When you have an economically deranged idiaat for president, this is what you get. A president without formal education

nex:
Nigerians, both home and abroad, have been feeling the bite of the foreign exchange restrictions imposed by the Central Bank of Nigeria (CBN) on since 2015. Bureaus De Change (BDCs) have been made to pass through several new regulations in order to remain in operation, and citizens, both home and abroad, wake up everyday to find out they can’t pay for what they used to anymore. Importers are stuck in limbo, travelers don’t know what to expect on trips, and students in foreign universities have been turned to debtors.





Despite all the pains and confusion caused by these policies, it would interest Nigerians to know that Government and Government officials remain keen on transacting in American Dollars. It may surprise most of you to know that Nigeria’s Budget 2016 is still based on the prices of crude oil in dollars amid all the talks of diversification of the economy, and restriction on FOREX.



The N3.6 billion dollars budgeted for BMW cars will not be paid in Nigeria to Bavaria Motor Works, but in dollars. This is at a time when Innoson Motors and Stallion Motors which are both producing cars in Nigeria will shout “Hallelluyah” at the Naira equivalent, which will create more jobs, and deepen automotive technology advancement in Nigeria.





It will appear that the Nigerian Government prefer spending dollars to Naira, but it also prefers to receive payments in dollars over its own legal tender. Recently, Africa’s largest telecommunications company, MTN was slapped with a $5.2 billion fine for not disconnection about 5.2 million phone lines. The first day Nigerians first heard this fine, we believed it to be a N5 billion but according to the regulatory body, Nigerian Communications Commission, the penalty was calculated at $1,000 per defaulting MTN line! How so?! Why dollars? As much as some of us have tried to create some logic by explaining the possibility of a typographical error which may have exchanged “N” for “$”, the regulatory body insists and maintains that its fine is in USD.



So what exactly inspires this preference of foreign currency over the Nigerian legal tender? In the case of the MTN fine, it is so ridiculous that the NCC has reduced the fine to $3.9 billion, but let’s face things square, no company is will be the scapegoat to foot 15% of your national budget. It has never happened in the history of humanity, and it will never happen! Even though the NCC has slightly reduced that fine in a “show of mercy”, but we should admit our mistakes when them.






We must have a clear economic direction in this country. We’re either restricting FOREX from the entire system or we are not. We’re either growing our economy or we’re not. We’re either encouraging foreign direct investment, or we’re killing off the existing foreign investors who have dared to succeed within all the peculiarities of Nigeria.


SOURCE: http://www.barbaric.com.ng/cbns-forex-restrictions-and-governments-obsession-with-dollars

Dee60:


Not many people will agree with you. So what law has MTN broken to warrant a $5biillion fine? I am not on the side of MTN, but the massess must be joking to think MTN will pay that and they wont inflict the pain on the common man on the street! I feel there is no single corporate entity in the whole of Africa that can pay that kind of fine and still survive. This thing will cause a rift between Nigeria and SAF and I dont think Africa needs that now.

The fine is way beyond ridiculous. Same MTN that still owes a $100million fine since 2014 or so.

The Joke is on NCC. And someone wants me to pretend that naija is not lawless..haha

lohresloco:
When you have an economically deranged idiaat for president, this is what you get. A president without formal education

The Government is not economically wrong here.

We do not have enough dollars flowing into the country because over the last year...oil prices have been falling.

We need dollars to prop up the economy.

That is why we are becoming more serious about raising money from taxation....which is why MTN is in soup right now...because sins that would have been overlooked in the times of plenty are not being overlooked now.

And yes....it was wrong to buy cars from BMW. But even if they bought from Innoson....Innoson still assembles his cars whose parts are made outside the country.So...dollars would STILL be leaving the country.

The problem is the fall in the oil price. Thus,.....we must make our economy less dependent on oil, and more dependent on manufacturing using the abundant raw materials we have.

docadams:
Hmmmmmmm

What's happening here? Only 13 comments and thread is already in promise land.

Seun, lalasticala, Mnyd44, hope all is well.

This is the most important issue facing the economy today; the present incomprehensible exchange rate policy. It is ruining the economy.

Kikero112:


The Government is not economically wrong here.

We do not have enough dollars flowing into the country because over the last year...oil prices have been falling.

