The Monetary Policy Committee (MPC) on Tuesday, once again voted against the widely speculated Naira devaluation.

The Central Bank of Nigeria (CBN) governor, Godwin Emefiele, said interest rates would instead be reduced to further ease the liquidity in the economy. Explaining that the current global oil glut is expected to remain for a long time and as such it is imperative to prepare for longer period of low government revenue from oil sources.

According to the governor, the 12 member committee voted unanimously to keep the rated unchanged. Monetary Policy Rate (MPR) remains 11 percent, while Cash Reserve Requirements stood at 20 percent and liquidity ratio 30 percent.

The Naira will continue to exchange at the official rate N197-N199 to the dollar, but parallel market rate is expected to rise above N300 as a result of CBN refusal to devalue the Nigerian Naira.

However, the governor defended the forex restrictions, insisting its working as local manufacturers, especially locally produced food had witnessed increase sales since the policy was implemented.

"It has been positive," he said.

“There is wide room for optimism about the medium to long term macro-economic prospects… especially given the clarity in the policy direction of the administration, the various interventions in the real sector, gradual improvements in the power sector and the reinvigorated fight against corruption.”

International Monetary Fund (IMF) director, Christine Largade, during her visit to Nigeria advised CBN to devalue in order to ease the tension in the economy by adjusting its policy to accommodate the current gap created by lower oil prices.

But CBN insisted it would rather reduce interest rates to encourage borrowing and job creation.

http://investorsking.com/naira-will-not-be-devalue-instead-rates-would-be-reduced-cbn/

good

CBN is very funny. Wether they devalue it or not, the effects have started. This is what you get when a cow is a president

Baboons and monkeys are soaking but this time not in blood but in their own sweats!

okosodo:
CBN is very funny. Wether they devalue it or not, the effects have started. This is what you get when a cow is a president

I prefer this cow my sister corruption is now stealing carry go let haters keep hating . May God almighty protect president M Buhari , and give him knowledge of wisdom and understanding.

I love this

This is exactly what we need

Reduction in interest rates should help SMEs.

End of importation culture is crucial

okosodo:
CBN is very funny. Wether they devalue it or not, the effects have started. This is what you get when a cow is a president

You have not made any sense sir

Instead of name calling, try and construct an argument

Lalasticlala, this is FP worthy

slimfit1:


I prefer this cow my sister corruption is now stealing carry go let haters keep hating . May God almighty protect president M Buhari , and give him knowledge of wisdom and understanding.

Still sleeping

TheDevilIsALai:
NSE composite value wiped off $10bn in 6 mths and still falling.

The NSE has witnessed nearly 50% loss since may 29, 2015.

[img]http://www.tradingeconomics.com/charts/og.png?url=/nigeria/stock-market[/img]

Have you asked who is dumping shares and in return who is mopping them up?

Most of the shares being dumped come from foriegn investors who see the economy as a train heading for dissaster and most of those buying them are northerners. As the foriegn investors dump their shares it creates a ripple effect leading to most southerners dumping theirs which makes the shares cheaper for adamus to buy into.

As for the naira, the strict rules in place are just hogwash since the black marketers who are mainly northerners still have back door access to dollars from the CBN.

This move is meant to cripple southern business and in turn make the northerners control the forex market.


When I say sense is not part of the south una go begin curse una father

Let us give a round of applause to all the omowalabis who voted chain and bondage.

Chinazaekperem5:
I love this

This is exactly what we need

Reduction in interest rates should help SMEs.

End of importation culture is crucial

The banks will rather borrow states than you from where the governors will convert it to forex (thereby putting more pressure on the naira) and stash it in Swiss vaults.

TheDevilIsALai:


The banks will rather borrow states than you from where the governors will convert it to forex (thereby putting more pressure on the naira) and stash it in Swiss vaults.

Speculative assumption sir

Any evidence to back up your assertion?

I would imagine that there would be a more vibrant oversight to solidify and ensure the policy direction

slimfit1:


I prefer this cow my sister corruption is now stealing carry go let haters keep hating . May God almighty protect president M Buhari , and give him knowledge of wisdom and understanding.

Well said.

So what happens to rates on fixed deposits and treasury bills ?

ok lol

Chinazaekperem5:


Speculative assumption sir

Any evidence to back up your assertion?

