...
Domestic oil producers are feeling the pinch worst. Many borrowed heavily to buy oilfields when crude was worth more than $100 a barrel, and are now struggling to pay the interest on loans, says Kola Karim, the founder of Shoreline Group, a Nigerian conglomerate. This, in turn, threatens to create a banking crisis. About 20% of Nigerian banks’ loans were made to oil and gas producers (along with another 4% to underperforming power companies). Capital cushions are plumper than they were during an earlier banking crisis in 2009; but, even so, bad debts are mounting and banks that are exposed to oil producers may find themselves in trouble. “It wouldn’t surprise me if one or two went down,” says a senior banker in Nigeria.
The government’s response to the crisis has been three-pronged. First, it is trying to stimulate the economy with a mildly expansionary budget. At the same time, it is trying to protect its dwindling hard-currency reserves by blocking imports. Third, it is trying to suppress inflation by keeping the currency, the naira, pegged at 197-199 to the dollar. Only the first of these policies seems likely to work.
The budget, which includes a plan to spend more on badly needed infrastructure, is a step in the right direction. Although government revenues are under pressure from the falling oil price, Mr Buhari hopes to offset that by plugging “leakages” (a polite term for theft) and taxing people and businesses more. That seems reasonable. At 7%, Nigeria’s tax-to-GDP ratio is pitifully low. Every percentage point increase could yield $5 billion of extra cash for the coffers, reckons Kayode Akindele of TIA Capital, an investment firm. Mr Buhari also plans to save some $5 billion-$7 billion a year by ending fuel subsidies—a crucial reform, if he sticks with it. Even so he will be left with a deficit of $15 billion (3% of GDP) that will have to be filled by domestic and foreign borrowing.

Yet his policies on the currency seem likely to stymie that. The central bank has frozen the naira at its current overvalued official rate for almost a year. The various import bans (on everything from soap to ballpoint pens) are supposed to reduce demand for dollars, but have little effect. Businesses that have to import essential supplies to keep their factories running complain that they have been forced into the black market, where the naira currently trades at 300 or more to the dollar. Several local manufacturers have suspended operations. International investors, knowing that the value of their assets could tumble, have slammed on the brakes and some have pulled money out of the country just as their dollars are most needed (see chart).
Nigeria is fortunate in having low levels of public debt (less than 20% of GDP), but it is not helped by high interest rates, which mean that 35% of government revenue goes straight out of the door again to service its borrowings. It would not take much to push it into a debt crisis.
[/b]Frustratingly,[b] this crunch is one that Nigeria has been through before—under the then youthful Mr Buhari. Then, as now, he refused to let the market set the value of the currency. Instead he shut out imports, causing the legal import trade to fall by almost 50% and killing much of Nigeria’s nascent industry in the process. Between 1980 and 1990, carmaking fell by almost 90%. Today, as in the 1980s, the president is making a bad situation worse.

http://www.economist.com/news/middle-east-and-africa/21689584-cheap-oil-causing-currency-crisis-nigeria-banning-imports-no

Mods, I hope you will do justice to this as well, will be interesting to see this and the other thread calling Jonathan a "buffoon" go head to head,
Same article but different perspectives

This is front page material.

Not all those kanye and khalifa yeye beef

vivalavida:
This is front page material.

Not all those kanye and khalifa yeye beef

I am hoping the mods do move it to frontpage, so we have a balanced view of the message, seeing some people just picked a few lines of insult at the ex-president leaving the very raison d'etre of the article, which is basically a criticism of the President's crude economic tactics.

Ok na, very soon they will also give him a name or insult him. Sometime they can be really unprofessional,by the way, the policies by the present administration is a complete disaster, n may end up destroying the economy. I ve never seen.

NavierStokes:


I am hoping the mods do move it to frontpage, so we have a balanced view of the message, seeing some people just picked a few lines of insult at the ex-president leaving the very raison d'etre of the article, which is basically a criticism of the President's crude economic tactics.

Exactly. N they will also pick the few lines here n insult the economist as well.

#Clears throat..

Goodluck Jonathan was an Ineffectual Buffoon - The Economist (2016).

ellechrystal:

Exactly. N they will also pick the few lines here n insult the economist as well.

Forgetting that the very reason for that article is to serve as an attack at President Buhari's crude economic tactics. As evident in the title of the article:

Nigeria’s economy, Crude tactics
Cheap oil is causing a currency crisis in Nigeria. Banning imports is no solution

Poor title of article. The Economist did not accuse PMB of worsening Nigeria's economy. They merely criticized the administration's FX and Imports Policy.
---
They spoke glowingly about his efforts to plug leakages to shore up government revenue. They also credited the expansionary budget aimed at infrastructural development and diversification of government revenue.

NavierStokes:


I am hoping the mods do move it to frontpage, so we have a balanced view of the message, seeing some people just picked a few lines of insult at the ex-president leaving the very raison d'etre of the article, which is basically a criticism of the President's crude economic tactics.

The present government economic policies are an outrage.

The foriegn exchange restrictions is killing the economy.

If the fall in oil prices left the econony half dead, the present statist policies will finish it off.

If this expansionary budget is passed which they wrongly praised. it will cause a drop in the naira to 400 in the nlack market by year ending at the latest. I am actually suspecting by July this year

Bevista:
Poor title article. The Economist did not accuse PMB of worsening Nigeria's economy, but merely criticized the administration FX Policy.

Please bro take a look at the last sentence.