We need dollars to prop up the economy.

That is why we are becoming more serious about raising money from taxation....which is why MTN is in soup right now...because sins that would have been overlooked in the times of plenty are not being overlooked now.

And yes....it was wrong to buy cars from BMW. But even if they bought from Innoson....Innoson still assembles his cars whose parts are made outside the country.So...dollars would STILL be leaving the country.

The problem is the fall in the oil price. Thus,.....we must make our economy less dependent on oil, and more dependent on manufacturing using the abundant raw materials we have.

the proper way is through a devaluation.

grandstar:
the proper way is through a devaluation.

Yes...except that devaluation is a risky venture....which does not always work the way you want it too..

As an example...you devalue the naira to say N400 to $1

Suddenly,imported things that cost 220,000 naira would now cost N400 000..IE become more expensive.

Fuelling inflation.

Technically speaking....you fight this by focusing more on increasing domestic production...reducing dependence on imports. But when we tried that back in the 1980's....it did not work. Our industries could not stand up to the demand....and many of them were, and still are dependent on imported raw materials.

Of course....we may soon get there unfortunately....if oil prices stay low.

Hello, please where are all the first class graduates of economics in Nigeria working? What are the economists doing? Do they employ them at all? Is their formal education a waste in such that they cannot voice out sense into this NCC that is just slapping out fines like people that didn't pass through the school system.

Built2last:
Can anybody remember what our president said when they asked him questions on restrictions of FX and card transactions?

Can anybody show me the economic policy document of this administration.

Be reminded that while we applaud them for fighting corruption, 7 months after, nobody is in jail.

All we hear is noise while the gullible are kept busy in the guise that the fight is on.

From August to November, they kept us busy with Saraki/versus CCB. Today it's Dasuki versus cash distribution. ..give the Dasuki case till April....The case will die natural death...We will all forget it.

We were told some people returned money. Why in heavens name will you shield them. How are we to verify such claims.

At all times government must find something to keep the gullible busy.

My position is this, while you paint a picture that you are fighting corruption and facing security, give us good economic direction. Formulate policies that will boost investors confidence...create jobs...budget was pegged at 38 dollar per barrel as I type today it's at 33 per barrel. ..

I don't understand. ..If you understand the economic direction, please educate me.

I feel you. The truth is there is no high level economic strategy from this govt. They have have shown absolutely no initiatives on how to deal with loss of income from the drop in oil prices. Any 100 level economics students knows that if a countries FX earnings drop, it needs to devalue it's currency accordingly. Trying to fight this is just plain dumb. It has been tried in the past and only leads to the kind of scarcity, paralysis and eventually economic stagnation that we are seeing now.

Also, what hard measures is the govt prepared to take to reduce the cost of governance? Is it no time to re-visit the Oronsye report which called for the scrapping and merging of many federal agencies?

At the end of the day the simple reality is that Nigeria is in a very tough situation. Tough choices need to be taken to steady the ship. The govt needs to outline what it's economic strategy is and start to implement it. I must say if the figures we are seeing from the 2016 budget are anything to go by, then it seems the road ahead will be quite rough.

grandstar:
the proper way is through a devaluation.

Sorry to dobule quote you....your point is very very interesting....

From Vanguard....here is the CBN governor explaining a few months ago why he won't devalue.

Represented by the Director of Financial Market, Mr. Emmanuel Ikeji , the CBN governor stated: “The simple idea behind devaluation is that it will make your import more expensive while your export is cheaper.

“Our major export commodity which accounts for more than 80% of our income is crude oil and here is crude oil that the price is determined, we don’t have a control over it. So, if we devalue, it has no impact directly on our major export, and what is supposed to be the non oil export, we are not producing effectively.

“It means that for the industry which is also import dependent, they have to pay higher prices for those goods which will translate to higher inflation.”

And that was the same issue back in 1989 when we first devalued. And we had a slightly better industrial sector back then.

Source:http://www.vanguardngr.com/2015/11/why-we-ignored-calls-for-naira-devaluation-by-cbn/

That is y dey r government

TaiKuun:
Hello, please where are all the first class graduates of economics in Nigeria working? What are the economists doing? Do they employ them at all? Is their formal education a waste in such that they cannot voice out sense into this NCC that is just slapping out fines like people that didn't pass through the school system.

