Harwoyeez(m): 9:44pm On Dec 14, 2015
1freshdude:


What would you have CBN do? Because the CBN has a limited amount of Forex to sell at the official rate and a lot of items have been excluded from their list (They do not sell Forex to some certain sectors like telecom equip importers, generator importers e.t.c) What happens to the excess demand for Forex? how would you suggest they manage it?
d solution to it in some ways is that those who genuinely need forex wil get them and all others must go tru an import substitution development plan thereby freeing forex for those who need them. Also anoda is radical developmental project must be undertaken by govt in order to ease d pressure on forex demand
Re: CBN Halts Branch Operations By Bureaux De Change #Emefieleconomics by Bluffly: 9:47pm On Dec 14, 2015
MKO4ever:
A caution deposit of N35billion at near zero interest rate is too punitive for the operators. But I believe the objective of the FG here is to reduce the number of the BDC operators in the market.
Read well. $35 million and not billion
Re: CBN Halts Branch Operations By Bureaux De Change #Emefieleconomics by MAURI: 9:50pm On Dec 14, 2015
@1freshdude

Serious bro. I do see the selling of Forex by banks solving this problem. The problem is the insatiable demand for Forex/import, the CBNs effort needs to be complemented by the Fiscal policy only then can pressure ease on the Naira.

Aha bro,

We are getting somewhere.

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