"Who's running Nigeria?" blared a headline in this
week's The Economist, aptly summarizing the
state of affairs in beleaguered Nigeria — a major
oil producer and African economic powerhouse
whose economy appears to be as stricken as its
ailing leader.

With Nigerian President Muhammadu Buhari in
absentia suffering from an undisclosed illness, the
country's National Bureau of Statistics reported
this week that the economy contracted 1.5
percent last year for the first time in nearly 25
years. Although Vice President Yemi Osinbajo is
handling day-to-day management of the country,
analysts say Nigeria's mounting woes require
steady leadership.

Like most OPEC member states, the former
emerging market standout has found itself on the
wrong side of oil prices that remain far too low to
bolster an economy heavily reliant upon crude
production.

The troubles of Africa's largest economy have
been exacerbated by a debilitating currency
shortage. The International Monetary Fund
forecasts Nigeria will only see "modest growth" of
less than 1 percent this year, and inflation is
running in the double digits. It all suggests relief
for the beleaguered country appears far off.

"Shortage of foreign exchange is very severe,"
explained Win Thin, global head of emerging
market currency research at Brown Brothers
Harriman. "Foreign investors today face very long
delays in repatriating funds out of Nigeria."

The shortages were first caused by lower oil
prices, but policymakers ultimately made the
situation worse by pegging the Nigerian naira [its
official currency] at a rate analysts say was
overvalued. "As such, markets are not clearing
and there are shortages of FX," he added.

Let that currency float
Meanwhile, the scarcity and overinflated value of
Nigeria's currency is creating liquidity pressures
in the financial system. Recently, the Central Bank
of Nigeria took measures to ease the situation.

Oil, which has frequently rescued Nigeria from
economic decline and provided a buffer in tough
times, may not be enough to salvage the
country's economy this time. Brent crude has
traded around $55 — a far cry from levels above
$100 that once kept OPEC members flush with
revenue.

Nigeria, which produces 1.8 million barrels a day
of crude, was excluded from a recent deal
between cartel members that restricts output in
order to boost sagging oil prices. Analysts don't
see that exemption helping in the near term.

"Exhibiting 'Dutch disease' type symptoms,
Nigeria's economy has been buoyed by oil-
related inflows during the oil price boom," Phyllis
Papadavid, an analyst with the Overseas
Development Institute, wrote in a recent report.

"Subsequent naira strength has coincided with a
stagnant non-oil sector, which has been at the
expense of a largely undiversified manufacturing
sector. Looking ahead, CBN naira support at the
current rate is consistent with overvaluation," she
said, adding that Nigeria needs to diversify its
economy and allow its currency to float freely.

"I think Nigeria can manage with oil around
$50-55, but the key is getting actual output up to
capacity," said BBH's Thin, adding that Nigeria
may need to act on stabilizing its currency before
seeing any relief.

"The situation is unsustainable, in my view, and
Nigeria will likely eventually float the naira," said
Thin. "Egypt faced a similar situation last year and
eventually floated its official currency, the Egyptian
pound."

The new central bank policy should help increase
availability of FX on the retail side of the market; it
remains to be seen to what extent this will ease
the backlog.

"The authorities do not seem keen to bite the
bullet and let the naira find its own level as driven
by market forces, and we see this continuing to
put a damper on [foreign investment] and inward
portfolio flows," said Frank Kahumba, a
Johannesburg-based senior analyst with
Momentum SP Reid Securities, in a research note
last month.

www.cnbc.com/2017/03/05/hit-by-soft-oil-prices-rudderless-nigeria-struggles-with-a-leadership-crisis-and-recession.html

I tire ooo...Gosh

Expecting the #250000 per month paid BMC army to invade this thread and start cancelling/striking through the Op.
But finally I wouldn't mind earning such free money oh!