So MTN should continue to disobey our laid down laws....

And after...you will be complaining that Nigeria is a country that does not observe rule of law.

I fear for this APC govt. No policy direction. A finance minister without a charisma. A president that thinks he is still in the army.

Honestly, i dont think the finance minister knows what she has gotten herself into. Is she waiting for oil price to drop to $20 before pressing the panic button.

bjdon:


I feel you. The truth is there is no high level economic strategy from this govt. They have have shown absolutely no initiatives on how to deal with loss of income from the drop in oil prices. Any 100 level economics students knows that if a countries FX earnings drop, it needs to devalue it's currency accordingly. Trying to fight this is just plain dumb. It has been tried in the past and only leads to the kind of scarcity, paralysis and eventually economic stagnation that we are seeing now.

Yes...we got to devalue the currency....but this might be disastrous for Nigeria.

As the CBN governor put it....(sauce)

The simple idea behind devaluation is that it will make your import more expensive while your export is cheaper.

“Our major export commodity which accounts for more than 80% of our income is crude oil (whose price), we don’t have(control) So, if we devalue, it has no impact directly on our major export, and what is supposed to be the non oil export, we are not producing effectively.

“It means that for the industry which is also import dependent, they have to pay higher prices for those goods which will translate to higher inflation.”

See....it would only make things worse.

Devaluation makes sense when you have a vibrant industrial sector that produces from the raw materials we have here...not the one we have here that is very poor, and dependent on imported raw materials.(Yes...Japan has that kind of industry that is dependent on imported raw materials...but they produce high volume of quality goods that more than makes up for it.Ditto China and South Korea).

Also, what hard measures is the govt prepared to take to reduce the cost of governance? Is it no time to re-visit the Oronsye report which called for the scrapping and merging of many federal agencies?

Exactly.

At the end of the day the simple reality is that Nigeria is in a very tough situation. Tough choices need to be taken to steady the ship. The govt needs to outline what it's economic strategy is and start to implement it. I must say if the figures we are seeing from the 2016 budget are anything to go by, then it seems the road ahead will be quite rough.

And the way forward is austerity.

persius555:
I fear for this APC govt. No policy direction. A finance minister without a charisma. A president that thinks he is still in the army.

Threre is a policy direction....steady the sinking ship by restricting forex, increasing taxation, and hopefully diversifying away from oil.

Honestly, i dont think the finance minister knows what she has gotten herself into. Is she waiting for oil price to drop to $20 before pressing the panic button.

They know what they are doing. They are taking measures that would prevent our naira from losing more value, and fighting corruption, as well as increasing our tax base.

UncleJudax:
Tushe!

Touchè bro not that. Thank me later.

Kikero112:


Sorry to dobule quote you....your point is very very interesting....

From Vanguard....here is the CBN governor explaining a few months ago why he won't devalue.



And that was the same issue back in 1989 when we first devalued. And we had a slightly better industrial sector back then.

Source:http://www.vanguardngr.com/2015/11/why-we-ignored-calls-for-naira-devaluation-by-cbn/

he does not want to devalue and yet the rate fell to 280! why we deceiving ourselves? there is serious inflation out there! an official devaluation would have brought the naira to 230 at most but now we are saddled with this madness! exporters, manufacturers,foriegn investors are all groaning! his policies are not working

Kikero112:


Yes...except that devaluation is a risky venture....which does not always work the way you want it too..

As an example...you devalue the naira to say N400 to $1

Suddenly,imported things that cost 220,000 naira would now cost N400 000..IE become more expensive.

Fuelling inflation.

Technically speaking....you fight this by focusing more on increasing domestic production...reducing dependence on imports. But when we tried that back in the 1980's....it did not work. Our industries could not stand up to the demand....and many of them were, and still are dependent on imported raw materials.

Of course....we may soon get there unfortunately....if oil prices stay low.

the naira will probably fall to 230 at worst and not your scary prediction. it is already 276 at the black market.

Kikero112:


Yes...we got to devalue the currency....but this might be disastrous for Nigeria.