I would imagine that there would be a more vibrant oversight to solidify and ensure the policy direction

And why should the banks lend SMEs when they can lend one state 40bn naira at a swoop without bordering how to manage the loan faccility?

Why take the risk by providing loans to thousands of SMEs that will be into local manufacturing ? They never borrowed money to local manufacturers in the past and preferred to borrow importers , so why should they partner with SMEs now?

The cheap loans will be swooped on by governors who will simply convert a chunk of it to dollars and stash in their Swiss accounts and use the remaining to fund over priced and useless projects contracted to themselves via their cronies.

This is 9ja where very sound policy ends up being tarnished by evil politicians

stevecantrell:
So what happens to rates on fixed deposits and treasury bills ?

Treasury bills will go up in order to attract more investors but fixed deposits in commercial banks will go down naturally since the banks will be getting cheap loans from the CBN ( which is actually a bail out in disguise given that most banks are seriously on the brink of collapse).

TheDevilIsALai:


And why should the banks lend SMEs when they can lend one state 40bn naira at a swoop without bordering how to manage the loan faccility?

Why take the risk by providing loans to thousands of SMEs that will be into local manufacturing ? They never borrowed money to local manufacturers in the past and preferred to borrow importers , so why should they partner with SMEs now?

The cheap loans will be swooped on by governors who will simply convert a chunk of it to dollars and stash in their Swiss accounts and use the remaining to fund over priced and useless projects contracted to themselves via their cronies.

This is 9ja where very sound policy ends up being tarnished by evil politicians

I doubt businesses can prosper in an environment where the. official rate is 197 and the black market rate is 305. The naira should hit 400 this year.

Banks won't confidence in SME's

I swear they should make me CBN governor when they keep adopting my suggestions (lowering interest rates). My recent posts below:

kayfra:
This is a great thread.

I don't agree with running parallel exchange rates, all that it will do is encourage bankers to connive with FX dealers and it will defeat the purpose.I believe it's time we acknowledge the realities of diminshed revenues in our mono product economy. This is how I'll propose to change the existing monetary policy:

1. Devalue the naira to something more realistic and closer to the parallel market. Let it float with given limits maybe plus or minus 20 naira
2. Lower interest rates to reinflate the economy so more money is available and cheap to lend. Yes. Inflation will increase but consumers will have more money to spend.
3. Place outright bans on any product that can be sourced locally and review the policy on a product by product basis if it's becoming scarce. A tiered approach to enforce the bans should be considered, so stuff like toothpick, tomato puree, chicken etc can be Class A. Products that deserve total bans and Class C may just be tariffs
4. Place transaction limits on cards for personal use and be more liberal with business cards. Banks should come out with cards for Business vs. Personal cards. Improves tracking and taxable income
5. They know the politicians and contractors that benefitted from the dollarization of our economy. So a blanket ban is shortsighted. Remove the draconian policy of limiting inflows and outflows of dollars into domiciled accounts and track the aforementioned people.
6. Any import of farm or processing equipment that encourages exports should be subsidised and the proof of receipt of such should be at the custom. This should be done using rebates to avoid people getting subsidies and channeling the money for alternative use.
7. Redesign the monies collected via Remita, so that it spends more time at the banks which fRees up cash for lending and trade. CBN can track those using some clearing mechanism.


Without doing something to our monetary policies, the economy will crash before the end of second quarter. They are killing the economy the more this ill-advised policy continues.


And outside of monetary policy, Buhari and his goons needs to communicate an economic vision that brings about everything. Give it targets, goals and milestones. Without a vision and an enabling environment, Nigeria is doomed to fail.

kayfra:
We are a victim of a mono product commodity export based economy and when prices tank, then so is our fortune and currency. We had a boat load of opportunity under the last government to structurally change our economy by building infrastructure and diversifying our exports. But we blew away the days of oil at $140 a barrel. That was lost on private jets and ridiculous properties.

Anyway, accepting our reality let's look at what will alleviate the pain.