CNBC should talk about South Africa's ailing rand,the barbaric upsurge of xenophobia and the mine workers' crisis waiting to engulf the nation in flames.
Nigeria will solve her problems,but not by foolishly allowing the naira to float and devalue to between N800 and N1000; can you imagine how inflation rate will skyrocket?,imagine how much goods will cost in a country that is still largely import dependent!!.
No one can pressure Nigeria to devalue,devaluation at this point is an anti-socialist fiscal policy that will further ruin the economy and cause a nationwide unrest.
Let CBN continue to buoy the naira while simultaneously injecting money into diversification efforts.In the meantime,NNPC should continue ramping up production and the FG should persist in persuading agitators in the Niger delta.

Oboy. So no hope for niaja economy for this year............shooo

Nope, Buhari is Hale and Hearty...so the economy is equally that (sarcasm). It's only on a vacation

Nigeria is seriously sick indeed!

AkinPhysicist:
While America is as confused as its President the Orangutan

BMC spotted

EVarn:
CNBC should talk about South Africa's ailing rand,the barbaric upsurge of xenophobia and the mine workers' crisis waiting to engulf the nation in flames.
Nigeria will solve her problems,but not by foolishly allowing the naira to float and devalue to between N800 and N1000; can you imagine how inflation rate will skyrocket?,imagine how much goods will cost in a country that is still largely import dependent!!.
No one can pressure Nigeria to devalue,devaluation at this point is an anti-socialist fiscal policy that will further ruin the economy and cause a nationwide unrest.
Let CBN continue to buoy the naira while simultaneously injecting money into diversification efforts.In the meantime,NNPC should continue ramping up production and the FG should persist in persuading agitators in the Niger delta.

BMC spotted

CROWNWEALTH019:
BMC spotted

Lol

AkinPhysicist:
While America is as confused as its President the Orangutan

^^^
Extra ordinary Zombie

i have question. So many of these articles aim at one thing, Devaluation of the Naira. So I ask how would a Naira at N1000/USD help the economy and the common man on the street?

jarkbauer:
i have question. So many of these articles aim at one thing, Devaluation of the Naira. So I ask how would a Naira at N1000/USD help the economy and the common man on the street?

Devaluation only comes about when a currency is artificially being floated.

Get rid of any useless regulation especially forex control. The US feds do not supply forex to banks. Banks and depositors can choose to invest their wealth in any currency of their choice. This is what the Chinese have introduced knowing fully well the Chinese central bank can never meet up on china's forex demand.

The naira remains a non convertable currency that is only accepted in Nigeria

EVarn:
CNBC should talk about South Africa's ailing rand,the barbaric upsurge of xenophobia and the mine workers' crisis waiting to engulf the nation in flames.
Nigeria will solve her problems,but not by foolishly allowing the naira to float and devalue to between N800 and N1000; can you imagine how inflation rate will skyrocket?,imagine how much goods will cost in a country that is still largely import dependent!!.
No one can pressure Nigeria to devalue,devaluation at this point is an anti-socialist fiscal policy that will further ruin the economy and cause a nationwide unrest.
Let CBN continue to buoy the naira while simultaneously injecting money into diversification efforts.In the meantime,NNPC should continue ramping up production and the FG should persist in persuading agitators in the Niger delta.

Ah thank God there are people with BRAINS in Nigeria.
There are always many options but sometimes the best is "do nothing". The current policy will win in the end.
Nigeria cannot attract investment by floating the currency because there is an underlying international context favouring "invest at home", xenophobia, Brexit, and other economic nationalism related issues.

If we float stupidly we are screwed and all armchair office bound big english speakers suggesting dead brain policies will all run away

What we do have in Nigeria though is probably $30bn stolen money ( in foreign currency) that corrupt people are holding outside (and in some cases inside) the banking system and another $21bn coming in from Nigerian foreign workers every year.
Government should find a way to move those monies into investments in infrastructure.

BMC squadron should come and do the needful

ImadeUReadThis:


Devaluation only comes about when a currency is artificially being floated.

Get rid of any useless regulation especially forex control. The US feds do not supply forex to banks. Banks and depositors can choose to invest their wealth in any currency of their choice. This is what the Chinese have introduced knowing fully well the Chinese central bank can never meet up on china's forex demand.