As the CBN governor put it....(sauce)

The simple idea behind devaluation is that it will make your import more expensive while your export is cheaper.

“Our major export commodity which accounts for more than 80% of our income is crude oil (whose price), we don’t have(control) So, if we devalue, it has no impact directly on our major export, and what is supposed to be the non oil export, we are not producing effectively.

“It means that for the industry which is also import dependent, they have to pay higher prices for those goods which will translate to higher inflation.”

See....it would only make things worse.

Devaluation makes sense when you have a vibrant industrial sector that produces from the raw materials we have here...not the one we have here that is very poor, and dependent on imported raw materials.(Yes...Japan has that kind of industry that is dependent on imported raw materials...but they produce high volume of quality goods that more than makes up for it.Ditto China and South Korea).



Exactly.


And the way forward is austerity.

Tnx @ kikero112 n co, esp for the engaging discourse.
Am no economist, but my personal view (and question) is that, the present economic situation of the nation is akin to trying to put up blockades against a downhill rolling train..in other words, the end point of all this is still gonna be d devaluation of the naira.
With d forex restrictions, importers and other providers of goods and services are finding it more difficult doing business and it is reflecting in d costs of goods and services now.
Won't devaluating later rather than sooner cause a much greater increase in costs of goods instead of wat would have been if it had bin done sooner??

persius555:
I fear for this APC govt. No policy direction. A finance minister without a charisma. A president that thinks he is still in the army.

Honestly, i dont think the finance minister knows what she has gotten herself into. Is she waiting for oil price to drop to $20 before pressing the panic button.

the economy is tanking and your finance minister is an accountant! she has done nothing to talk up the naira. she is not ubitiquous which is a constant. as the most important minister in any country, she is not doing enough

dBard:


Tnx @ kikero112 n co, esp for the engaging discourse.
Am no economist, but my personal view (and question) is that, the present economic situation of the nation is akin to trying to put up blockades against a downhill rolling train..in other words, the end point of all this is still gonna be d devaluation of the naira.
With d forex restrictions, importers and other providers of goods and services are finding it more difficult doing business and it is reflecting in d costs of goods and services now.
Won't devaluating later rather than sooner cause a much greater increase in costs of goods instead of wat would have been if it had bin done sooner??

your brain is working overtime

The first day Nigerians first heard this fine, we believed it to be a N5 billion but according to the regulatory body, Nigerian Communications Commission, the penalty was calculated at $1,000 per defaulting MTN line! How so?! Why dollars? As much as some of us have tried to create some logic by explaining the possibility of a typographical error which may have exchanged “N” for “$”, the regulatory body insists and maintains that its fine is in USD.

Wrong the fine is N200,000 per unregistered SIM. The international media had to convert to dollars so that others will understand the enormity of the fine.

What strengthens the naira amongst other things is having it plentifully in other countries. As we try to increase the naira value and shore up our dollar reserve, which are equally highly necessary, it becomes even more important that we increase the quantity of the naira in foreign reserves of other countries. Hence, whenever and wherever possible, using the naira for trade with external bodies should be encouraged, in order to increase their naira reserves and as such increase the value of the naira. It would be counterproductive to use dollar for foreign spendings as we will only further deplete our dollar reserves, worsen the forex market and ultimately, further devalue the naira.

MTN along with other major players and NCC signed agreement, to register all SIM cards in use or to be used in Nigeria. All mobile network operators agreed that the penalty for activation of a non registered SIM card is N200,000 each. MTN activated more than 5.2m lines. Do the Maths...

My 2 kobo.

nex:
Basically, NCC just picks figure from thin air. They have no clue how many jobs will be lost, and how much worse the economy will get if they continue to enforce this fine that is based on no sense at all. I don't blame them though they know nothing about economics. $5.2 billion! LOL!

CBN and the Nigerian Government though they can do better. You can't be telling people to spend less dollars while you want to spend more.

All this fucktards coming up here saying shit......are u making any sense

Kikero112:


So MTN should continue to disobey our laid down laws....

And after...you will be complaining that Nigeria is a country that does not observe rule of law.

which laws? Federal Laws? I'm not a fan of MTN but i'm not gullible enough to believe that what the NCC has done is the right thing. How can one pay over 80% of it's total revenue as fine? Asides that, how can a Nigerian body (NCC) prefer to be paid in dollars, not naira? Bro, you really need to read and understand before jumping on people's comments

wallace83:






All this fucktards coming up here saying shit......are u making any sense

bro, can't you use your head before you talk?

