Reference:


Devaluation will flog you to a solution. Propping up the naira will only maintain the status quo, slavery to big oil. Make your choice oh ye irresponsible, ease seeking, ostrich hiding, can kicking, lazy ar.se.d citizens. Na una sabi. I am exporting and my clients are loving it.

Reference:


Devaluation will flog you to a solution. Propping up the naira will only maintain the status quo, slavery to big oil. Make your choice oh ye irresponsible, ease seeking, ostrich hiding, can kicking, lazy ar.se.d citizens. Na una sabi. I am exporting and my clients are loving it.

undisputedk:



I have read elsewhere where some persons have proposed that the disparity between the two prices maybe shortened by devaluation, while some have argued that unless the naira is 'floated', we'd continue to have the differences. Whatever that means anyways. Please can you shed some light on the adverse effects of having the two markets and how does 'floating'(another vocabulary I see being around around lately) seek to help the naira.


Yet again sir, I'm yet to get the answers to my first question.
When a BDC operator gives me about 400 naira for a dollar, how does he make a profit?
I'm deeply sorry for being an economic pain in your arse. I just need to understand that basic phenomenon. :-(

LRNZH:



But to think of it, 1N to $1 is not necessarily an economic advantage especially if we want to boost exports in the future. Read the OP.

omonnakoda:
Factually it is not true that the period of parallel was brief. During Buhari's tenure the dollar exchange for 3-4 Naira so I do not see where the 1.70 quoted in Babangida's time came from.It is not true

Reference:


Don't mind these senseless people. Top exporting countries like China and Japan struggle to keep their currencies WEAKER than set levels so as to make their goods competitive. Productivity and market share is the key. Foolish Nigerians struggle to keep their currency strong and so cannot attract or sustain productivity thoughtless of exports. Devaluation is not the destination but the key to killing wanton importation and inflation only affects unproductive lazy bones. Productivity is the counter to inflation. Nigerians are just to lazy mentally and physically but they love good things. The result is either poverty or theft. Two things in abundance here. Tell me why Buhari doesn't want to devalue and I will tell you that he is protecting his constituency, people of low productivity but of high taste. Sorry for this country.

danjumakolo:
Devaluation will make more meaning if we have 100% of power and high capacity utilization.This will make everything to be sourced within the country.

Reference:


What do you need power for. Abeg go siddon. Do you need power to farm, to raise the chicken you are importing. Do you need power to mix cement and build your roads and bridges. Nigeria doesn't need all these high-wire industries to develop. It is the basics that build economies and it is the lack of basics that destroy. Our biggest import bill is fuel, then food. Two things we have potentials and should produce abundantly if we can restructure and be hardworking. Your quest for electricity is just a lazy excuse. The average youth uses the little power available to charge phones to chat. Electricity has not benefitted most and 24hr power will not make a millionaire out of a sloth. How do I know this. The price of electricity has gone up and people are shouting. A productive person will not because he can easily swap costs. A industrious exporter will desire a devaluation to enable him remain in the game despite rising costs.

LRNZH:


Devaluation between 1985 and 1993 and indeed in most Nigeria's history has not forces us to any meaningful solution. Don't forget that we are still import based.

If I may ask what do you export? I am only curious.

cckris:

Devaluation is not only to aid exports. Producing match sticks can create jobs, & save Forex. How about Machetes for millions of farmers, or MUST USE kitchen knives, or shovels & head pans & other construction tools.
IBB started on the path of Structural Adjustment, but when he & his political friends saw that the South had more & better infrastructure for immediate take off, they backed out.Why?
You may have heard such nonsense as EVEN DEVELOPMENT, by which IBB & his political allies presume that they can hold down the South until the North catches up. Unfortunately Economic Development is not about how much money people have, otherwise Saudi Arabia & Brunei would possess patents on IT & Rocket Maths.
Today all Economic Indices, even in the Core North, is now COMPELLING Nigerians to use the FREE OIL MONEY to create jobs, instead of creating KINGS in every hamlet.

LRNZH:


In 1980, if was Shagari not Buhari and it was for a brief period. I put in a reference there. Kindly dispute this with your own reference let's fact check.

Thanks for reading though. It is along article.

Reference:


Devaluation will flog you to a solution. Propping up the naira will only maintain the status quo, slavery to big oil. Make your choice oh ye irresponsible, ease seeking, ostrich hiding, can kicking, lazy ar.se.d citizens. Na una sabi. I am exporting and my clients are loving it.

omonnakoda:
I did not say Buhari was there in 1980?

I said the dollar was 3-4 Naira under Buhari in the Parallel market and Buhari was there before Babangida

You wrote that it was 1.70 under Babangida. This is untrue and was never the case. In fact the deterioration started under shagari and never reversed.