The naira remains a non convertable currency that is only accepted in Nigeria

Really?I may be a novice but really comparing Nigeria to USA? really? The local currency in US is dollars so no need for Feds to supply forex(dollars) to banks. Dollars is easily interchangeable to any currency so?

Besides you did not answer my questions,floating the Naira will make it exchange at close to N1000 to the dollar due to manipulators speculators and profit takers, so of what benefit is N1000/USD to me

jarkbauer:



Really?I may be a novice but really comparing Nigeria to USA? really? The local currency in US is dollars so no need for Feds to supply forex(dollars) to banks. Dollars is easily interchangeable to any currency so?

Besides you did not answer my questions,floating the Naira will make it exchange at close to N1000 to the dollar due to manipulators speculators and profit takers, so of what benefit is N1000/USD to me

The naira is just a rebased form of currency which the FG sets it's value based on forex reserves held by the CBN. Even the FG budget takes into consideration a benchmark value for the naira in their annual budget.

Relax forex regulations and see if the naira won't strengthen.. as things stand only the FG is accounting for virtually all forex supply.

ImadeUReadThis:


The naira is just a rebased form of currency which the FG sets it's value based on forex reserves held by the CBN. Even the FG budget takes into consideration a benchmark value for the naira in their annual budget.

Relax forex regulations and see if the naira won't strengthen.. as things stand only the FG is accounting for virtually all forex supply.

Most analysts believe the real value Of the Naira is N800/$


Why from 200/usd?

jarkbauer:


Most analysts believe the real value Of the Naira is N800/$


Why from 200/usd?

The current administration never helped matters as they scared foreign investors away who by the way were a major source of foreign exchange into the economy.

There is also the several forex scams by the CBN and high placed Aso Rock officials which led to well over 20 different exchange rates. This is where the round-tripping began.

We must not also forget the fact that the Ministry of Finance withdrew all waivers to exporters and the CBN barred them from accessing forex at the official rate.

This led to a situation where some exporters were forced to patronise the black market for forex to fund their import requirements but at the same time will get their foreign proceeds paid to them by the CBN at the ridiculously low official rate.

This is what led to most companies shutting down operations and moving to neighbouring countries.

ImadeUReadThis:


The current administration never helped matters as they scared foreign investors away who by the way were a major source of foreign exchange into the economy.

There is also the several forex scams by the CBN and high placed Aso Rock officials which led to well over 20 different exchange rates. This is where the round-tripping began.

We must not also forget the fact that the Ministry of Finance withdrew all waivers to exporters and the CBN barred them from accessing forex at the official rate.

This led to a situation where some exporters were forced to patronise the black market for forex to fund their import requirements but at the same time will get their foreign proceeds paid to them by the CBN at the ridiculously low official rate.

This is what led to most companies shutting down operations and moving to neighbouring countries.

so complicated

jarkbauer:



so complicated

Here is a simplified version of how Buhari through both gross incompetence and corruption destroyed the naira:


For 6yrs, the Jonathan administration was able to maintain a stable forex rate for the naira which hovered at around 156 to the USD.

This feat was achieved through a steady supply of forex sales into the local economy by the CBN .

The last immediate Governor of the CBN, by estimation, provided $100bn to local businesses during his 5yr stint.

This huge amount was made possible due to high oil receipts to govt coffers buoyed by a strong and growing confidence in our economy.

The naira began its decline through a deliberate and well thought out policy move by the CBN to devalue it on the heels of lowering oil prices.

The naira then saw a dip to 178 naira during the twilight years of the past administration in the closing quater of 2014. This policy was borne out of both necessity and commonsense.

Further decline in the naira was recorded in the buildup to the 2015 general elections not out of fiscal constraints but owing largely to an unstable political atmosphere. Investors being rightfully wary of the careless rhetrioc and threats of unleashing violence by the opposition party and it's candidate (just as Buhari promised and executed in 2011 after he lost out), led to most investors fleeing for safety. The stock market was heavily hit and the naira was not spared as well which saw the naira dipping to as low as 210 to the USD.