NavierStokes:


Forgetting that the very reason for that article is to serve as an attack at President Buhari's crude economic tactics. As evident in the title of the article:

Nigeria’s economy, Crude tactics
Cheap oil is causing a currency crisis in Nigeria. Banning imports is no solution

My dear, they don't understand, each tym I try to explain to certain peeps I get stunned by their ignorant responses.
Illiteracy n lack of study is becoming a huge mess in Nigeria compared to corruption itself. I don tire . some people don't read, n even if they do, comprehension is another huge problem, or they try to twist it to suit what's in their brain.

grandstar:


The present government economic policies are an outrage.

The foriegn exchange restrictions is killing the economy.

If the fall in oil prices left the econony half dead, the present statist policies will finish it off.

If this expansionary budget is passed which they wrongly praised. it will cause a drop in the naira to 400 in the nlack market by year ending at the latest. I am actually suspecting by July this year

Coupled with the possibility of a supplementary budget that will no doubt be in the trillions, thus with the interest rates as rightly pointed out in the article presents a possibility of sliding down the slippery slope of a debt crises.

grandstar:
The present government economic policies are an outrage.

The foriegn exchange restrictions is killing the economy.

If the fall in oil prices left the econony half dead, the present statist policies will finish it off.

If this expansionary budget is passed which they wrongly praised. it will cause a drop in the naira to 400 in the nlack market by year ending at the latest. I am actually suspecting by July this year

I would beg to disagree that the expansionary budget is "wrongly praised". It is exactly what is needed to invest in infrastructure and other parts of the economy with a view to diversifying government revenue. How else do you want government to plan for future revenue in the face of falling oil prices.
---
But, yes, the administration FX Policy is so out of sync with economic realities. Extremely poor from Emefiele & PMB.

Bevista:
I would beg to disagree that the expansionary budget is "wrongly praised". It is exactly what is needed to invest in infrastructure and other parts of the economy with a view to diversifying government revenue. How else do you want government to plan for future revenue in the face of falling oil prices.
---
But, yes, the administration FX Policy is so out of sync with economic realities. Extremely poor from Emefiele & PMB.

Infrastructures of websites, connecting cables to drivers office, renovating of the presidential villa etc.?

It is well seen that a good look at the budget shows overbloated numbers that probably add no value to the common nigerian.

But all the same you have proven to be a different type of supporter that doesn't "abobaku" for his principal. At least there have been cases i have seen you disagree with the president's policies, unlike some.

NavierStokes:
Please bro take a look at the last sentence.

That only validates my earlier position. They are criticizing the President’s foreign currency & import policy.

Bevista:
Poor title of article. The Economist did not accuse PMB of worsening Nigeria's economy. They merely criticized the administration's FX Policy.

The Economist was too soft on PMB.

The FX and import restrictions are an outright disaster!

Even the expansionary budget is a curse becsuse the FX restrictions will adversely affect it. Expansionary budgets alwsys leads to a loss in a currency's value. Since the CBN will not allow the Naira to lose value officially, the pressure will be on the black market. I foresee the naira touching 400 year ending

Bevista:
That only validates my earlier position. They are criticizing the President’s foreign currency & import policy.

Well I would disagree with you on this.

NavierStokes:
Infrastructures of websites, comnecting cables to drivers office, renovating of the presidential villa etc.

It is well seen that a good look at the budget shows overbloated numbers that probably add no value to the common nigerian.

The budget is fraught with disturbing allocations, but it doesn't preclude the fact most of the funds have been allocated to Capital Projects.
---
I will excuse the administration on this budget, since the cabinet had less than 2 months to get it ready. I will draw my conclusions by the 2017 budget. Remember, the APC is operating in Aso Rock for the first time, so one should expect some Inexperience to show.

Bevista:
The budget is fraught with disturbing allocations, but it doesn't preclude the fact most of the funds have been allocated to Capital Projects.
---
I will excuse the administration on this budget, since the cabinet had less than 2 months to get it ready. I will draw my conclusions by the 2017 budget. Remember, the APC is operating in Aso Rock for the first time, so one should expect some Inexperience to show.

Well we honestly didn't have the luxury to afford to hire a "trainee FEC". All the same the issue of time comes up because the president felt comfortable running a "bokassa" styled regime where all the permanent secretaries take turns to brief him over a 5 months period.

ok

Rubbish

When will GEJ and his supporters explain this?

Not just the economist also agriculturist, even the tourist...





Change na Change

Mtsheeeeew

they were laughing when the Economist called ex president GEJ an Ineffectual Buffoon


this The Economist get bad mouth sha

Na so e dey easy for their mouth - change! change! Very soon e go bi choi! choi!

slowly, nairaland is turning into a huge boring joke

their shall be no devaluetion...period......

Hey hey hey hey hey

What is good for the goose is good for the gander.

Lol

Frustratingly, this crunch is one that Nigeria has been through before—under the then youthful Mr Buhari. Then, as now, he refused to let the market set the value of the currency. Instead he shut out imports, causing the legal import trade to fall by almost 50% and killing much of Nigeria’s nascent industry in the process. Between 1980 and 1990, carmaking fell by almost 90%. Today, as in the 1980s, the president is making a bad situation worse.

Buhari have been doing everything possible to kill the Nigerian economy since 1983.

OgbeifunErom:
ok

Rubbish

When will GEJ and his supporters explain this?

Just when Buhari and his supporters give a timeframe on this.