TaiKuun:
which laws? Federal Laws? I'm not a fan of MTN but i'm not gullible enough to believe that what the NCC has done is the right thing. How can one pay over 80% of it's total revenue as fine? Asides that, how can a Nigerian body (NCC) prefer to be paid in dollars, not naira? Bro, you really need to read and understand before jumping on people's comments

1.As has been pointed out earlier, the fine was charged in naira. The conversion to dollars was done by the media for the benefit of international readers.(Someone reading the news in say the US may relate to the story if the sum was converted into dollars. The media does this all the time).

The N1.04 trillion fine imposed on MTN Nigeria by the Nigerian Communications Commission borders largely on security issues, writes Emma Okonji

The Nigerian telecoms regulator, Nigerian Communications Commission (NCC) last month, shocked telecoms operators and their subscribers when it slammed a whopping N1.04 trillion fine on MTN for failure to deactivate 5.2 million unregistered and improperly registered SIM cards from its network. The offence attracts N200,000 per SIM card, amounting to N1.04 trillion for a total of 5.2 million defaulting SIM cards.

So you see....fine was in naira. And the OP misled us....again.

2.MTN was not the only one fined. The other telecom operatoors too got fines. All paid up....EXCEPT MTN...

NCC said it communicated the security implications to all telecoms operators and expected them to comply, but was surprised that they all failed to comply, hence the initial fine of N120.4 million in August this year on all four GSM operators. At that MTN was fined N102.2 million, Globacom got N7.4 million fine, Etisalat got N7 million, and Airtel got N3.8 million fine, totaling N120.4 million fine for all them, for violating the NCC's directive to deactivate all pre-registered SIM cards, all improperly registered SIM cards and all SIM cards that failed to undergo complete registration on their networks.

NCC gave them up till September 7, 2015 to pay the fine or risk additional N100, 000 fine per day for each operator, aside from the main fine.

THISDAY gathered that all other operators paid the fine, except for MTN who failed to pay, before it got the present N1.04 trillion fine.


3.As a result of MTN not paying up....NCC got angry....and increased MTN's fine...

Citing security implications, NCC said it had to fine MTN again and that the fine was meant to compel MTN to respect constituted authority in an environment where it plays as the biggest telecoms operator, with over 62 million subscribers, out of the 150 million subscribers across GSM networks in the country, as at June this year.

In other words.....MTN did not play by the rules.

You see sir.....I did read.

Source: The Genesis of MTN's Hefty fine..published on This Day's website.

Hope this clears it up.

Kikero112:


The Government is not economically wrong here.

We do not have enough dollars flowing into the country because over the last year...oil prices have been falling.

We need dollars to prop up the economy.

That is why we are becoming more serious about raising money from taxation....which is why MTN is in soup right now...because sins that would have been overlooked in the times of plenty are not being overlooked now.

And yes....it was wrong to buy cars from BMW. But even if they bought from Innoson....Innoson still assembles his cars whose parts are made outside the country.So...dollars would STILL be leaving the country.

The problem is the fall in the oil price. Thus,.....we must make our economy less dependent on oil, and more dependent on manufacturing using the abundant raw materials we have.

What the hell are u saying? Dollars to prop up the economy?

Kikero112:


Threre is a policy direction....steady the sinking ship by restricting forex, increasing taxation, and hopefully diversifying away from oil.



They know what they are doing. They are taking measures that would prevent our naira from losing more value, and fighting corruption, as well as increasing our tax base.

Increasing taxation on which income and businesses? The ones the strict FX poilcies have taken away? Please try to make some sense.

pimpo:


Increasing taxation on which income and businesses? The ones the strict FX poilcies have taken away? Please try to make some sense.

I am making sense. And not all businesses are based off imported goods you know...plus many Nigerian businessess and people (eg mining ) do not pay tax.

We have no choice.

pimpo:


What the hell are u saying? Dollars to prop up the economy?

To prop up the naira.....and by extension the economy (by avoiding premature devaluation).