After the vagabonds secured their mandate in May, 2015 the naira gradually regained some value to 199. This wasn't out of any economic masterstoke by the Buhari adminstration but merely due to the fact that Nigeria had survived one of her most tense political situations in her history.

This value remained stubbornly and artificially stagnant for over one year leading to the greatest disparity between the official rates to that of the parallel market.


Fig 1: Naira trend from Jan 2011 to May, 2015


The politics of the naira had now taken precedence over the economics of its true value

Despite several calls to float the naira, the arrogating mediocre at the helms refused to do the needful.




The naira took several hits further when the man at the helms refused to announce a cabinet and issue any economic road map. Rather, the man in charge went on a global pilgrimage tour prophesying his mythical Puritan sainthood while denouncing his fellow country men as indisciplined criminals and preaching to whoever had time to waste that Nigeria was broke. If there was ever a worst demarketing agent, here came Buhari to out shadow him at the task of rubbishing our nation to which he was elected to promote.

The Buhari govt will then set out to try old and discarded rubbish fiscal policies that have never worked and will never work in trying to buoy his artificial currency. He introduced import restrictions on items without providing insentives to promote alternatives within our local manufacturing sector. He isolated our economy from the rest of the world by introducing silly restrictions on individual consumption and use of their ATMs while abroad and on the net. He favored his cronies and family members with subsidized forex gotten from the CBN with a note from him which they dumped on the parallel market to get huge returns. He then decided to stop all ongoing govt projects and payments to contractors in order to keep our foreign reserves hovering at $26bn (down from $30bn he inherited on May,29).

Not stopping there, he squandered much needed forex in compensating his theiving governors who supported him in the last election. I know you will say that both APC and PDP controlled states got a bailout but why should Osun state get a bailout of 40bn naira - an amount 400% higher than the next highest state recipient! The osun bailout was nothing but anavenue to compensate Bola Ahmed Tinubu since the rascal governor of osun did not use the huge sum - which amounted to a year's earnigs for the state to offset owed civil servants' salaries.



Fig 2: the Dullard's voodoo tricks effect on the naira

Not only did he squander the LNG funds in compensating his theiving accomplices, he forced banks through his bailout agreement to reschedule debts owed by states. This led to a huge shortfall in liquidity flows to banks since the states where their biggest debtors. The antecedents were shaky banks that led to a lot of branch closures, staff retrenchment and a spike in interests rates further contracting the economy.

The dullard will later apply for a 2 trillion naira supplementary budget based on loans in late November , 2015 claiming the inherited budget he met "was no more feasible in light of harsh economic realities". Now what exactly did he do with the 4.5 trillion budget and the additional 2trillion naira supplementary budget for 2015? Not a damn thing!

It gets worse. In early 2016, the dullard issued another draconian decree on our economy restricting forex sales to local manufacturers; declaring they "source forex from other sources" - the black market to be precise which his cronies where now supplying forex to. This saw the naira crashing at well over 320 to a dollar.

So who exactly is our forex for since Buhari has restricted virtually every one but himself, his cronies, family members , political jobbers and newly acquired business affiliates to forex access ?

As things stand now our foreign reserves is just sitting fallow in foriegn bank accounts servicing foreign interests and businesses.

So who in God's holy name does our foriegn reserves epp?

ImadeUReadThis:


Here is a simplified version of how Buhari through both gross incompetence and corruption destroyed the naira:


For 6yrs, the Jonathan administration was able to maintain a stable forex rate for the naira which hovered at around 156 to the USD.

This feat was achieved through a steady supply of forex sales into the local economy by the CBN .

The last immediate Governor of the CBN, by estimation, provided $100bn to local businesses during his 5yr stint.

This huge amount was made possible due to high oil receipts to govt coffers buoyed by a strong and growing confidence in our economy.

The naira began its decline through a deliberate and well thought out policy move by the CBN to devalue it on the heels of lowering oil prices.

The naira then saw a dip to 178 naira during the twilight years of the past administration in the closing quater of 2014. This policy was borne out of both necessity and commonsense.