LRNZH:


My references state otherwise but I will not argue this point as it doesn't take away from the crux of our discourse. Thanks for sharing.

Ijaya123:


Proactive steps like what and what, if I may ask?

omonnakoda:
Please share those references.They may be talking of the official rates but I BOUGHT dollars at Bristol hotel in 1984 for 3 Naira and 4 Naira early 85 before Babangida took over in August. I did not read it up.....

Reference:



The price of electricity has gone up and people are shouting.

mrphysics:
@op you have really done a nice work. I love the way you unbiasedly pen down your point.
From the past to where we are today, and from different governments.

Do you think that the cause of this current economic situation of Nigeria is caused by the present administration
please give with reasons why the previous administration didn't experience the high exchange rate.
Just for the benefit of some wailing Wailers in NL. because I know the answers. thanks

LRNZH:


It is in the main article.
https://en.m.wikipedia.org/wiki/Nigerian_naira

By this reference, it was in 1986 that the black market rate got to around 4 Naira to a USD. Since you experienced it, I defer to you.

As I earlier stated, it doesn't change our conclusions on the subject matter.

Reference:


Top exporting countries like China and Japan struggle to keep their currencies WEAKER than set levels so as to make their goods competitive.

.

omonnakoda:
If you look at it it says CITATION NEEDED and does not provide a source but the figures do not look real to me . Again I recall the £ in 1988 was 12 naira and dollar about 18

LRNZH:


I suspect you may be mixing up some of the dates. 18 Naira to 1 USD cannot be the official rate in 1988. I too remember this period. Anyway, thanks once again.

mrphysics:
@op you have really done a nice work. I love the way you unbiasedly pen down your point.
From the past to where we are today, and from different governments.

Do you think that the cause of this current economic situation of Nigeria is caused by the present administration
please give with reasons why the previous administration didn't experience the high exchange rate.
Just for the benefit of some wailing Wailers in NL. because I know the answers. thanks

azikiweironsi:
OP, God Bless you for the writeup. Well educating. Hope other NLs will follow this step rather than using abusive words.
Nigeria will be great again.
God Bless Nigeria.

onatisi:

Too late to do anything about it now.maybe if the current govt had taken proactive steps around July or August last year things might have been different now. Even right now it is too late to devalue the currency because the difference between the black market and bank rate is too too wide. The best now is to leave the market as it is and allow it to cool by itself .this may take time and to be honest very very painful and hard on Nigerians but after sometime of which can't be predicted the demand for dollars will come down.

Xerum:
@OP

Nice write-up and analysis.

I do miss the term arbitrage though (spread between bid and offer price), it is the gap between these prices that parallel market operators take advantage of. Arbitrage is very common in most 3rd world / developing economies as a result of the fact that most are extremely import dependent / netto importers like Nigeria.

The Nigerian economy is still at the very basic stage (extractive), we still import refined oil which entails incurring huge expenses in the process (Transportation & insurance) all paid for you USD.

It is almost beginning to sound like a cliché; we need to create enabling environment in which our SME’s will thrive, by so doing creating employment and increase purchasing power which will boost internal consumption. If we are able to boost our internal market this will reduce our yarn for imported goods & services that are available in Nigeria. Importation of unnecessary goods and services should be made expensive.

Nigeria is not an isolated market, the government and CBN can stick to their current policies of not doing the needful and wait it out hoping for a miracle, at the end of the day it is the market that determines the value of the Naira (taking into consideration our over dependency on import)

It is rather weird, that the official position of the government & CBN is that the Naira is pegged between 190 – 200 which is the price commercial banks buy USD from CBN. And the commercial banks in turn charges their clients who make purchases on the net / make withdrawals abroad close to the black market rates (excluding bank charges).
Commercial banks are making huge profits here and we wonder why the parallel market still thrive? Which brings me to my next question which is, why isn’t any of the Financial regulatory bodies doing anything about this? cos this action of the commercial banks is tantamount to jeopardizing the exchange rate policies of the government.

That the Nigeran government is reluctant to go the way of devaluation is understandable as this will increase the prices of imported refined oil products (with its multiplier effect on inflation) & will also make our debt more expensive. But something must be done to discourage over-dependency on importation and must be structural too.

You just summarised a large part of my epistle in less than 10 paragraphs.

Arbitrage, is what I was referring to as percentage premium in the analysis. Remember say I no go makaranta for Economics. I will miss out some key jargons of the trade.

Thanks for the clarity you just provided. I agree that a certain privileged few are making a killing from the ongoing arbitrage. The economic team has its work cut out for it.

LRNZH:


It is in the main article.
https://en.m.wikipedia.org/wiki/Nigerian_naira

By this reference, it was in 1986 that the black market rate got to around 4 Naira to a USD. Since you experienced it, I defer to you.

As I earlier stated, it doesn't change our conclusions on the subject matter.