Monetary policy - CBN (Emefiele)
1. Devalue the naira and stop wasting reserves on our ego. Naira is not worth the official rate and let's be done with that reality. Of course, inflation will rise, which is inevitable.
2. Lower interest rates. This is to make the cost of borrowing cheaper, so more naira is available to spend to keep a buoyant economy. The banks won't enjoy runaway profits but they can make up for that in fees.
3. Stress test the banks and based on the results, recapitalizate the banks. We can't afford to have weak banks that'll collapse anytime soon. If the banks are not strong enough to do real banking, then consolidate them.
4. Formulate policies for banks to increase retail lending which will grow the economy when money is available to individuals to invest in businesses and other entrepreneurial activities such as farming. We have 160 million people and can run a growth based economy internally.
5. Put more import tariffs on frivolous goods to encourage local production.
6. Prioritize the issuance of forex to companies importing industrial or agricultural machines. Anything that will foster local production should be encouraged. This will get us from being a net exporter of raw goods to a net exporter of processed or semi processed goods.


Fiscal policy (Adeosun)
Kemi is already doing most of my recommendation

1. Look for ways to seal all the leakages in parastatals.
2. Retrieve every single kobo of revenue made by government agencies which will include customs, ports, waec, jamb etc etc
3. Review the cost of governance with the aim of drastically lowering recurrent expenditure. This may involve firing redundant people.
4. Review our VAT. We have a low tax rate and we need to tax consumption of foreign goods to discourage our dependence on them.
5. Broaden the tax base with targeted taxation across the economy. Anybody with a stall or farm has to pay taxes. No exceptions.
6. Automate governance using technology. We need an ERP solution and data warehouse. This will give easy access to information and reports so we can plan and make better policy decisions.
7. Review fee structure across the board. This will include police tickets, traffic tickets, tolls, road tax etc etc


Buhari
1. Communicate a vision and hire an economic adviser that can articulate the vision as concrete plans with milestones.
2. Go after trade agreements with African countries. We have a lot to sell the less developed African countries and can effectively replace a lot of their foreign partners. This will increase dollar repatriation from the revenue we make in those countries.
3. Stop speaking so negatively about Nigeria. You kill consumer and investor confidence when the head of state sounds so negative.
4. Fight corruption but don't let it take center stage of your government. It just shows you're not capable of managing a complex country with varying priorities.
5. Strengthen our defense. It's your #1 priority as commander in chief.
6. Go get a communication coach to teach you the art leadership using verbal and non verbal cues.


NASS
1. Pass PIB bill as a matter of urgency.
2. Pass any bill that will clear roadblocks and speed up the incubation of businesses. Example. Why does it take a year to get mining license? There are other examples.
3. Do real work and pass laws that will help the common man and big business. They go hand in hand


The People
1. Work hard, pray hard and party hard.

Watch him adopt more of my ideas.

Who believes in these policies.

BUHARICONOMICS AT WORK! baba want to do it the hard way

Hmmmmmmmmmmmm

Am still waiting $1 = #1 Aboki PMB. This is not what you promises at campaign.

I never see the change, too login to Aliexpress 1688 etc taya me.

how i go buy shoe etc for cheap price and paid #311 per $.

Commercial bank self no help.

I give up on Nigeria

*Drop Mic*

Not a bad option if you ask me.

This would encourage borrowing by local businessmen/investors, stimulate expansion of businesses which would in effect promote employment.

So far, the policies of this government have been tailored towards promoting local production and curbing import- exactly what Nigeria needs if she wants to become the giant she dreams of becoming.

okosodo:
CBN is very funny. Wether they devalue it or not, the effects have started. This is what you get when a cow is a president

And the cow will be your president till 2019. Kill yourself. If you like.

Like i will always say, Economist will only give you economic indices on that wont translate on the live of an average citizen for good......

I rep Sociology.

Not an economist,,,, only them economists knows what this is all about...

And if you are not Pls not typing gibberish insulting the president just to get cheap "likes"

Who benefit from the huge difference between parallel market rate of #300+ to $1 and official rate of #197 to $1 ?

kayfra:
I swear they should make me CBN governor when they keep adopting my suggestions (lowering interest rates). My recent posts below:










Watch him adopt more of my ideas.

Perhaps Emefiele is a nairalander.

The overall intention is good but our economy can't sustain this

Sai baba

I DON HEAR THIS STORY BEFORE YET THE NAIRA STILL DEY GO DOWN.
I WONDER WHAT WILL HAPPEN IF DEM COME DECIDE TO DE-VALUE THE NAIRA?