Further decline in the naira was recorded in the buildup to the 2015 general elections not out of fiscal constraints but owing largely to an unstable political atmosphere. Investors being rightfully wary of the careless rhetrioc and threats of unleashing violence by the opposition party and it's candidate (just as Buhari promised and executed in 2011 after he lost out), led to most investors fleeing for safety. The stock market was heavily hit and the naira was not spared as well which saw the naira dipping to as low as 210 to the USD.

After the vagabonds secured their mandate in May, 2015 the naira gradually regained some value to 199. This wasn't out of any economic masterstoke by the Buhari adminstration but merely due to the fact that Nigeria had survived one of her most tense political situations in her history.

This value remained stubbornly and artificially stagnant for over one year leading to the greatest disparity between the official rates to that of the parallel market.


Fig 1: Naira trend from Jan 2011 to May, 2015


The politics of the naira had now taken precedence over the economics of its true value

Despite several calls to float the naira, the arrogating mediocre at the helms refused to do the needful.




The naira took several hits further when the man at the helms refused to announce a cabinet and issue any economic road map. Rather, the man in charge went on a global pilgrimage tour prophesying his mythical Puritan sainthood while denouncing his fellow country men as indisciplined criminals and preaching to whoever had time to waste that Nigeria was broke. If there was ever a worst demarketing agent, here came Buhari to out shadow him at the task of rubbishing our nation to which he was elected to promote.

The Buhari govt will then set out to try old and discarded rubbish fiscal policies that have never worked and will never work in trying to buoy his artificial currency. He introduced import restrictions on items without providing insentives to promote alternatives within our local manufacturing sector. He isolated our economy from the rest of the world by introducing silly restrictions on individual consumption and use of their ATMs while abroad and on the net. He favored his cronies and family members with subsidized forex gotten from the CBN with a note from him which they dumped on the parallel market to get huge returns. He then decided to stop all ongoing govt projects and payments to contractors in order to keep our foreign reserves hovering at $26bn (down from $30bn he inherited on May,29).

Not stopping there, he squandered much needed forex in compensating his theiving governors who supported him in the last election. I know you will say that both APC and PDP controlled states got a bailout but why should Osun state get a bailout of 40bn naira - an amount 400% higher than the next highest state recipient! The osun bailout was nothing but anavenue to compensate Bola Ahmed Tinubu since the rascal governor of osun did not use the huge sum - which amounted to a year's earnigs for the state to offset owed civil servants' salaries.



Fig 2: the Dullard's voodoo tricks effect on the naira

Not only did he squander the LNG funds in compensating his theiving accomplices, he forced banks through his bailout agreement to reschedule debts owed by states. This led to a huge shortfall in liquidity flows to banks since the states where their biggest debtors. The antecedents were shaky banks that led to a lot of branch closures, staff retrenchment and a spike in interests rates further contracting the economy.

The dullard will later apply for a 2 trillion naira supplementary budget based on loans in late November , 2015 claiming the inherited budget he met "was no more feasible in light of harsh economic realities". Now what exactly did he do with the 4.5 trillion budget and the additional 2trillion naira supplementary budget for 2015? Not a damn thing!

It gets worse. In early 2016, the dullard issued another draconian decree on our economy restricting forex sales to local manufacturers; declaring they "source forex from other sources" - the black market to be precise which his cronies where now supplying forex to. This saw the naira crashing at well over 320 to a dollar.

So who exactly is our forex for since Buhari has restricted virtually every one but himself, his cronies, family members , political jobbers and newly acquired business affiliates to forex access ?

As things stand now our foreign reserves is just sitting fallow in foriegn bank accounts servicing foreign interests and businesses.

So who in God's holy name does our foriegn reserves epp?

It seems you are partisan but thats your issue.I will ask why didn't we float the Naira during these times of surplus? Why was it that Gurus like you never mentioned flotation then? Naira stabilized at N197 due to availability of the dollars not due some ingenuity by Jonathan. floating the Naira will not make Naira sell at N200 to the dollar from all permutations then they said the real value of the Naira was around N350-400 to the dollar. So I ask again would any president support flotation that will see Naira fall from N200 to N400/$?

jarkbauer:


It seems you are partisan but thats your issue.I will ask why didn't we float the Naira during these times of surplus? Why was it that Gurus like you never mentioned flotation then? Naira stabilized at N197 due to availability of the dollars not due some ingenuity by Jonathan.

The GEJ administration recorded the highest inflow of FDI funding into our economy.

All the gains recorded from 1999 - May, 2015 especially in the area of direct foreign investments were eroded in just one year under Buhari.

As FDI were running away they cashed out all their investments dumping our economy and putting serious strain on the naira.

This is how Buhari destroyed our economy by destroying foreign investors confidence on our economy.

jarkbauer:


It seems you are partisan but thats your issue.I will ask why didn't we float the Naira during these times of surplus? Why was it that Gurus like you never mentioned flotation then? Naira stabilized at N197 due to availability of the dollars not due some ingenuity by Jonathan.

Thank God you know that under GEJ, high crude earnings were used to buoy the naira

jarkbauer:


floating the Naira will not make Naira sell at N200 to the dollar from all permutations then they said the real value of the Naira was around N350-400 to the dollar. So I ask again would any president support flotation that will see Naira fall from N200 to N400/$?

As long as incompetent political appointees and corrupt civil servants are in charge of our economy through direct control of forex then we will have this lingering problem.


Get rid of govt monopoly on the economy and see how our economy will flourish.

ImadeUReadThis:


The GEJ administration recorded the highest inflow of FDI funding into our economy.

All the gains recorded from 1999 - May, 2015 especially in the area of direct foreign investments were eroded in just one year under Buhari.

As FDI were running away they cashed out all their investments dumping our economy and putting serious strain on the naira.

This is how Buhari destroyed our economy by destroying foreign investors confidence on our economy.

Why did the CBN defend the Naira with $100billion? Why not allow market forces to determine the real value of the Naira during the surplus times. Kindly explain why

jarkbauer:


Why did the CBN defend the Naira with $100billion? Why not allow market forces to determine the real value of the Naira during the surplus times. Kindly explain why

Because at that time FDI inflows were not yet sufficient.

If that tempo was maintained, for the next 5yrs we would have reached that point where commercial banks would have been able to meet up with forex demand.

But thanks to just one year of Buhari foolishness we have been take back 30yrs!

My own take from all of this is

1.We are import dependent Nation something should have been done about this(Your almighty GEJ shares a blame here with all our leaders)
2. We export only raw materials and import finished goods..too bad
3.During GEJ oil was selling at all time prices yet he left a paltry $30 billion in reserves too bad OBJ left $65 B
4. Buhari was too rigid and wanted an impossible status quo in the value of the Naira(as in no be under me Naira go fall) so he did not listen to his advisers or probably he had bad advisers who couldn't school him.
5. Mismanagement of our Forex by corrupt politicians
6. Nigerians love imported goods

ImadeUReadThis:


Because at that time FDI inflows were not yet sufficient.

If that tempo was maintained, for the next 5yrs we would have reached that point where commercial banks would have been able to meet up with forex demand.

But thanks to just one year of Buhari foolishness we have been take back 30yrs!

Oh oh oh oh

Oga you are not being sincere. Nigeria wasnt ripe for flotation when all was well but the recipe is now flotation when all is not well.. haba


We did not float when OBJ Yaradua and GEJ were there but you want Buhari to float haba

jarkbauer:



Oh oh oh oh

Oga you are not being sincere. Nigeria wasnt ripe for flotation when all was well but the recipe is now flotation when all is not well.. haba


We did not float when OBJ Yaradua and GEJ were there but you want Buhari to float haba

Stop defending the gross foolishness and incompetence of this APC govt under Buhari.

Every reputable economic forum has laid the blame squarely on Buhari's incompetence.


Secondly, for all Goodluck's short comings, the state of the economy was never in doubt under his watch.

Now it should be abundantly clear with an economy in recession that Buhari and his team are gross failures.